Would a firesale now of distressed properties here ultimately help the economy?

Slideshowbob

Well?

Opinions please - I think it would help the economy, until it happens we are living in a fallacy.

ilovesleep

I think it would help. If a person had enough in savings and were able to pick up a property very cheap he/she therefore would not have rent to pay, and would not have a mortgage. Therefore their income is theirs to do as they wish and to spend in their locality. Personally I woundn't pay more than 10,000 for 1 bedroom apartment, 14,000 for a two bedroom apartment.

mikemac

Not your fault, you can't start polls in here, disabled. You can for most of the rest of boards

Slideshowbob

hmmm ok thanks!!!

tonedef

My answer would be Impossible to say

As a matter of interest, does anyone have info from previous property bubble economies that would give an indication of the percentage of the peak prices properties would be sold at in a fire sale?

Slideshowbob

dillon1 wrote: »

My answer would be Impossible to say

As a matter of interest, does anyone have info from previous property bubble economies that would give an indication of the percentage of the peak prices properties would be sold at in a fire sale?

I'd say you have to take every bubble on its own merits.

This auction should be very interesting:
http://www.auction.co.uk/irish/onlineCatalogue.asp

Might give us a better impression of where things are at.

femur61

I lived in the UK in the late 80's, saw some people take out huge mortgages based on their overtime, recession hit, property prices fell, overtime was severed and they ultimately fell on hard times. but eventually stabilised but took a while. Houses were cheap but I think one major problem here is the oversupply, so would it correct the market, thats the million dollar question, we don't have the same population as the UK, so probally not.

Slideshowbob

femur61 wrote: »

I lived in the UK in the late 80's, saw some people take out huge mortgages based on their overtime, recession hit, property prices fell, overtime was severed and they ultimately fell on hard times. but eventually stabilised but took a while. Houses were cheap but I think one major problem here is the oversupply, so would it correct the market, thats the million dollar question, we don't have the same population as the UK, so probally not.

What is the correct market? The price which properties will currently achieve? How can that be derived???? :rolleyes:

R P McMurphy

I am puzzled by the entire situation. I have seen some houses fullly finished and they are on sale for considerably cheaper than you could hope to buy the site for, purchase materials, employ builders etc. By considerably I mean a good 30-40%. This is in Donegal by the way where there is a good over supply.

Can these houses go much lower? Maybe the costs of labour and materials still need to also take a tumble as well, although most employed in the building trade will tell you they have trimmed back as far as possible

Mr. Presentable

I don't see how a firesale of properties would help. They will be bought by speculators - I know if there're apartments in an urban area going for 10-20k I'll be buying several. Better to sell them to councils and house people, or knock them down.



The notion of oversupply is greatly based on properties in unserviced impractical rural locations that not even the erstwhile homeless or on lists otherwise will take.

Slideshowbob

Mr. Presentable wrote: »

I don't see how a firesale of properties would help.

So in the meantime the taxpayer is liable for any deficit while we wait for properties to meet their "long-term economic value" again!?!

Mr. Presentable

Slideshowbob wrote: »

So in the meantime the taxpayer is liable for any deficit while we wait for properties to meet their "long-term economic value" again!?!

I'm sorry, I thought you asked a question and wanted opinions. Is it only opinions that agree with your own I should post?

R P McMurphy

Mr. Presentable wrote: »

I know if there're apartments in an urban area going for 10-20k I'll be buying several.

If the tax on non-primary residences started to escalate there could be difficultes in this. Would the cost of renting fall dramatically if excess stock was sold off in a firesale

Slideshowbob

Mr. Presentable wrote: »

I'm sorry, I thought you asked a question and wanted opinions. Is it only opinions that agree with your own I should post?

