Property Market 2020

cnocbui

The US is showing some signs that the pandemic isn't affecting buying in the way many had feared:

If mortgage demand is an indicator, buyers are coming back to the housing market far faster than anticipated, despite coronavirus shutdowns and job losses.

Mortgage applications to purchase a home rose 6% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Purchase volume was just 1.5% lower than a year ago, a rather stunning recovery from just six weeks ago, when purchase volume was down 35% annually.

https://www.cnbc.com/2020/05/20/weekly-mortgage-applications-point-to-remarkable-bounce-in-homebuying.html

The Belly

cnocbui wrote: »

The US is showing some signs that the pandemic isn't affecting buying in the way many had feared:

https://www.cnbc.com/2020/05/20/weekly-mortgage-applications-point-to-remarkable-bounce-in-homebuying.html

Mortgage Bankers Association

i would take that with a pinch of salt

Auctioneera

I am not speaking about these properties in particular but in general terms, it might be worth understanding how these asking prices are arrived at. When estate agents go out to pitch for business, they get asked to "value" the property. So, each agent goes out and says "I value it at €x" - inevitably some agents will give an artificially high valuation in order to try to win the business. You will often hear naive vendors saying things like "well ABC Estate Agency" reckon they will get me €2m so let's give them a shot" - the agent gives the impression that they have some proprietary technique or exclusive access to some pool of buyers that no one else does that enables them to achieve a higher price. In reality, the market values the property - the agent just facilitates viewings and processes offers.
But many agents will give unrealistic guide prices in order to win business. When the market wont bear this price, they then gradually reduce the guide price but the point is that they're in the door now, have the client and get the commission. This is one of the reasons you will see properties that are clearly overvalued in terms of asking price from time to time ie an agent overvaluing in order to get the gig.

Auctioneera

Pivot Eoin wrote: »

Agreed, whole situation is like The Big Short, The EAs are the big banks, laughing at Christian Bale, Steve Carrel, Ryan Gosling and Co. (Buyers) and the whole market just refuses to react to the deepening crater of what is happening to the economy and the housing market is just priced as usual until an inevitable and sharp Decline!

In the end, there is going to be a few sellers who get burnt particularly bad due to greedy practice by EAs, hopefully an industry that doesn't exist too much longer with the likes of Auctioneera, BidX1, Purple Bricks etc.

Thanks for the mention Eoin!

Auctioneera

Cyrus wrote: »

What am i missing here:

https://www.myhome.ie/residential/brochure/17-nutley-road-donnybrook-dublin-4/4413668

v

https://www.myhome.ie/residential/brochure/97-anglesea-road-ballsbridge-dublin-4-d04-v3a3/4277483

I am not speaking about these properties in particular but in general terms, it might be worth understanding how these asking prices are arrived at. When estate agents go out to pitch for business, they get asked to "value" the property. So, each agent goes out and says "I value it at €x" - inevitably some agents will give an artificially high valuation in order to try to win the business. You will often hear naive vendors saying things like "well ABC Estate Agency" reckon they will get me €2m so let's give them a shot" - the agent gives the impression that they have some proprietary technique or exclusive access to some pool of buyers that no one else does that enables them to achieve a higher price. In reality, the market values the property - the agent just facilitates viewings and processes offers.
But many agents will give unrealistic guide prices in order to win business. When the market wont bear this price, they then gradually reduce the guide price but the point is that they're in the door now, have the client and get the commission. This is one of the reasons you will see properties that are clearly overvalued in terms of asking price from time to time ie an agent overvaluing in order to get the gig.

The Belly

Auctioneers are un neccesary for your average sale. Take a few pictures put a daft ad up open door and talk alot but say nothing of any worth.

A bit like block busters or xtra vision back in the day they have outlived their purpose

There is no need for them as they dont add any value at all and provide nothing that someone with half a brain could do themselves.

Auctioneera

The Belly wrote: »

Auctioneers are un neccesary for your average sale. Take a few pictures put a daft ad up open door and talk alot but say nothing of any worth.

A bit like block busters or xtra vision back in the day they have outlived their purpose

There is no need for them as they dont add any value at all and provide nothing that someone with half a brain could do themselves.

