Housing Bubble Bursting

SimpleSam06

20goto10 wrote: »

Yes I know. And the amount of credit is based on wages.

Not really. The extreme boom in lending over the last few years was due to an incredible relaxation in lending terms, that won't be coming back.

20goto10 wrote: »

When the credit markets return to normal, and they will

Heh. They are returning to normal. When credit is sufficiently tightened again, it will be normal.

The alternative is another global economic crash.

And you don't want that now, do you?

BendiBus

SimpleSam06 wrote: »

The extreme boom in lending over the last few years was due to an incredible relaxation in lending terms, that won't be coming back.

Which only means that the next boom will be due to something else.

20goto10

SimpleSam06 wrote: »

Not really. The extreme boom in lending over the last few years was due to an incredible relaxation in lending terms, that won't be coming back.


Heh. They are returning to normal. When credit is sufficiently tightened again, it will be normal.

I'm not saying the reckless lending over the past decade or so was normal. I'm saying the current credit crunch is not normal.

SimpleSam06 wrote: »

The alternative is another global economic crash.

Tightening the flow of credit even further as you suggest will do exactly that. We need more flow of credit and thats what all the world governments are working on. You seem to know more than them. Well you seem to think you know more than them :rolleyes:

SimpleSam06

BendiBus wrote: »

Which only means that the next boom will be due to something else.

It means the next boom will be in something else.

20goto10 wrote: »

I'm not saying the reckless lending over the past decade or so was normal. I'm saying the current credit crunch is not normal.

Its not crunchy enough to be normal, tbh.

20goto10 wrote: »

Tightening the flow of credit even further as you suggest will do exactly that. We need more flow of credit and thats what all the world governments are working on. You seem to know more than them. Well you seem to think you know more than them :rolleyes:

No they are talking about the flow of credit to businesses and enterprise, which to an extent is useful, although I own a few businesses myself and I don't owe a penny. You're talking about the flow of credit into the property market, which is well and truly over, as well as being unnecessary for the functioning of the greater economy.

Whatever about them, it looks like I know more than you.

whizzbang

20goto10 wrote: »

Will be coming from? They're here already.

Basically what I'm saying is the housing market will correct itself against an abnormal credit crunch. Once the credit crunch subsides we're left with under priced houses. And in an economy that only knows booms and busts the outcome is inevitable.

Fair enough. Lets see if they stay so

20goto10

SimpleSam06 wrote: »

It means the next boom will be in something else.


Its not crunchy enough to be normal, tbh.


No they are talking about the flow of credit to businesses and enterprise, which to an extent is useful, although I own a few businesses myself and I don't owe a penny. You're talking about the flow of credit into the property market, which is well and truly over, as well as being unnecessary for the functioning of the greater economy.

Whatever about them, it looks like I know more than you.

I think what they're talking about is getting people spending again. Be it businesses or individuals. Lower interest rates, lower inflation and a healthy flow of credit. More crunch is definitely not what world leaders and top economists are talking about. I think you'll find the only people talking like that are potential first time buyers with an interest in plummeting house prices.

SimpleSam06

20goto10 wrote: »

I think what they're talking about is getting people spending again.

No, they are talking about unfreezing the credit markets so businesses which depend on credit to tide them through the lean times don't go bankrupt. Its a mirror image of what turned the wall street crash into the great depression. This is a situation they are rightly desperate to avoid.

20goto10 wrote: »

More crunch is definitely not what world leaders and top economists are talking about.

Pity, thats what they are going to get.

gurramok

BOI say land prices to decline by 60% http://www.rte.ie/news/2008/1113/1news_av.html?2448822,null,230

jmayo

20goto10 wrote: »

Yes I know. And the amount of credit is based on wages. When the credit markets return to normal, and they will, we'll have high wages (coupled with available credit) and low property prices.

But they are more normal now for personal borrowers than they were for last 10 years.
If you thought that back in 70s, 80s or indeed 90s you coudl get large unsecured loans, 100% mortgages and multiple credit cards then it is you that needs to visit normality.

20goto10 wrote: »

Will be coming from? They're here already.

Basically what I'm saying is the housing market will correct itself against an abnormal credit crunch. Once the credit crunch subsides we're left with under priced houses. And in an economy that only knows booms and busts the outcome is inevitable.

