Was the Tiger really that great?

Zebra3

https://www.boards.ie/discussion/comment/118311667#Comment_118311667

By her fortune teller, you mean financial adviser? 😃

Geuze

https://www.boards.ie/discussion/comment/118302618#Comment_118302618

A fall in house prices is NOT negative equity.

If people paid 200k for a house, that now sells for 120k, that IS NOT negative equity.

You can refer to that as a capital loss.

Negative equity is "mortgage balance greater than house price", and as ten years have passed, the mortgage repayments should have pushed the balance below the house price.

OK, if you got an interest only mortgage, somebody could still be in neg equity.

Geuze

https://www.boards.ie/discussion/comment/118306467#Comment_118306467

As there is no mention of any mortgage in this post, then nobody can make any comment on negative equity.

Many people confuse capital losses with negative equity.

I once met an mortgage official in a bank who made the same mistake!!!

Flinty997

https://www.boards.ie/discussion/comment/118271020#Comment_118271020

I remember that Tiger, but I don't remember that penguin.

JimmyVik

The tiger was the best thing ever to happen to this country.

If you think its bad today, it was a totally miserable place if you left school in the late 80s, early 90s.

The tiger brought the whole country up. The big issue though was that a lot of people, even though they were earning good money, borrowed heavily too, and they were the ones who really suffered after it all came tumbling down. They were part of the cause of that too to be fair.

Where things really got good though was if you hadnt borrowed heavily and still had a good job after the crash then the world was your oyster.

My biggest mistake in the years leading up to the crash was actually NOT buying a house. For a good few years after the crash I thought id made the right decision. I realize now that if I had even bought a house in right at the top of the market and then spent a decade in negative equity, it would still be cheaper than buying or renting today and id also have half of the mortgage already paid off.

I see sheep

https://www.boards.ie/discussion/comment/118270169#Comment_118270169

You didn't visit Ireland for 16 years after leaving, that's strange, any reason why?

JimmyVik

https://www.boards.ie/discussion/comment/118315355#Comment_118315355

I think thats a fairly common scenarios for a lot of people who left Ireland in the 80s.

Unless you were stuck here, once you got out you really would have been happy never to have seen the place again at that point.

There were no cheap air fares then. Once you said goodbye to someone getting on the boat there was a fair chance you would never see them again at that time. A lot of people did come home eventually though, thanks to the tiger.

Jim2007

https://www.boards.ie/discussion/comment/118315355#Comment_118315355

Life happened...

I see sheep

https://www.boards.ie/discussion/comment/118315581#Comment_118315581

Fair enough, just curious. :) Glad you like Switzerland.

Ray Palmer

https://www.boards.ie/discussion/comment/118315333#Comment_118315333

I think a lot of people discovered this later but they were also patting themselves on the back about how smart they were for a long time before realising. Had a friend go on and on about an impending crash from about 1999. Told everyone they were fools when buying a house and how once there was a crash he would buy a house half the price and be laughing at us all. Prices crashed and he was "waiting" for the bottom of the market to buy. Then he lost his job as many people did ate into his "deposit" money got another job paying much less than before. The banks would not lend him as much money he wanted even with his "deposit" which turned out wasn't as great as he claimed less than 10% value of what he wanted. He then went over 40 and realised the banks were even more reluctant to give him money and he couldn't get a 30 year mortgage as he planned. All the people who were fools for buying all have over 15 years mortgage payment and have property worth more than they paid. He constantly complains about rent now and how unfair it is and how people who bought houses don't care or support tenants. He has moved from being a friend to an acquaintance by most as he is so bitter. He claims no responsibility for the situation he finds himself in and claims everyone took risks and he just lost out. The same person who told us we were all fools for taking the risk of buying.

dxhound2005

https://www.boards.ie/discussion/comment/118314885#Comment_118314885

That was post #77. The mortgage was mentioned in post #79.

riclad

I'm not a financial expert my opinion you are in negative equity if you can't sell your house because it's worth less than the mortgage, eg loan 200k, house value 120k, I understand some people can sell the house and afford to borrow the remainder to pay off the mortgage

Say you bought a house in 2006 at this point you are probably 45 or 50 years old, banks know people retire at 65. They will only loan you a limited amount if you are over 50 years of age prices in dublin have gone up by 100 per cent in the last 4 years

Prices in rural areas small towns have gone up maybe by 30 per cent on average

riclad

Young people now are trapped now, paying high rent for mediocre rental housing, with little chance of getting a mortgage unless they earn over 35k per year

Young people are putting off having children because the housing situation is so bad

Our economy depends on young people having kids to provide the next generation of workers even if it costs billions the government needs to tackle the housing crisis

One of the reasons our economy recovered is we always had plenty of young people available to work

Gusser09

I run a home in Dublin, Castlebar and Brussels. I wanna tell you something, try it sometime when you have a couple of cars and three houses and three homes and a few housekeepers.

zimmermania

https://www.boards.ie/discussion/comment/118265101#Comment_118265101

I agree,he simply crushed all before him,anyone punting on Tiger in those days could have won enough to buy an overpriced house or two.

zimmermania

Ahh ANGLO you are missed. That bank was a legend- lent 100% of the cost of a field to a guy who built 2 or 3 back kitchens in a brief period as a small builder,lent the same guy the total cost of building 100 houses,lent oodles of cash to his mates to buy 5 or 6 houses each so that they could flip them,gave 100% loans to first time buyers to buy the houses and pushed the small builder (who now called himself a developer) into taking out an even bigger loan to buy a bigger field and carry on the crazy merry-go-round.