No doubt about it - it isn't rocket science by any matter of means.
Just a few things to be aware of though:
If you sell yourself, you can't list on MyHome as that is exclusively for estate agencies. I think that would be a big problem for vendors particularly in Dublin.
Also, would prospective buyers trust the bids if the vendor was managing the sale? We have all our latest bids up on our website and we are regulated by the PSRA so buyers totally trust that when we say "there's an offer of €x on the property" that there is indeed such an offer. However, imagine calling up to make an offer on a property and have the owner of the property say "there's an offer of €x in already" - he has a clear incentive here to drive the price up so it would be hard to believe him. It would put the buyer and the seller in an awkward position in my view.
Then there's the cost of doing yourself - below would be a rough estimate:

Daft Listing: €495
Professional Photography: €200
Floor Plans: you'd have to find a photographer who can do them but let's say €100
For Sale Sign: maybe you could get away without one I suppose
Viewings:
Suppose it takes you 15 viewings at 30 mins each. It depends how valuable you think your time is but suppose you value your time at €20 per viewing. That's another €300
There is inevitably a stream of calls and emails to be managed which you'd need to allow for also.

You're at over €1k at this point and you're not on MyHome
Checking proof of funds would be tricky for a private vendor also I feel. Would a buyer realistically be willing to share their bank balance with a totally unregulated vendor?
We think, having weighed up all the above, you'd be better off going with a tightly priced fixed fee agency. But of course you will say that we would say that!

Padre_Pio

Auctioneera wrote: »

You're at over €1k at this point and you're not on MyHome
Checking proof of funds would be tricky for a private vendor also I feel. Would a buyer realistically be willing to share their bank balance with a totally unregulated vendor?
We think, having weighed up all the above, you'd be better off going with a tightly priced fixed fee agency. But of course you will say that we would say that!

Deposit would be another one.
I don't think I'd transfer thousands into some lads account.

Plenty of scams where people pose as sellers or landlords and take deposits and disappear.

lawrencesummers

Roberto_gas wrote: »

https://amp.independent.ie/irish-news/house-prices-due-to-fall-sharply-in-wake-of-pandemic-rices-39220784.html

We would be lucky to get away with 12% drop by next year ! Any views on the above

Ballymore will be selling houses at cost alright, and Trump is a great president.

Mic 1972

I'll believe the market is on the decline when i see the signs of it, as of now the market looks surprisingly strong. new properties are being added and asking prices are through the roof. I'm the first one to be surprised by this but it is the reality

landofthetree

lawrencesummers wrote: »

Ballymore will be selling houses at cost alright, and Trump is a great president.

Like all businesses developers need cash flow. They have staff to pay and loan repayments to be met.

Auctioneera

Padre_Pio wrote: »

Deposit would be another one.
I don't think I'd transfer thousands into some lads account.

Plenty of scams where people pose as sellers or landlords and take deposits and disappear.

Fair point - we have a client funds account in place for booking deposits which obviously we can't touch and is audited once a year.
However, there's actually no legal basis for booking deposits - they mean nothing at all. If you pay one, you can ask it for it back at any point right up to when contracts are signed. The reason we ask for them is twofold:

1) It's a gesture of a commitment - it's no more than that though
2) It means we don't have to chase vendors for payment once the property is sold - we pay ourselves out of the booking deposit. That wouldn't apply to a private vendor so in theory you could get around the deposit issue.

The bidding and inability to list on MyHome are the key problems to selling yourself I feel.
Plus if you have a job & are busy, taking all the calls, emails, calling back underbidders, hosting viewings etc would be an awful lot of work.

Auctioneera

Mic 1972 wrote: »

I'll believe the market is on the decline when i see the signs of it, as of now the market looks surprisingly strong. new properties are being added and asking prices are through the roof. I'm the first one to be surprised by this but it is the reality

Think about it though. What vendor will sell their house at a fire sale price at present? To get a crash in prices, you need distressed vendors and we just don't have large scale distress in the market. We did an article on this here: https://www.auctioneera.ie/house-prices-ireland-post-covid-19
We're seeing this on the ground. Plenty opportunists submitting lowball bids - vendors aren't entertaining them as they're not distressed.
They always have a strong rental market to fall back on if they can't get a reasonable offer.

lawrencesummers

landofthetree wrote: »

Like all businesses developers need cash flow. They have staff to pay and loan repayments to be met.

Don’t be naive.