No we are not left with under priced houses :eek:
We are left with houses that probably reflect their more correct true value.
Houses valued at 20-40 times the average salary is not normal.

PS once the credit crunch of lending between banks subsides, it does not mean banks will run out and start leanding 100% 40 year mortgages based on rent a room schemes again.

SimpleSam06 wrote: »

No, they are talking about unfreezing the credit markets so businesses which depend on credit to tide them through the lean times don't go bankrupt. Its a mirror image of what turned the wall street crash into the great depression. This is a situation they are rightly desperate to avoid.

Pity, thats what they are going to get.

Simplesam it appears to be of no use telling the poster about the 1929 crash, he/she thinks history began in 2001 when all the great lending to irish housebuyers took off
Anyway to somepeople all that matters is that there are cheap mortgages and lots of credit for personal spending, credit for business doesn't come into it.

20goto10

jmayo wrote: »

But they are more normal now for personal borrowers than they were for last 10 years.
If you thought that back in 70s, 80s or indeed 90s you coudl get large unsecured loans, 100% mortgages and multiple credit cards then it is you that needs to visit normality.



No we are not left with under priced houses :eek:
We are left with houses that probably reflect their more correct true value.
Houses valued at 20-40 times the average salary is not normal.

PS once the credit crunch of lending between banks subsides, it does not mean banks will run out and start leanding 100% 40 year mortgages based on rent a room schemes again.



Simplesam it appears to be of no use telling the poster about the 1929 crash, he/she thinks history began in 2001 when all the great lending to irish housebuyers took off
Anyway to somepeople all that matters is that there are cheap mortgages and lots of credit for personal spending, credit for business doesn't come into it.

Once again the FTBs warp things to fit in with their little fantasy world of buying houses for cash. I'm not going to get into an argument with someone who thinks the credit crunch is normal or needs further crunching before it can be considered normal. Especially from the same people who blast people down as a "vested interest" whenever they're losing an argument. Its clear as day who are the party with vested interests on this forum. The funny thing is, the worse things get the less chance you'll ever have of owning a home, no matter what the price.

gurramok

20goto10 wrote: »

Once again the FTBs warp things to fit in with their little fantasy world of buying houses for cash. I'm not going to get into an argument with someone who thinks the credit crunch is normal or needs further crunching before it can be considered normal. Especially from the same people who blast people down as a "vested interest" whenever they're losing an argument. Its clear as day who are the party with vested interests on this forum. The funny thing is, the worse things get the less chance you'll ever have of owning a home, no matter what the price.

You are so wrong on both counts.

Vested interests have 2 meanings:

Banks, estate agents & the local politician have a vested interest in keeping prices high.
Ordinary joes who take on that debt as buyers have a vested interest in lower
prices.
Difference is that the first crowd are a vested interest for a living, salesmen. The 2nd crowd just want a place to live in.

"The worst things get".

A buyer will still get a mortgage as long as they have savings and jobs. Everyone, movers and FTB's are in the same boat. Its the amounts that count and prices will reflect that.

And before you bash FTB's, they bloody are no.1 priority to any housing market because any housing market needs new entrants or it will seize up entirely like a pyramid.

20goto10

gurramok wrote: »

Difference is that the first crowd are a vested interest for a living, salesmen. The 2nd crowd just want a place to live in.

The 2nd crowd (and not all, I don't want to appear to be FTB bashing) have an interests in prices falling as much as possible. Play with my words all you like but my point still remains. They therefore have an interest in a deepening and prolonged recession and their interests conflict with the interests of every other "crowd" (for want of a better word, I'm in a hurry) in the country.

gurramok

20goto10 wrote: »

The 2nd crowd (and not all, I don't want to appear to be FTB bashing) have an interests in prices falling as much as possible. Play with my words all you like but my point still remains. They therefore have an interest in a deepening and prolonged recession and their interests conflict with the interests of every other "crowd" (for want of a better word, I'm in a hurry) in the country.

This recession is down to Govt mismanangement of the economy.

Whats wrong with lower prices for the 2nd crowd?