Sorry if you misinterpreted my posts. By all means feel free to substantiate your opinion. It would be great to achieve some clarity on the raisin d'être of NAMA etc. I'm all ears

jimmycrackcorm

A firesale is pointless when there is no credit to be had for anyone to buy with. The only beneficiaries are those who made lots of dough in the boom from selling property at high prices and external investors. We, the taxpayers paying for the mess, would not benefit and only lose out more.

whiteonion

jimmycrackcorm wrote: »

A firesale is pointless when there is no credit to be had for anyone to buy with. The only beneficiaries are those who made lots of dough in the boom from selling property at high prices and external investors. We, the taxpayers paying for the mess, would not benefit and only lose out more.

So how money years should we let these properties just stand around and cost money for the taxpayers in terms of maintanance fees etc? 10, 20,30,40 years?

Bring on the firesales! Let the market decide the true value of these houses.

jimmycrackcorm

whiteonion wrote: »

So how money years should we let these properties just stand around and cost money for the taxpayers in terms of maintanance fees etc? 10, 20,30,40 years?

Bring on the firesales! Let the market decide the true value of these houses.

How long do you anticipate this recession lasting? A firesale also means that we lose because we end up paying for the losses which are then compounded by the market being flooded...

hmmm

There's no such thing as a "firesale", there is such a thing as "selling properties at market prices". NAMA seems to be a gamble that if we hang on to crumbling properties long enough, eventually we will get bubble prices for the taxpayer when we sell them. In the meantime, no-one is buying property because they know that prices are artificially high.

Propping up the market won't work, the only way to get a properly functioning property market is to release the stock and let the excess work its way out of the system.

whiteonion

jimmycrackcorm wrote: »

How long do you anticipate this recession lasting? A firesale also means that we lose because we end up paying for the losses which are then compounded by the market being flooded...

I think property prices in Japan has been falling for over 20 years... Why would Ireland be different? House prices here have been falling for what? 5 years possibly?

I still think we have a long way to go, the longer the government tries to prop up the housing market the longer it will take and the more costly it will become.

taizy

We seem to have a history of allowing building to rot.

I think it depends on what type of properties and how distressed they are. If they are historical then they could be put in the care of a heritage group. Selling cheap to people who are out for a quick buck isn't the way forward. Though I have heard of ordinary people trying to buy a NAMA property and having no luck. Something about the deeds

We need proper sustainable planning with not just the "economy" in mind, but considering the reality of how communities and neighbourhoods work.

What makes my blood boil is the same developers been given top up loans to finish projects... and what about Treasury holdings and their 300m Casino plans in the docks?

When will we ever learn.....give us more tescos, hotels (the bigger the better) casinos, race course please ..gimme gimme gimme

whiteonion wrote: »

I think property prices in Japan has been falling for over 20 years...

older apartment buildings in Tokyo aren't earthquake proof and have dropped in price. Japanese tend to build quite light wooden structures due to earthquakes.

Slydice

Yep, firesales would be awesome for Ireland.

But, let's not forget, Many people (who have alot of their lives and money invested their houses) would become poor. This would be quite **** for the many people who own houses or pay mortgages.

All the people who (still) can't afford houses suddenly would be able to.

People would need less money to buy houses and so would be able to spend more in the country. This would probably help Irish business.

People would be able to know how much they need to get a house and so would be less uncertain about their future and be able to plan how to use their money better and with more confidence.

With houses getting cheaper, people would be able to work in jobs for less wages to pay their mortgages off and so wages might come down a bit. This might just help the economy become even more competitive than it currently is.

With cheaper houses and rent, then providing homes or shelter to people on social welfare would be cheaper and so (hopefully) that might slow down the rising social welfare bill that the government is paying.

Pete_Cavan

hmmm wrote: »

Propping up the market won't work, the only way to get a properly functioning property market is to release the stock and let the excess work its way out of the system.

The problem is, there is no price at which it is worth buying a house in a half finished estate in a rural area with literally nothing within walking distance, where only five houses out of twenty five are occupied. Even a firesale will not allow these houses to "work their way out of the system". A firesale would only see the better properties, mainly in and around Dublin, sold but do nothing to alleviate the problem of ghost estates and over supply. I posted this in another forum on a thread about ghost estates, it would not be popular but is the only solution imo.

