Housing Bubble Bursting

patrickolee

What's property pin? Never heard of it before.

A Random Walk

patrickolee wrote:

What's property pin? Never heard of it before.

When AAM decided to ban discussion on housing prices (just as the market stalled, imagine that), many of the banned posters gathered over at

http://www.thepropertypin.com/forum/

It is naturally quite a bearish site, but the quality of analysis and honest reporting of the market is streets ahead of anything else available to the public (except for this thread of course ).

patrickolee

lol, OMG I've seen it all now... a whole web site dedicated to it!

dochasach

patrickolee wrote:

lol, OMG I've seen it all now... a whole web site dedicated to it!

Actually, a couple of blogs and forum websites were dedicated to this, what appears be one of the best examples of financial psychosis since the Dutch tulip bubble in 1636 The genuine property bulls on this thread might wind up in the history books. Propertypin is recruiting property bulls lately if any of ye here would like to move on over.

I also opened a propertybubble blog in 2005 but I took it down a few months ago when it became obvious that the counterspin it offered yer man on the street up against his EA, the industry vested interest and their paid-for government could no longer help keep any but the most foolish specuvestor out of trouble. The party is over, the fat lady is singing and I'm considering reopening a "Property bust fallout:Now what?" site.

JupiterKid wrote:

I met a EA this afternoon to discuss an academic matter. We ended up talking about the property market and he got very nervous and despondent...

He was also worried about "all the negativity talk" destabilising the property market further... The EA was especially worried about websites like the Property Pin changing the public's sentiment about property for the worse.

I sympathise with him, some of my family were EAs and appraisers in a previous boom and many of my friends are employed in construction but I disagree. If there had been more honesty and alternatives to the vested interest spin on things a few years back, this EA wouldn't be in this bind now. My advice to EAs is be totally honest with sellers and buyers, if telling someone their property won't sell at last year's prices means you don't get the listing, so be it. There are plenty more out there and you'll be running yourself ragged trying to sell all your listings when the last buyer evaporates. Also, hire a good photographer to present your listings in their best light on daft and myhome, use a wide-angle lens to make the place look bigger. Buyers won't be queuing to view ****e homes anymore.

The Irish property bubble sites and this thread do provide useful information, if you're buying and someone is trying to convince you that supply is short, show him the 40,000 and growing list of propertys on http://daftwatch.atspace.com or link to the census report showing 250,000 vacant houses. If you're selling, you'd better have an honest look at the real market before you waste a year waiting for the 2005 Irish seller's market to return. Ditto for landlords and tenants. The recent news that rents are up might cause tenants to become despondant and landlords to try to ake advantage of leverage they don't have. The daft report makes it clear that rental inventory is also rising and at an all time high. Every day I walk by a brand new well-located business property which has been "To Let" for almost two years now and every week we hear of another IT or pharmeceudical company leaving the state. My advice to builders; cut prices to the bone, throw in incentives and stop feeling sorry for yourself, your margin is still higher than the people you sold to who are trying to sell-up now, they may be in negative equity for years, you can still get out with your shirt if you hurry. How about bumping up the quality a bit so your places can be distinguished from the hundreds of others on the market?

Welcome to the information age, you can't hide your head in a bucket forever.

-- Property, sometimes it looks like a ladder, sometimes it looks like an albatross.

D'Peoples Voice

If the surge in rentals properties is being caused by people who can't sell, then it means that once the market does temporarily improve, there will be a flood of houses coming on the market for sale!
That means worse case scenario for those who choose to hold onto the property:o lower rents in the near future and lower prices in the future!

Pa ElGrande

patrickolee wrote:

lol, OMG I've seen it all now... a whole web site dedicated to it!

If you want an insight into the this phenonomen read this article Bottom-up Insights from the Bubble Bloggers.

patrickolee

Very interesting article alright, thanks for posting.

He says in it

"Most Bubble Bloggers are not paid much for their work, and you may wonder what motivates them to dedicate hours per day to tasks such as tracking housing inventories. The simple answer may be: They want to be Paul Revere. And they want to be right. "

I wonder is he right about the blogger's motivation?

A Random Walk

patrickolee wrote:

I wonder is he right about the blogger's motivation?

Paul Revere was last year. This year is watching how the public react to the news he was right all along.

Supercell

From reading about Paul Revere on wiki it would seem that this is a pretty noble aspiration and something to be admired?

