Housing Bubble Bursting

robd

As a frustrated potential buyer, albeit at higher priced houses, let me give you some insight.

The number of EA's working in each office has dramatically reduced since the boom, hence it can be hard to arrange a viewing. This is not that the market is real busy just that there are so few EA's and everyone wants to see a house on a Saturday morning. Due to the boom the quality of said EA's at actually selling is abysmal. Think "you want the house or not". That seems to be most EA's position. They also seem to have problems showing houses. Some are know to demand written prove of mortgage approval. Of course as a knowledgeable buyer you'd never agree to that as knowledge is power and that knowledge in their hands means you'll pay an awful lot more for an awful lot less. Of course, they'll refuse to deal with you without it so a stalemate ensues. Basically you won't be buying off one of these EA's.

You're unlikely to get more than 10% off of asking price. EA's seem to prefer to slowly discount asking price and wait for a byte than accept an offer with a discount of more than this. This is the idiot rule. All they need is one idiot prepared to pay the price and they get the sale. They still seem to blindly hope a bidding war ensues. This is frustrating as a buyer but this seems to be the way it is.

Basically, like me, you're in for a multi-year wait if you want to get a house at a decent price.

This are my experiences rather than my views. It's complete horse **** if you ask me.

Rezident

robd wrote: »

As a frustrated potential buyer, albeit at higher priced houses, let me give you some insight.

The number of EA's working in each office has dramatically reduced since the boom, hence it can be hard to arrange a viewing. This is not that the market is real busy just that there are so few EA's and everyone wants to see a house on a Saturday morning. Due to the boom the quality of said EA's at actually selling is abysmal. Think "you want the house or not". That seems to be most EA's position. They also seem to have problems showing houses. Some are know to demand written prove of mortgage approval. Of course as a knowledgeable buyer you'd never agree to that as knowledge is power and that knowledge in their hands means you'll pay an awful lot more for an awful lot less. Of course, they'll refuse to deal with you without it so a stalemate ensues. Basically you won't be buying off one of these EA's.

You're unlikely to get more than 10% off of asking price. EA's seem to prefer to slowly discount asking price and wait for a byte than accept an offer with a discount of more than this. This is the idiot rule. All they need is one idiot prepared to pay the price and they get the sale. They still seem to blindly hope a bidding war ensues. This is frustrating as a buyer but this seems to be the way it is.

Basically, like me, you're in for a multi-year wait if you want to get a house at a decent price.

This are my experiences rather than my views. It's complete horse **** if you ask me.

Same as, and I would agree with you totally that Ireland will drag it out so slowly rather than take the hit and get over it quick. One thing though, there are cases where the seller will accept less than 10% off asking price (20 - 25% off anyway) if you are FTB, no chain etc.

dtipp

Interesting one.

Saw a few houses about six or seven weeks ago, and at one of them the estate agent was boasting about all the interest there was in the house. He already had a bid at a couple of thousand below the asking price but there were several bidders and the only question was how much ABOVE the asking price the house would sell for.

It didn't suit us anyway, so we weren't interested.

Just noticed the asking price of the house has this week been reduced by another 10%.

Estate agents are so full of bull**** it's unreal.
Everyone knows not to believe a word they say, but you meet one and end up thinking 'ya, (s)he seems honest enough'.

SouperComputer

Is there any sort of a movement for a reform in the way property is traded. Ie a central listing system and documented, recorded and verified bids\offer?

norrie rugger

It is crazy reading this.
Even the mortgage brokers are saynig that you are mad to even offer 90% of asking price

Tea drinker

Rezident wrote: »

Same as, and I would agree with you totally that Ireland will drag it out so slowly rather than take the hit and get over it quick. One thing though, there are cases where the seller will accept less than 10% off asking price (20 - 25% off anyway) if you are FTB, no chain etc.