If developers are not making money they slow down construction and match demand. Contractors get cut, houses get finished slower. Developers don’t sell a thing at ‘cost’

lawrencesummers

Auctioneera wrote: »

Think about it though. What vendor will sell their house at a fire sale price at present? To get a crash in prices, you need distressed vendors and we just don't have large scale distress in the market. We did an article on this here: https://www.auctioneera.ie/house-prices-ireland-post-covid-19
We're seeing this on the ground. Plenty opportunists submitting lowball bids - vendors aren't entertaining them as they're not distressed.
They always have a strong rental market to fall back on if they can't get a reasonable offer.

Not to be argumentative, but your not approaching this from a neutral point of view or with any great figures to back up those statements.

I’ve no confidence that you will answer these truthfully because of the vested nature of your job but...

Are viewings down?
Have many sales fallen through in the last 2/3 months?

cnocbui

Developers always build at cost, but they don't often sell at or below cost, if they want to continue eating.

landofthetree

cnocbui wrote: »

Developers always build at cost, but they don't often sell at or below cost, if they want to continue eating.

NAMA and receivers sell below cost.

Loads of medium size developers will have loans with venture capitalists not banks.

Typically around 8%.

They will want their money.

lawrencesummers

landofthetree wrote: »

NAMA and receivers sell below cost.

But they are not developers

Auctioneera

lawrencesummers wrote: »

Don’t be naive.

If developers are not making money they slow down construction and match demand. Contractors get cut, houses get finished slower. Developers don’t build a thing at ‘cost’

yes but what about developers who are in the middle of projects and have borrowed money at expensive rates to finance the development. They need to finish the project as quickly as possible so slowing down construction on an already commenced site isn't usually an option.

Padre_Pio

Auctioneera wrote: »

Think about it though. What vendor will sell their house at a fire sale price at present? To get a crash in prices, you need distressed vendors and we just don't have large scale distress in the market. We did an article on this here: https://www.auctioneera.ie/house-prices-ireland-post-covid-19
We're seeing this on the ground. Plenty opportunists submitting lowball bids - vendors aren't entertaining them as they're not distressed.
They always have a strong rental market to fall back on if they can't get a reasonable offer.

Are you looking at the economy through the lens of early 2020?
The effects of COVID won't be felt until the economy reopens.

A sizable % of people on the PUP payment don't know if they have a job to go back to. As I mentioned previous, it's better for a company to say nothing and have their employees receive PUP than close and pay redundancies.

I think it's too early to tell either way until we hit the end of June and phase 4/5.

This doesn't take into account the international situation, which is also very unknown right now.

lawrencesummers

Auctioneera wrote: »

yes but what about developers who are in the middle of projects and have borrowed money at expensive rates to finance the development. They need to finish the project as quickly as possible so slowing down construction on an already commenced site isn't usually an option.

They go back to the bank and renegotiate.

landofthetree

lawrencesummers wrote: »

They go back to the bank and renegotiate.

Many of them aren't financed by banks this time.

Which of course is good news for the taxpayer as well are on the hook to bail the banks out if they crash again.

Auctioneera

lawrencesummers wrote: »

They go back to the bank and renegotiate.

ya but banks / non-bank lenders won't write anything off - they need to be paid. The land was bought years ago based on projections that certainly didn't include the onsite costs of managing a pandemic.
Alas, construction will, as you say, slow down now.......just as it did in 2010-2016 and in the long run, this will hurt us all in large swings in prices once the pandemic passes.....as it ultimately will (when we find a vaccine or get enough herd immunity)

Melanchthon

Auctioneera wrote: »

Think about it though. What vendor will sell their house at a fire sale price at present? To get a crash in prices, you need distressed vendors and we just don't have large scale distress in the market. We did an article on this here: https://www.auctioneera.ie/house-prices-ireland-post-covid-19
We're seeing this on the ground. Plenty opportunists submitting lowball bids - vendors aren't entertaining them as they're not distressed.
They always have a strong rental market to fall back on if they can't get a reasonable offer.

Will the rental market actually be strong though in Dublin? How many foreign students are going to be landing in Dublin in September, how many tourists over the summer, add to that a not insignificant amount of foreign nationals involved in hospitality and other industries are going to be out of a job.
This forum is full of posters saying how terrible and risky it is being a small time landlord and that's with the crazy Dublin rents.

I actually agree with some of the sentiments in your article but I think that just pushes the date of say 10-15% decreases a few months out.
I also think the whole saving money via no expenses thing is being overestimated, at the most it's only going to be a few grand not enough to properly change the amount held as a deposit and for those that were already setting a strict budget to save for a deposit the impact is less again, people might retain these habits which means bigger deposits however if people do that , then there is more jobs lost or wages cut in the industries that spending supports which will reduce rents.