PhatPiggins

Personally I think we need to start bulldozing some of the ghost estates and get the over supply numbers down. What's a fire sale going to do for the price of property but give the market an artificial bottom. We'll still have too much property. I'd be more in favour of reducing the supply and let the market set the price naturally.

It needs to be addressed one way or another as the current state of limbo is killing the market.

PhatPiggins

PhatPiggins wrote: »

Personally I think we need to start bulldozing some of the ghost estates and get the over supply numbers down. What's a fire sale going to do for the price of property but give the market an artificial bottom. We'll still have too much property. I'd be more in favour of reducing the supply and let the market set the price naturally.

It needs to be addressed one way or another as the current state of limbo is killing the market.

ah you`d knock it down rather than let someone buy it cheap

:mad:

jimmycrackcorm

Slydice wrote: »

Yep, firesales would be awesome for Ireland.

But, let's not forget, Many people (who have alot of their lives and money invested their houses) would become poor. This would be quite **** for the many people who own houses or pay mortgages.

All the people who (still) can't afford houses suddenly would be able to.

People would need less money to buy houses and so would be able to spend more in the country. This would probably help Irish business.

People would be able to know how much they need to get a house and so would be less uncertain about their future and be able to plan how to use their money better and with more confidence.

With houses getting cheaper, people would be able to work in jobs for less wages to pay their mortgages off and so wages might come down a bit. This might just help the economy become even more competitive than it currently is.

With cheaper houses and rent, then providing homes or shelter to people on social welfare would be cheaper and so (hopefully) that might slow down the rising social welfare bill that the government is paying.

Where do I start?

Does the word "firesale" imply awesome? Here's a hint - it starts with fire...

People who have invested a lot of money already in houses do not suddenly become poor - they are still at the same position as they are now.

The people who can't afford houses wouldn't be able to get them because there is still no credit - they won't benefit. The people who will benefit are those who HAVE money and can afford to buy assets really cheaply to rent cheaply to people who still own't get credit.

If renting is cheaper then buying houses (supply led) then businesses benefit more from renters having more money to spend than homeowners.

Wages won't come down more because A) the private sector has already set the bottom limit and the public sector won't be coming down any more because of their perceived "cuts".

Slideshowbob

jimmycrackcorm wrote: »

there is no credit to be had for anyone to buy with.

ahem - yeah that's what you call a credit crunch and it's reality!!!

Basically now as I see it the average Joe is now propping up bad investors - THAT'S JUST WRONG!!!

Slideshowbob

jimmycrackcorm wrote: »

Where do I start?

Does the word "firesale" imply awesome? Here's a hint - it starts with fire...

It's like saying (without getting too personal) does the name "Jimmycrackcorm" imply cracked?!??! :rolleyes:

Jimmy tell us have you a vested interest? Is there a reason the average Joe should prop up bad investors?

And we won't really BURN the bondholders, we promise!!! Just separate private and sovereign debt and let the taxpayer just be liable for the latter!!!!! pleaseeeeeeeeeeeeee

jimmycrackcorm

I've no vested interest. I just think that neither propping up prices nor the other extreme are good ideas.

The idea of dumping property at firesale prices is appealing but just like over pricing neither situation benefits the people you would suggest. Only those with money already.

PhatPiggins

Deleted User wrote: »

ah you`d knock it down rather than let someone buy it cheap

:mad:

Ah absolutely, how are property prices ever going to improve if there's far too much of it? You sell ten houses in an estate for 40K how much are the other 10 that sold for 175K 3 years ago now worth? Whats the net gain from the firesale?

Any short term gains from a firesale are going to be miniscule to the negative long term affects on the property market.