Hi Rezident, what sort of cases? For new build off developer or private stuff?

the groutch

okeydoke, I think alot of these places are now "priced to sell", and whatever they've dropped it to is what they want, and alot of the time they will get it
the one I bought I paid 3k over asking (but was still a bargain imo), and 3 others I was looking at sold for asking or slightly above

I understand your fustration in having offers refused or sales fall through, but you might not have quite the same bargaining power as you did last year, when prices were still a bit inflated

robd

the groutch wrote: »

okeydoke, I think alot of these places are now "priced to sell", and whatever they've dropped it to is what they want, and alot of the time they will get it
the one I bought I paid 3k over asking (but was still a bargain imo), and 3 others I was looking at sold for asking or slightly above

I understand your fustration in having offers refused or sales fall through, but you might not have quite the same bargaining power as you did last year, when prices were still a bit inflated

Think you'll have huge bargaining power if you wait 18+ months, when the Ireland's fiscal situation becomes totally unmanageable due to the bank bailouts. It's all about patience really.

I gave up on buying due to the insanity. Never personally saw anything I would consider value let alone a bargain over past 24 months. 30-40% discount on insanity is still insanity. Valuation system is broken.

Putting my energies into other things now such as a new international business which has the potential to generate real wealth, which all this property crap will never do.

norrie rugger

the groutch wrote: »

okeydoke, I think alot of these places are now "priced to sell", and whatever they've dropped it to is what they want, and alot of the time they will get it
the one I bought I paid 3k over asking (but was still a bargain imo), and 3 others I was looking at sold for asking or slightly above

I understand your fustration in having offers refused or sales fall through, but you might not have quite the same bargaining power as you did last year, when prices were still a bit inflated

1 Question: How did you find out that the other 3 sold for the asking/slightly above?

norrie rugger

robd wrote: »

Think you'll have huge bargaining power if you wait 18+ months, when the Ireland's fiscal situation becomes totally unmanageable due to the bank bailouts. It's all about patience really.

I gave up on buying due to the insanity. Never personally saw anything I would consider value let alone a bargain over past 24 months. 30-40% discount on insanity is still insanity. Valuation system is broken.

Putting my energies into other things now such as a new international business which has the potential to generate real wealth, which all this property crap will never do.

I would make one small point here.
If you find your "Dream" home, after years of looking and you can beat them down on pice to an "affordable" level, I think that you should still consider buying.

robd

norrie rugger wrote: »

I would make one small point here.
If you find your "Dream" home, after years of looking and you can beat them down on pice to an "affordable" level, I think that you should still consider buying.

Well. You're always going to pay a lot for anything considered "dream". You really want it, you pay for it. Not really the way I think. "Dream" to me, is a capitalist seller's word. I'm more interested in a size of house in a range of areas that meets my needs. "Affordable" in Ireland has come to mean "just about able to hang onto with your fingertips". Again I don't agree with that. I'd like to be able to fund my life assurance, pension, my company, sending kids to a good school, having a couple of nice holidays a year, a couple of mid-range cars, putting food on the table, clothes and some luxuries while paying a mortgage. i.e. I'd like to have a life. The two are seriously incompatible in Ireland still.

Bear in mind I have a very comfortable life without the house. I owned in the past, sold up, and banked the money for the future. Property ownership is seriously over-rated.

MuffinsDa

robd wrote: »

Think you'll have huge bargaining power if you wait 18+ months, when the Ireland's fiscal situation becomes totally unmanageable due to the bank bailouts. It's all about patience really.

Unlikely! That's assuming that:

1. There are any banks left to lend you money
2. They lend you anything near what you want

Which are both iffy assumptions at present! You may have bargaining power, but there will be no credit available to you, unless you've cash!

oceanclub

MuffinsDa wrote: »

Unlikely! That's assuming that:

1. There are any banks left to lend you money
2. They lend you anything near what you want

"Buy now before the banks collapse?"

Yeah, that makes sense. No doubt once that happens and Ireland has no economy, prices will shoot back up.

P.

quozl

MuffinsDa wrote: »

Which are both iffy assumptions at present! You may have bargaining power, but there will be no credit available to you, unless you've cash!