Blueshoe

Any dip will be temporary. Central Banks are filling government coffers with low cost cash which is then being handed out in the form of subsidies and grants in an effort to keep things ticking over until economies get back on track.

In the Us the federal reserve are specifically targeting markets that ran into liquidity shortages during the 08 collapse. They are being pumped with low cost cash.

There will be stagnation but no deep recession. It won't be allowed happen.
The Eu are keen to try and reintroduce much needed inflation. The best way to achieve this is to keep the money coming.
Expect a massive low cost or no cost deal to be signed.

Auctioneera

Padre_Pio wrote: »

Are you looking at the economy through the lens of early 2020?
The effects of COVID won't be felt until the economy reopens.

A sizable % of people on the PUP payment don't know if they have a job to go back to. As I mentioned previous, it's better for a company to say nothing and have their employees receive PUP than close and pay redundancies.

I think it's too early to tell either way until we hit the end of June and phase 4/5.

This doesn't take into account the international situation, which is also very unknown right now.

Loads of uncertainty for sure. But the macroprudential rules, that many bemoaned, will protect us this time round. They dampen price inflation in good times (which they certainly did) to soften the declines in bad. They smooth out the cycle. There's no bubble to burst.

Auctioneera

Melanchthon wrote: »

Will the rental market actually be strong though in Dublin? How many foreign students are going to be landing in Dublin in September, how many tourists over the summer, add to that a not insignificant amount of foreign nationals involved in hospitality and other industries are going to be out of a job.
This forum is full of posters saying how terrible and risky it is being a small time landlord and that's with the crazy Dublin rents.

I actually agree with some of the sentiments in your article but I think that just pushes the date of say 10-15% decreases a few months out.
I also think the whole saving money via no expenses thing is being overestimated, at the most it's only going to be a few grand not enough to properly change the amount held as a deposit and for those that were already setting a strict budget to save for a deposit the impact is less again, people might retain these habits which means bigger deposits however if people do that , then there is more jobs lost or wages cut in the industries that spending supports which will reduce rents.

Coherent points, well made. Can't really argue with any of this analysis.
However, if we get good treatments, a vaccine or herd immunity, some level of hospitality will reopen so some semblance of normality may be restored hopefully sooner than we expect.

neon123

Hi Folks,

I was wondering if anyone could give some advise. The GF and myself are looking to try and take advantage of any possible dip in house prices, and might look to try and buy maybe this year or next year. We are looking for ideally a 2 bedroom apartment in the areas of Monkstown/Blackrock/Dun Laoghaire or possibly Sandyford. The types of apartments we like seem to cost between €270k to €295k in those areas, however our budget with a deposit is just about €250k. For people familiar with these areas, do you think the prices of these types of properties in those areas might drop by much, or alternatively could someone suggest what they think would be the max discount a seller would come down by, i.e in the current climate would suggesting a 10% reduction off the list price be possible or maybe even more?

Thanks a million !

Padre_Pio

Auctioneera wrote: »

Coherent points, well made. Can't really argue with any of this analysis.
However, if we get good treatments, a vaccine or herd immunity, some level of hospitality will reopen so some semblance of normality may be restored hopefully sooner than we expect.

All I can take out of the last few hundred posts on this thread is that nobody knows for sure.
In 2007 there was outright denial things would change.
In 2008 they said we'd have a soft landing.
in 2009 people really woke up.

I know this is different (a pandession according to David MacWilliams) but to me it looks a lot of the same.

Villa05

cnocbui wrote:

The US is showing some signs that the pandemic isn't affecting buying in the way many had feared:

Would anyone have figures on what percentage of US mortgages are 5 years behind on their mortgage

Auctioneera wrote:

We're seeing this on the ground. Plenty opportunists submitting lowball bids - vendors aren't entertaining them as they're not distressed. They always have a strong rental market to fall back on if they can't get a reasonable offer.

Not sure how long you are in the business, but have you seen much, upsizing/downsizing, Does a fall in price matter/effect them? Is it even positive?

Bit too early in this cycle to see a trend, but I did see it alot in 2012/13/14 when I was in the market

Also if a person bought there house 30 years ago and wishes to sell, is a 10% fall a game changer and a no sale even though the property is still 300% above what that person paid for the property?