Dannyboy83

PhatPiggins wrote: »

Ah absolutely, how are property prices ever going to improve if there's far too much of it? You sell ten houses in an estate for 40K how much are the other 10 that sold for 175K 3 years ago now worth? Whats the net gain from the firesale?

The only person who stands to benefit would be the developer, and that's in a very select situation. i.e. not this scenario.

Overpriced houses rob everyone - the state and the citizen. Even the property agent making a fast buck - they end up living in a worse state.

Too much money going into housing, means almost nothing is going into domestic investments, education, entrepreneurs, etc. etc.
There is always an opportunity cost.

Dannyboy83

hmmm wrote: »

There's no such thing as a "firesale", there is such a thing as "selling properties at market prices". NAMA seems to be a gamble that if we hang on to crumbling properties long enough, eventually we will get bubble prices for the taxpayer when we sell them. In the meantime, no-one is buying property because they know that prices are artificially high.

Propping up the market won't work, the only way to get a properly functioning property market is to release the stock and let the excess work its way out of the system.

Agree.

Nama in effect defeats itself.
It seeks to prevent conditions returning to normal (market normal).

Even if it does work out at some stage down the line, 20/25 years - that still ignores the fact that it is holding back recovery.

Overpriced houses = lost productivity.

PhatPiggins

Dannyboy83 wrote: »

Agree.

Nama in effect defeats itself.
It seeks to prevent conditions returning to normal (market normal).

Even if it does work out at some stage down the line, 20/25 years - that still ignores the fact that it is holding back recovery.

Overpriced houses = lost productivity.

What do underpriced houses equal ?

P. Breathnach

PhatPiggins wrote: »

What do underpriced houses equal ?

Firesale.

hmmm

PhatPiggins wrote: »

What do underpriced houses equal ?

What does that even mean? Put the houses on the market in an auction and let them sell at whatever price the market wants to pay for them. Just because Jacinta in number 33 is appalled that some oik has paid 100k less than her house is "worth" is no reason for the government to stockpile crumbling housing stock.

Pete_Cavan

Dannyboy83 wrote: »

Nama in effect defeats itself.
It seeks to prevent conditions returning to normal (market normal).

NAMA seeks to take loans off the balance sheets of the banks, I dont think it cares about market conditions.

Even if it does work out at some stage down the line, 20/25 years - that still ignores the fact that it is holding back recovery.

I dont see how giving away houses is going to aid recovery, like I said earlier in the thread, a lot of these houses people would not take if you gave it to them for nothing away.

ei.sdraob

Pete_Cavan wrote: »

NAMA seeks to take loans off the balance sheets of the banks, I dont think it cares about market conditions.

They do, the lower the prices go the less these loans are worth and harder it is to repay them by the parties having to repay the loans.

barfizz

A fire sale is the sale of goods at extremely discounted prices, typically when the seller faces bankruptcy or other impending distress.

All the properties that are presently for sale can fall into a number of categories that are not limited to.

Family homes, which are not likely to be in a fire sale, however a fire sale of other categorised houses would severely impact the value of their house.

Investor owned, say bye bye to their investment, not very nice if it happens too you, i know quite a few people who were caught up in the madness bought one house (for their retirement) and have been punished, do you want to see these people punished further. Don't forget the majority of investors are single property owners, not the big guys with 20/50/100 etc...

Developer owned properties, if the properties are of value (they are not in NAMA) and they own them they will either sell at a fair market rate (with some profit) of wait (if they can ) to get a fair value.

NAMA owned properties, here are where the properties you are talking about will come from, and who bears the brunt of any loss, the general public, in relation to losses from the value that they have already paid the developers and the value the market will pay and that shortfall will be covered by the taxpayers.