And if there's no credit available to anybody houses will have to sell for what people can pay, which will not be that much. Houses will continue to come on the market if from nothing more than death and divorce.

It was credit availability that allowed people to pay bubble prices, a complete lack of credit will have the opposite affect.

Not that I'm saying things will be great if that situation comes around, I'm just pointing out the correlation to your point.

MuffinsDa

Hold your horses gentleman. How did you make that conclusion from my post oceanclub? With all due respect if that's the height of your ability in logic and rhetoric then you need further schooling

I simply hazarded a guess, it's up to individuals to decide what they want to do.

Simply put, prices may come down, but it may be impossible to access credit, so therefore affordability will stay the same (or lower). It would be a Stagnation-Deflation.

oceanclub

MuffinsDa wrote: »

Simply put, prices may come down, but it may be impossible to access credit, so therefore affordability will stay the same (or lower). It would be a Stagnation-Deflation.

So houses will retain their real price in a country with 500K unemployed, a 14% deficit and no banks?

It's an interesting theory.

P.

MuffinsDa

oceanclub wrote: »

So houses will retain their real price in a country with 500K unemployed, a 14% deficit and no banks?

It's an interesting theory.

P.

What the hell are you talking about??? Which part of my simple discussion do you not understand, or have a problem with.

I'm done with explaining it to you anyway, if you want to twist my words and repeat your wrong interpretation of my points(and generally act like a fool), you're welcome to it.

oceanclub

MuffinsDa wrote: »

What the hell are you talking about??? Which part of my simple discussion do you not understand, or have a problem with? Stop twisting my word and talking rubbish.

The bit where you said:

"Simply put, prices may come down, but it may be impossible to access credit, so therefore affordability will stay the same (or lower)."

Affordability has nothing to do with lack of credit; it's related to interest rates.

P.

MuffinsDa

oceanclub wrote: »

The bit where you said:



Affordability has nothing to do with lack of credit; it's related to interest rates.

P.

Ok. Affordability in the sense of being able to buy the house you want. Here's a very crude example:

The house you like to have is currently 100,000. You have 20 deposits, and bank are willing to lend you 80. You therefore can buy it if you wanted to.

The prices can drop to, say, 60,000 in 5 years. And there may be a possibility that banks are not willing to lend to you by then, be it brcause of further credit squeeze, or that there are no banks left, or you losing your job etc. Or maybe they'll only give you 20K by then. After all if we're in a deflation wage deflation is a big factor as well. So you won't be able to buy the same house, even thought the price has dropped.

This doesn't mean that you have to jump and buy a house now if you can and just because you may be able to get a mortgage. It is clear that I did not suggest that. But you keep trying to say I did, and that's where the problem is. That is a decision entirely up to ones individual circumstances. And after all, the second scenario is based on two assumptions that could be both wrong.

quozl

MuffinsDa, I think you are making a mistake in this bit

The prices can drop to, say, 60,000 in 5 years.

The prices will actually drop to the point where it will sell. There are still sales going on nowadays, even if it's a very low levels.

Many properties won't drop, but, they then won't sell. The market is set at the edge, and it will likely be set by those death and divorce properties I mentioned earlier.

If because of lack of credit the average person can no longer afford the average house, then the average house will have to drop to the point at which the average person can again afford it.

You're unlinking what a house will drop by, and the drop in what potential buyers can pay. They are strongly linked imo.

oceanclub

quozl wrote: »

If because of lack of credit the average person can no longer afford the average house, then the average house will have to drop to the point at which the average person can again afford it.

Bingo.

Any other argument is similar to the argument previously put about on this forum that builders couldn't sell below what the property is "worth".

P.

MuffinsDa

oceanclub wrote: »

Bingo.

Any other argument is similar to the argument previously put about on this forum that builders couldn't sell below what the property is "worth".

P.