Some bank for one bank,they provided the food so that the tiger could gorge,those were the days.

For Forks Sake

https://www.boards.ie/discussion/comment/118314695#Comment_118314695

Fortune Teller / Financial Adviser and Hot Tub Sales.

For Forks Sake

#NeverForget

https://www.youtube.com/watch?v=lA8le849s2k

Feisar

https://www.boards.ie/discussion/comment/118269322#Comment_118269322

Thanks for the giggle, I read that one every single night.

HerrKuehn

https://www.boards.ie/discussion/comment/118315333#Comment_118315333

It wasn't clever buying in 2007, the writing was on the wall at that point. The famous Morgan Kelly article was published end of 2006 I think. The thing is, if you are holding off buying waiting for the crash, you need to be able to pull the trigger when you think it is the right moment. It is all easy in hindsight, but not very clear at the time. I waited and bought at the beginning of 2013, there was a lot of negativity at the time and it wasn't clear that it would be a good idea at all. I was reading the property pin regularly and found that at some point during 2012 a lot of the previously bearish posters were buying. For me that was the trigger that made me think the market had turned.

Ray Palmer

https://www.boards.ie/discussion/comment/118316482#Comment_118316482

No you aren't for sure. If you bought in 2006 how much did the the price drop before prices rose in the last 4 year by 100%? If you sell a house for less than your original mortgage isn't negative equity it is how much of your mortgage you have remaining when you sell. Buy for €200k pay off €80 and sell for €120 there is no negative equity.

A thing people ignore about the Tiger years was the amount of people lying on their applications for mortgages. There was a mini industry of people producing false pay slips. The banks gave out over 100% mortgages to certain occupations and the public wanted this. People paid surveyors to lie about how much work was needed on property. The banks were lax on checking details but the people applying were also lying. People go on about how the banks threw money at people but it was people actively trying to get as much as they could. Revisionist commentary laid all blame on the banks and ignore the public involvement and cries to give larger and larger mortgages.

The current restrictions are actually keeping prices down.

Wanderer78

https://www.boards.ie/discussion/comment/118318474#Comment_118318474

'behind every bad borrower, is a bad lender', its now much clearer that it was the intent of the financial sector to flood the planet with credit, to create asset bubbles, this moved things in their favor, they knowingly gave loans to people who were simply unable to pay this money back, this also wasnt just an irish problem!

Ray Palmer

https://www.boards.ie/discussion/comment/118318502#Comment_118318502

Proof of your claim? Pretty stupid of them to do that here given how long and difficult it is to repossess a property in Ireland.

Your claim is they banks wanted to raise the price of assets via credit so they would lose lots of money even if they were able to repossess them which they can't. Doesn't make any sense unless you are claiming there whole plan was stupid in the first place but they still were able to manipulate the situation expertly while knowing it would end in a disaster.

You are also ignoring people committing fraud and the public demanding 100% mortgages and higher at the time. These people lied on their own applications the banks didn't make them do it.

You are confusing the financial services in other countries and their building of high risk bonds listed as triple A assets. That really didn't have any effect here as we crashed before that all came out.

If you have proof of Irish mortgage customers who were knowingly given larger mortgages than they could pay you should go to the ombudsman about it. I am not aware of any such cases in Irish courts. According to you there would be thousands to choose from.

dxhound2005

The bank bailouts were a bailout of bank customers. A bank is nothing without customers. That included the loans in negative equity bailed out. And the guarantee scheme covered deposits up to €100K. Anglo had 120,000 customers, so a lot of those were probably "little people" as well as the high rollers.

Those who advocated burning the bondholders, would have been burning everyone else as well. It might have been the best thing to do, but with hindsight what was done has worked out OK. On the negative equity side the sort of lending that happened then should never happen again. But the "bank of mum and dad" phenomenon is possibly another road to widespread default.

Just a flavour of the tiger from this Irish Times report in 2003.

https://www.irishtimes.com/business/anglo-irish-bank-meeting-full-of-happy-investors-1.346578

JimmyVik

https://www.boards.ie/discussion/comment/118318407#Comment_118318407

There is many a genius who can tell you now that they were right in the past. Even if they spent years saying the sky was falling.