I certainly think that even though we don't have housing statistics openly available like in the UK and America which imho helped inflate the bubble on the way up will only serve to deflate it further on the way down here.

When people have no access to cold hard facts (housing sales figures, prices sold at) all that is left is speculation - in a rising market this good for the seller, in a falling one, this will be good for the buyer.

We are doomed to bubble and burst here until this changes.
The internet is filling in this knowledge gap for many though and those that choose to use it should have a significant advantage in Ireland.

miju

patrickolee wrote:

.....you may wonder what motivates them to dedicate hours per day to tasks such as tracking housing inventories. The simple answer may be.....

they simple answer is they dont over on property pin. its mostly automated

SimpleSam06

The Dow Jones is rocking with a surplus of sub prime mortgage defaulters...

“The investment banks who had lent money to the Bear Sterns hedge funds said, 'We want our money back. And if we can’t get our money back right away, we may seize collateral and sell it,'” says Janet Tavakoli, president of Tavakoli Structured Finance.

The cause of the high-grade structured credit fund trouble was sub-prime mortgage loans — mortgages designed for people with poor credit histories. When borrowers began defaulting earlier this year, hedge fund managers were caught flatfooted.

“We've had more trouble in the sub-prime market than many of us expected. We’ve had default rates that are around 15 percent and climbing,” says Tavakoli.

Although by definition, sub-prime loans are riskier investments, that's precisely why hedge fund managers poured money into them.

Hedge funds promise high returns for high risks, through the use of unconventional strategies. They're mostly unregulated and usually limited to wealthy investors. Tavokoli opposed Bear Sterns' bail out.

“These are sophisticated investors who know that they’re supposed to be taking risk,” says Tavokoli.

jimmycrackcorm

So I'll post yet again.... Does anyone know of anyone who is in negative equity yet?

Smoggy

Do you truely find out your in neg equity until you sell a house / appartment ? as very little is selling the amount who find themseleves in this situation must be limited. People who have bought an appartment in the last year will quiet definatly be in negative equity. Places i'm thinking of are say citywest were last year 3 bed duplexes were bought @ 340k, but now they are not selling @ 317.5k. Also it's not something you shout about.

Smoggy

Smoggy wrote:

Do you truely find out your in neg equity until you sell a house / appartment ? as very little is selling the amount who find themseleves in this situation must be limited. People who have bought an appartment in the last year will quiet definatly be in negative equity. Places i'm thinking of are say citywest were last year 3 bed duplexes were bought @ 340k, but now they are not selling @ 317.5k. Also it's not something you shout about.

That's a bit of a generalisation. I paid 317,500 for my house two years ago. I had it re-valued last month for 400,000.
That means little as I don't want to move. However I'm now paying a lower 4.6% interest rate as my loan to value has decreased.
Likewise, negative equity means little unless you're selling.

Beta2

jimmycrackcorm wrote:

So I'll post yet again.... Does anyone know of anyone who is in negative equity yet?

I know 3 people who bought apartments within the last 12 months. They are all in negative equity.

2 people bought in city centre, one on blanchardstown. One is my cousin who paid 420K (+stamp) about 11 months ago, the same style apartment is up for sale at 395k today, with no signs of it selling. That is negative equity.

They borrowed 420k, almost a year ago, they have paid about 10k in mortgage interest and about 5k in capital. So all in all they now have a mortgage of 415k left on an apartment worth 395k. Thats 20K down the drain.

As I have said before the GF's Father is a Developer, he has an apartment block out in D4, its been on sale over a year with only about 10% sold, he admits the market is fukced, but hasn't reduced the asking price by a dime, although kitchen specs have got a lot higher. Interestingly enough he's now offering said apartments to family and friends, 260K below asking price. This is something he wouldn't have done a year ago, perhaps it suggests how much he thinks the apartments will fall by in the next year or so.

conor_mc

Deleted User wrote:

That's a bit of a generalisation. I paid 317,500 for my house two years ago. I had it re-valued last month for 400,000.
That means little as I don't want to move. However I'm now paying a lower 4.6% interest rate as my loan to value has decreased.
Likewise, negative equity means little unless you're selling.

When you say re-valued, do you mean by an estate agent who has very recently sold a similar house at that price, or by one who has several similar properties for sale, none of which have yet sold at that price?