Oceanclub. Yet another example of referring to something completely irrelevant to the point I was trying to make. I rest my case!

quozl, You are correct in your point that prices will drop to the whatever people are willing to pay for them, but there is a possibility of entering a deflation-stagnation phase, whereby the prices will keep dropping but there will be very little transactions actually taking places, either due to people being unable to sell or people being unable to access credit. Deaths and divorces can only account for a very small percentage of sales, and that is pretty much what's happening right now as well, only those who "HAVE TO" sell will sell. Everyone else is either unable to sell (due to negative equity) or thinks (probably wrongly) it's not worth it. And that will lead to an stagnation.

robd

MuffinsDa wrote: »

Unlikely! That's assuming that:

1. There are any banks left to lend you money
2. They lend you anything near what you want

Which are both iffy assumptions at present! You may have bargaining power, but there will be no credit available to you, unless you've cash!

I do love when people put forward this argument. I've seen it a number of times already in mainstream media and on board sites. Quite simply, I'm afraid you don't understand Economics 101: Supply & Demand.

Oh. I wouldn't be looking for a mortgage. Cash buyer. Cash is king.

oceanclub

MuffinsDa wrote: »

Oceanclub. Yet another example of referring to something completely irrelevant to the point I was trying to make. I rest my case!

No, it's not irrelevant. Your notion that if the supply of credit decreases, that house prices instead remain static rather than themselves drop in line with that decrease (just the way that house prices originally went up because of the exhuberant increase of credit) is economic drivel.

P.

mark renton

robd wrote: »

Oh. I wouldn't be looking for a mortgage. Cash buyer. Cash is king.

It seems to me that houses are still greatly overpriced, I'm assuming a buyer is looking at 20-25% less than advertised at this moment - am I far wrong?

MuffinsDa

oceanclub wrote: »

No, it's not irrelevant. Your notion that if the supply of credit decreases, that house prices instead remain static rather than themselves drop in line with that decrease (just the way that house prices originally went up because of the exhuberant increase of credit) is economic drivel.

P.

You really don't know how to read do you? Where did I say prices remain static???? I rest my case.

robd

john47832 wrote: »

It seems to me that houses are still greatly overpriced, I'm assuming a buyer is looking at 20-25% less than advertised at this moment - am I far wrong?

It seems to me they are too.

Buyers are looking for 20% discount alright. Sellers/Agents seem stuck on <10% discount. The thinking seems to be. Put house up for greatly overpriced amount. Hope for the two idiots to have a bidding war. When that doesn't happen hope for one idiot. Rebuke any low (> 10% below asking) offers with vigor. Finally after much teeth gnashing, concede after 6 months. Discount by 10%. Rinse and repeat. That's my experience anyway. Very frustrating.

20goto10

Sold my gaf 4 months ago for asking price. It's not accurate to generalize and say all houses are overpriced. Had muppets offering 20%-50% below asking price saying houses are overpriced by that much. The house down the road may be, but that doesn't mean I have to drop my price by that much.

Finally sold it to someone who could see the value and more importantly it was affordable to them. It's completely irrelavent whether it was affordable to the poor fecker with no job or the couple who can't get a mortgage.

robd

20goto10 wrote: »

Sold my gaf 4 months ago for asking price. It's not accurate to generalize and say all houses are overpriced. Had muppets offering 20%-50% below asking price saying houses are overpriced by that much. The house down the road may be, but that doesn't mean I have to drop my price by that much.

Finally sold it to someone who could see the value and more importantly it was affordable to them. It's completely irrelavent whether it was affordable to the poor fecker with no job or the couple who can't get a mortgage.

As I said this is the idiot rule. All it took was one idiot for you to get your price. I'd regard him/her/them as the poor feckers rather than they couple who can't get a mortgage.

20goto10

robd wrote: »

As I said this is the idiot rule. All it took was one idiot for you to get your price. I'd regard him/her/them as the poor feckers rather than they couple who can't get a mortgage.

What wonderful magical powers you have there. You can say, without knowing any details, that the house was overpriced.

I'm not an economist but I'm pretty good at maths and I can tell you your maths is flawed. You cannot take an average price and apply it to the lower wage and say that ALL prices must drop to meet that. Not to mention nobody knows the average price because that data is not even recorded.