Go spill the beans.

ntlbell

20goto10 wrote: »

The 2nd crowd (and not all, I don't want to appear to be FTB bashing) have an interests in prices falling as much as possible. Play with my words all you like but my point still remains. They therefore have an interest in a deepening and prolonged recession and their interests conflict with the interests of every other "crowd" (for want of a better word, I'm in a hurry) in the country.

people have an interest in being able to afford their own home? - shock horror? how dare these people be able to purchase a home in their home towns and also be able to afford a decent standard of living, for shame.

the recession has nothing to do with the "2nd crowd" they didn't cause it. people are interestred in affordable homes to rare their kids and live a half decent life they're not interested in people losing their jobs and the country turning to ****e

Caoimhín

20goto10 wrote: »

They therefore have an interest in a deepening and prolonged recession and their interests conflict with the interests of every other "crowd" (for want of a better word, I'm in a hurry) in the country.

Mmm, not sure about that friend.

I have no interest in seeing a prolonged recession as my business will suffer. I do have an interest in seeing an end to the speculation and gambling on the housing "market". I believe houses are for families to live in, not to make a quick buck on.
I certainly see your point when you say FTB's have a vested interest in seeing house prices falling but i dont believe that's the same as the vested interest that professional market speculators have.
There is a big difference between wanting home prices to become affordable and wanting asset values to increase.

SimpleSam06

20goto10 wrote: »

They therefore have an interest in a deepening and prolonged recession and their interests conflict with the interests of every other "crowd" (for want of a better word, I'm in a hurry) in the country.

Correlation is not causation. The recession is not being caused by dropping house prices, or vice-versa, they are symptoms of another malaise entirely. Likewise seeing house prices rise will not rejuvenate the economy, except coincidentally (and don't confuse tax returns with the economy).

Caoimhín

SimpleSam06 wrote: »

Correlation is not causation. The recession is not being caused by dropping house prices, or vice-versa, they are symptoms of another malaise entirely. Likewise seeing house prices rise will not rejuvenate the economy, except coincidentally (and don't confuse tax returns with the economy).

Agreed,

There is a misconception out there that high house prices equal economic growth. It may equate to higher tax returns but it certainly does not reflect sustainable economic growth.

Houses in desirable areas will never be "cheap", but they do need to be at a level where a typical seni-skilled worker can afford to live in a bog standard house and support a family.

What the actual figures are, don't really matter.

If this recession becomes a depression with deflation, house prices will continue to fall to levels not seen since the 80's or earlier.

New houses should be valued at build cost (assuming a small profit for builder) plus land cost based on a small muitiple of agracultural value (X5 possibly). That could mean a typical 140m2 house costing €150k (at todays costs). Secondhand houses will be less as by the amount it costs to bring up to standard.

The premium of "Location, Location, Location" will be much reduced, and crap locations will just not sell (period).

20goto10

gurramok wrote: »

This recession is down to Govt mismanangement of the economy.

Whats wrong with lower prices for the 2nd crowd?

Go spill the beans.

LOL. Jealousy and greed got us into this mess. The Celtic Tiger is the green eyed monster. The same green eyed monster that is making some FTBs sit back and pray for a worsening economic situation so that the bottom will well and truely fall out of the property market and they can have their semi-D in D4 without having to work for it. Only their plan is flawed because chances are most of them will be out of a job.

I'm all for lower prices to a certain degree. 20% was the figure passed about at the start of the decline. Now we're hearing 70%. Feck it why stop there. Lets turn it into a used car market where everyone goes into negative equity as soon as they put the key in the door.

20goto10

20goto10 wrote: »

Lets turn it into a used car market where everyone goes into negative equity as soon as they put the key in the door.

And what's wrong with that!!! (A decent sized deposit and maintenance will prevent that)

You buy a house, maintain it sell it for what you bought it for +/- inflation, or not look after it and sell for less, a house is a place to live not a piggy bank!

SimpleSam06

20goto10 wrote: »

LOL. Jealousy and greed got us into this mess. The Celtic Tiger is the green eyed monster. The same green eyed monster that is making some FTBs sit back and pray for a worsening economic situation so that the bottom will well and truely fall out of the property market and they can have their semi-D in D4 without having to work for it. Only their plan is flawed because chances are most of them will be out of a job.

I'd say I want some of what you're smoking, but I really don't.

ZYX

Deleted User wrote: »

Houses will never be "cheap", but they do need to be at a level where a typical seni-skilled worker can afford to live in a bog standard house and support a family.

What the actual figures are, don't really matter.

If this recession becomes a depression with deflation, house prices will continue to fall to levels not seen since the 80's or earlier.