As a recent seller, if there's one thing to learn its that an EA's valuation means absolutely diddly-squat. Your house is worth what a buyer will pay for it, not the average asking price on daft or myhome!

Zambia

Smoggy wrote:

Also it's not something you shout about.

This would be true.

conor_mc

conor_mc wrote:

When you say re-valued, do you mean by an estate agent who has very recently sold a similar house at that price, or by one who has several similar properties for sale, none of which have yet sold at that price?

As a recent seller, if there's one thing to learn its that an EA's valuation means absolutely diddly-squat. Your house is worth what a buyer will pay for it, not the average asking price on daft or myhome!

It was valued by a valuer approved by the mortgage lender, obviously they're not going to knock thousands in interest off my mortgage based on flimsy guesswork!

My point is that the valuation, and negative equity, isn't relevant unless I want to sell, which I don't.
It has, however, saved me a whole lot in interest which means I can overpay my mortgage each month. That in turn has knocked years off the term.

Beta2

Beta2 wrote:

Interestingly enough he's now offering said apartments to family and friends, 260K below asking price.

Was that his profit margin?

or is he just trying to recover the amount borrowed to finance the build?

Beta2

Deleted User wrote:

Was that his profit margin?

or is he just trying to recover the amount borrowed to finance the build?

tbh I don't know, not privy to that kind of information.

iguana

jimmycrackcorm wrote:

So I'll post yet again.... Does anyone know of anyone who is in negative equity yet?

This poor guy is in negative equity and his house isn't even built yet.

RuggieBear

iguana wrote:

This poor guy is in negative equity and his house isn't even built yet.

jebus.:(

miju

Deleted User wrote:

I had it re-valued last month for 400,000.

i can be valued at whatever a valuer wants to value it at certainly doesnt mean anyone is going to pay it though as the property market is finally copping on to

SimpleSam06

Deleted User wrote:

However I'm now paying a lower 4.6% interest rate as my loan to value has decreased.

Just out of interest, what do you mean by this? You owe the bank what you owe, plus interest rates, set by the ECB and profit margin for the lender. Why would they adjust those profit margins based on the perceived value of your home?

A Random Walk

Beta2 wrote:

Interestingly enough he's now offering said apartments to family and friends, 260K below asking price. This is something he wouldn't have done a year ago, perhaps it suggests how much he thinks the apartments will fall by in the next year or so.

I'm always suspicious when I hear someone here say they've been offered something at "below market value". Why would a developer turn into a charity worker? Maybe that's what he thinks they are worth now

Gurgle

SimpleSam06 wrote:

Just out of interest, what do you mean by this? You owe the bank what you owe, plus interest rates, set by the ECB and profit margin for the lender. Why would they adjust those profit margins based on the perceived value of your home?

They will reduce their margin where there is lower risk - i.e. if you have significant equity in the property.

Of course they won't do it unless you call them and tell them you've got a better deal elsewhere.

I'm at ECB rate + 0.75%, previously ECB + 1.25%

SimpleSam06

Gurgle wrote:

They will reduce their margin where there is lower risk - i.e. if you have significant equity in the property.

Interesting, I did not know that. Wouldn't the same thing apply even if you were in negative equity, assuming you could get a better deal elsewhere (ie the level of risk is less of an issue than the competition taking their business)?

Gurgle has explained it there.
I borrowed 90% of what I paid for my house two years ago. Now I owe 70% of what the property is worth, according to the BANK (not according to me, to daft, to myhome or anyone else)

This particular lender has various interest rates, based on loan-to-value ratios and my loan-to-value ratio has dropped.

The valuation was purely a means to lower my interest rate, meaning I could easily 'overpay' my mortgage and therefore take years off the term.
I don't want to sell, hence my original point that negative equity is irrelevant to me because of that.

As miju pointed out, a property is only worth what someone will pay for it. So negative equity means nothing to me, because I'm not selling!

Of course, this doesn't really fit in with the tone of the thread.
Just thought I'd throw it out there as an antidote to the doom and gloom!

patrickolee

Sigh, I give up. post deleted

patrickolee

patrickolee wrote:

No the same thing would not apply if you had negative equity. The reason they have given him a discount on his payments is that he represents less of a risk. If he stops making payments for whatever reason, the bank will definitely still get all their money back. If you are in negative equity land and you stop making repayments, the bank will have to take a loss. Risk reward.

I'm a her.