Any fool could have seen that there was going to be a pandemic :) Sure didnt we have movies and tv series about it and warnings from billionaires. The conspiracy theory forums were full of people who knew there was a pandemic coming.

Im sure they'll all tell you now how they were right and everyone else was wrong as some sort of proof of their superior intellect :)

I remember a few years ago I was talking to a guy pontificating to everyone in the local pub about how he knew (any fool could see - is usually the phrase) about the crash years before it happened. Someone asked him why didnt he sell his nice house that was gone down from €750k to €200k then and buy it back a few years later. He said he was happy with his house and he felt it was worth it. I just thought - "you just threw away half a million euro mate. Now thats stupid"

HerrKuehn

https://www.boards.ie/discussion/comment/118318882#Comment_118318882

It wasn't any fool saying about a crash at that point though. The Morgan Kelly article was the first time I remember seeing a real case for the crash, it was Nov 2006 I think. Beginning of 2007 it was clear something was happening, so much so that you had the RTE Futureshock documentary in August 2007, that one really put the cat among the pigeons. In September 2007 you had the bank run on Northern Rock. I remember at the time being particularly worried about that.

It wasn't clear when we hit the bottom and it never will be in any market. You need to have an strategy, similar to trading stocks or whatever, where there is a signal to buy. In my case it was simply when the bears on the property pin were taking the leap. It will never be the case that all the stars align and everything feels perfect, like you cannot lose. At some point if you want to buy, you go for it and live with the consequences, even if it continues to drop.

HerrKuehn

For anyone interested in the beginning of the end of the property bubble, have a look at this:

https://www.youtube.com/watch?v=ZOE43_YnlOQ&ab_channel=PeoplesInfoNetwork

It was an RTE documentary, broadcast August 2007. It shows that even the mainstream was considering that the whole house of cards was ready to collapse at that point.

TheIrishGrover

I just remember going to the pub with friends. I had bought a house in end of 2000. Just before everything blew up. All I wanted was a house 'cos I was fed up of paying rent. Not about making a killing. (Still in the same place).

So I remember going to the pub with mates and every conversation was the same: How much money their place was worth. What they were going to do with the equity. (Buying apartments in Croatia was the thing at the time).

Now, as I said, I just wanted a place to live. Conversation usually went like this:

Them: "But Grover, you must have made a sh*t load of equity"

Me: "I guess so. But I'm not moving so means nothing to me"

Them: "No, it's not about that. It's about using that equity to get another mortgage to buy somewhere else in ADDITION"

Me: "I don't want anywhere else. What if I lose my job? Have 2 mortgages/huge one? What happens if prices fall?"

Them: "Oh, you don't get it. you buy, gain equity, buy another, make more, buy another, make more and sell and pay off in 5 or 10 years. Rent out the apartments in Croatia to pay mortgage"

Me: "No thanks. I know nothing about finance but I'd be terrified of that"

So my friends were almost looking at me like I was a kicked puppy. "Poor guy. Just doesn't get it".

ALL conversations were about money and how much your place was worth. Little bit of talk about football, movies, music, friends and family. Mainly money money money. Sure, we complain now about how much a pint is, cost of rent, etc. But not to the same degree. I agree. We totally lost the run of ourselves.

Ray Palmer

https://www.boards.ie/discussion/comment/118319023#Comment_118319023

You would swear nobody actually did this and made a profit. The reality is many did end up with more than one property paying less than current mortgages and didn't rent for 20 odd years. Now they have about 5 years left to clear their mortgages while others the same income and age bracket are still renting with no major assets or investment. It is a little odd when you see a manager living in a small rental and their staff living in much larger properties they own and pay less on mortgages.

The point which you bought or buy a home makes a bigger difference to your quality of life than your income or position. A huge shake up to the way things were before. This will have a long lasting effect later in life as homeowners will have a better pension and less to pay on accommodation. The whole market was totally disrupted and it has changed a lot in Irish society which was due a change anyway as we became more like the rest of the world. We had the highest homeownership in the world before this all happened. That was always going to be readjusted along with the longer term effects of both parents working.

People like to think there was some nefarious scheme to raise house prices and screw over the public. Much simpler and more believable reality is there was actually a lack of planning and too much listening to the public for knee jerk decisions without fore thought. They are doing it again with the RPZ meddling. It simply punishes landlords for not raising rent and forces them to raise rent annually due to what ever they are going to do next. It leads to huge disparity in the rental rates people are actually paying versus the basic figure of rents rising. They force some landlords to rent well below market rates and forced to continue that to the next tenant. That isn't about keeping rents balanced and fair just a method to keep the basic figure down for the general public to consume. The reality is rent should raise for many as they are being subsidised by private landlords for the government to look good.

Peppa Cig

https://www.boards.ie/discussion/comment/118318701#Comment_118318701

Banks cannot repossess properties?

Difficult (maybe) but they are repossessing?