So my answer is a fire sale will create more problems and should not be allowed, "in my opinion".

bunkbedman

There is anecdotal evidence that NAMA is actually supporting property prices... not because it particularly wants to but again they were sold a pup by the banks who when the game was up inflated values to get the most from the state (us) eg. NAMA buys half finished estate bank say these houses will make €250k+ fast forward 2 years auctioneer tells NAMA foot soldier realistically €150k foot soldier says I can’t take that we would lose on this property remains unsold prices stabilise above €150k (no sales = stability) reality will dawn there must be a further slump maybe 20 - 30% to hit bottom....... it’s inevitable happens in all bubbles bigger they are bigger they pop, I say bring it on get there asap what would it mean for the country to have reports, and it would make news around the globe, Ireland less than a year after bailout has first gain in property prices in 5 years ( albeit from a low base ) investors would turn and say hey maybe it’s time to look there again. Just my tuppence worth

hmmm

barfizz wrote: »

Family homes, which are not likely to be in a fire sale, however a fire sale of other categorised houses would severely impact the value of their house.

The prices in an area will of course drop if there is more supply, this is basic stuff. However it is not the taxpayers responsibility to allow housebuyers maintain their house "value" by maintaining an artificial scarcity of supply - not to mention you'd be an awful idiot to buy a house at the moment with NAMA holding massive stocks they could release at any time. We could go and bulldoze every saleable property in NAMA and drive the prices of property back up, that will be to the benefit of house-owners at the expense of taxpayers who bought the properties in the first place.

Slydice

Ah sure, I guess we'll see how firesales affect us. I'd say it'll probably next year or the year after when real firesales might happen.

Once again, this will be ****e for all those who believed the hype about the property ladder and hoped not to get "left behind". I'd say they're starting to feel pretty well left behind now.

It's a right balls that has been made of our country.:(

barfizz

hmmm wrote: »

The prices in an area will of course drop if there is more supply, this is basic stuff. However it is not the taxpayers responsibility to allow housebuyers maintain their house "value" by maintaining an artificial scarcity of supply - not to mention you'd be an awful idiot to buy a house at the moment with NAMA holding massive stocks they could release at any time. We could go and bulldoze every saleable property in NAMA and drive the prices of property back up, that will be to the benefit of house-owners at the expense of taxpayers who bought the properties in the first place.

My point of view is simple:
A lot of people are in debt with their properties, they overpaid, simple!
Now, do i want to "dance on their grave" (a well know saying) and drive down the value of their property further and cause them more problems?

whiteonion

I see nothing wrong in buying a foreclosed property very cheap and kick the family out on the pavement. They should not have bought something they could not afford in the first place.

tommy57

whiteonion wrote: »

I see nothing wrong in buying a foreclosed property very cheap and kick the family out on the pavement. They should not have bought something they could not afford in the first place.

Yeah people should have known they were going to lose their jobs. "prick"

barfizz

barfizz wrote: »

My point of view is simple:
A lot of people are in debt with their properties, they overpaid, simple!
Now, do i want to "dance on their grave" (a well know saying) and drive down the value of their property further and cause them more problems?

driving down the price of property will do Ireland alot of good, creating jobs boosting by our competitiveness and increasing disposable income!

Pete_Cavan wrote: »

I dont see how giving away houses is going to aid recovery, like I said earlier in the thread, a lot of these houses people would not take if you gave it to them for nothing away.

Your joking right??? tell me your joking?? Someone getting a 40 yr jumbo mortgage has their spending power ruined for 40 years
if someone could get a house cash or for a 10 or 15 yr mortgage (like in the past) then they can spend in the economy and boost jobs!!! Real basic stuff here. Worries me that people think low property prices are bad and dont get this basic stuff!!!!!!!!!

hmmm

barfizz wrote: »

My point of view is simple:
A lot of people are in debt with their properties, they overpaid, simple!
Now, do i want to "dance on their grave" (a well know saying) and drive down the value of their property further and cause them more problems?

The function of a government is not to prop up the prices of houses at the expense of the taxpayer. Everyone in this country seems to want their own bailout at the expense of someone else.

hmmm

Deleted User wrote: »

Your joking right??? tell me your joking?? Someone getting a 40 yr jumbo mortgage has their spending power ruined for 40 years
if someone could get a house cash or for a 10 or 15 yr mortgage (like in the past) then they can spend in the economy and boost jobs!!! Real basic stuff here. Worries me that people think low property prices are bad and dont get this basic stuff!!!!!!!!!