New houses should be valued at build cost (assuming a small profit for builder) plus land cost based on a small muitiple of agracultural value (X5 possibly). That could mean a typical 140m2 house costing €150k (at todays costs). Secondhand houses will be less as by the amount it costs to bring up to standard.

The premium of "Location, Location, Location" will be much reduced, and crap locations will just not sell (period).

Some properties will become very, very cheap. That is small appartments and any property in poor locations. In UK in Eighties I remember driving down a street in my second hand car thinking my car was worth more than any house on that street. That is how low prices can go in poor areas. That been said I could not afford a house in an area worth living in. People get too wrapped up in average house price and think every house will drop the average. They will not.

gurramok

20goto10 wrote: »

The same green eyed monster that is making some FTBs sit back and pray for a worsening economic situation so that the bottom will well and truely fall out of the property market and they can have their semi-D in D4 without having to work for it. Only their plan is flawed because chances are most of them will be out of a job.

I cannot believe you just wrote that, it really is an astonishing point of view with zero economic basis.

What's this now, the FTB are the scapegoats?

First it was the doom and gloomers who should of topped themselves, then it was international recession and now FTB's are the fault why Biddy and Miley in that MNC have just lost their jobs. And no, they do not want to live in D4, they just want a gaff to live in in which they can afford to buy.

Absolute comedy the stuff you come out with.

20goto10 wrote: »

I'm all for lower prices to a certain degree. 20% was the figure passed about at the start of the decline. Now we're hearing 70%. Feck it why stop there. Lets turn it into a used car market where everyone goes into negative equity as soon as they put the key in the door.

Who bandied out 20%? Was not me. Since day1 in this thread, i have stated 50%+ drops.
That used car market is now the property market, go figure.;)

ZYX

ZYX wrote: »

Some properties will become very, very cheap. That is small appartments and any property in poor locations. In UK in Eighties I remember driving down a street in my second hand car thinking my car was worth more than any house on that street. That is how low prices can go in poor areas. That been said I could not afford a house in an area worth living in. People get too wrapped up in average house price and think every house will drop the average. They will not.

I should have added the word "desirable" as you're quite correct undesirable areas they will be almost giving them away! (or abandoning them)

20goto10

gurramok wrote: »

I cannot believe you just wrote that, it really is an astonishing point of view with zero economic basis.

What's this now, the FTB are the scapegoats?

Do you actually read my posts or just see my name and make assumptions about what I'm saying? Where have I said anything you are accusing me of?

20goto10

gurramok wrote: »

And no, they do not want to live in D4, they just want a gaff to live in in which they can afford to buy.

Awww, such a noble cause you have there.

gurramok wrote: »

Absolute comedy the stuff you come out with.

The stuff I actaully came out with or your own twisted interpretation of what I came out with?

ntlbell

20goto10 wrote: »

Awww, such a noble cause you have there.



The stuff I actaully came out with or your own twisted interpretation of what I came out with?

your claiming people are hoping the country stays in a recession untill they afford a house in D4.

that's slightly detached from reality.....

there's no other way to interpretate such nonsense

gurramok

20goto10 wrote: »

Do you actually read my posts or just see my name and make assumptions about what I'm saying? Where have I said anything you are accusing me of?

Awww, such a noble cause you have there.

The stuff I actaully came out with or your own twisted interpretation of what I came out with?

Here, have another read of your own post

LOL. Jealousy and greed got us into this mess. The Celtic Tiger is the green eyed monster. The same green eyed monster that is making some FTBs sit back and pray for a worsening economic situation so that the bottom will well and truely fall out of the property market and they can have their semi-D in D4 without having to work for it. Only their plan is flawed because chances are most of them will be out of a job.

You've accused FTB's of sabotaging the economy just because they want a house to live in without strapping themselves with sky record levels of high debt.

20goto10

gurramok wrote: »

Here, have another read of your own post


You've accused FTB's of sabotaging the economy just because they want a house to live in without strapping themselves with sky record levels of high debt.

No I'm not. Putting it in bold does not change what I was saying.

20goto10

ntlbell wrote: »

your claiming people are hoping the country stays in a recession untill they afford a house in D4.

that's slightly detached from reality.....

there's no other way to interpretate such nonsense

Not quite. They're hoping for drastic declines in house prices. something that is only going to happen if the credit situation stays bad or gets worse. I do not think most of them realise the consequences.