We've had lots of pious talk over the past 3 or 4 years about how property has ruined Ireland and someone has to be to blame, yet I guarantee that if Irish people had a sniff of potential "riches" they'll be piling back into property before you can even say "rent is dead money".

Fighting Irish

jimmycrackcorm wrote: »

A firesale is pointless when there is no credit to be had for anyone to buy with. The only beneficiaries are those who made lots of dough in the boom from selling property at high prices and external investors. We, the taxpayers paying for the mess, would not benefit and only lose out more.

Or the smart public who didn't over spend and have big savings

barfizz

hmmm wrote: »

The function of a government is not to prop up the prices of houses at the expense of the taxpayer. Everyone in this country seems to want their own bailout at the expense of someone else.

The function of a government is not to drop the price of houses at the expense of the taxpayer. Everyone in this country seems to want their own bailout at the expense of someone else.

Opposite side of the coin.

hmmm

barfizz wrote: »

The function of a government is not to drop the price of houses at the expense of the taxpayer. Everyone in this country seems to want their own bailout at the expense of someone else.

Opposite side of the coin.

No, the government is artificially restricting the supply of property by taking large chunks of that supply off the market. It doesn't matter what these people think their houses are "worth", until the full supply hits the market few are going to be stupid enough to buy any property. So people can sit around content and happy that houses in their neighbourhood last sold for 400k in 2009, when the houses would go for 200k if it was a true market.

The taxpayer has billions tied up in NAMA. As a taxpayer I'd like to see some of those billions recouped and not have to pay to allow Fiachra and Charmaine feel good about their property investment.

Dannyboy83

hmmm wrote: »

No, the government is artificially restricting the supply of property by taking large chunks of that supply off the market. It doesn't matter what these people think their houses are "worth", until the full supply hits the market few are going to be stupid enough to buy any property. So people can sit around content and happy that houses in their neighbourhood last sold for 400k in 2009, when the houses would go for 200k if it was a true market.

The taxpayer has billions tied up in NAMA. As a taxpayer I'd like to see some of those billions recouped and not have to pay to allow Fiachra and Charmaine feel good about their property investment.

Not only this, but the continued government interference is causing all kind of nonsensical happenings.

For example, The Elysian Tower, smack bang in the middle of Cork City, tallest building in Ireland, is E-M-P-T-Y. You can't even get a quote! It's been pushed into Nama. It's a monument.

Massive chunks of property in inner city cork are empty.
Inner city Cork is full of old people. Or empty houses which are crumbling because nobody can get a mortgage.
Young people have been pushed out to the commuter towns for years.
This is complete fecking madness.

Even if you merely look at it from an environmental point of view, people are travelling far more than they potentially would have to, in order to reach schools, hospitals, jobs and so on.

I just can't get my head around this at all tbh.
All of this property should be released onto the market, allow property prices to reach market norms, and the whole congested machine will eventually start working again.

NAMA might have made sense if they thought the market would rebound after a year or 3. Evidently that is not going to happen. Anyone who has their head screwed on says there are still substantial falls to come. The market should already have self corrected by now.

Are they really going to sit on the Elysian for 20 years until inflation takes care of it? I can't see it happening.

Amhran Nua

The big concern about just letting rip is that it will further cripple the banks. Since FF managed to hitch our wagon to the banks, that means we'll end up having to recapitalise further. The real question is, would the clear economic benefits be worth the inevitable economic damage? High house prices are a drag on the real economy one way or the other, they produce nothing and destroy useful capital that could be going to productive purposes, so they will ultimately have to drop. Is now the best time for it though?

Naturally all objections would be moot if we weren't supporting the banks to the insane extent that we are.