Housing bargains

Slideshowbob

Anyone heard of remarkable reductions on guide prices against actual prices houses went for?

DJDC

remarkable reductions

Compared to 2005/2006? Haha give me a break. You have to go back to 2000 when the export driven Celtic Tiger died to find "value".

ionix5891

ive been observing the house prices and they barely budged (go to a property site and watch how some houses are still there 9 months later or more not selling)

alot of people are sitting on houses and are not yet desperate to sell, give it time tho (and new property taxes?)

house prices still have a long way to go, average house price is still 10x the average wage

Time Magazine

Moved from Economics.

321654

as pointed out here already. Houses are just not selling in any meaningful numbers.

Best thing you can do, as i and many others i know of are doing is put away all of your extra money into the highest interest savings account you can find. (pretend you have a mortgage. Match the payments you would make on it.)

This will serve 2 purposes.

Firstly it will give you a nice rainy day fund for the current uncertain economic climate.

Secondly, it will give you a nice big lump of money to pounce with when property does start selling and we find the market level. As soon as it starts to increase in price you are well placed to make your move, leaving all those who werent ready out in the cold.

Freddie59

Slideshowbob wrote: »

Anyone heard of remarkable reductions on guide prices against actual prices houses went for?

www.treesdontgrowtothesky.com :)

jetski

ionix5891 wrote: »

ive been observing the house prices and they barely budged (go to a property site and watch how some houses are still there 9 months later or more not selling)

alot of people are sitting on houses and are not yet desperate to sell, give it time tho (and new property taxes?)

house prices still have a long way to go, average house price is still 10x the average wage

What if a house is 10x times a salary. when they were 5 times a salary interest rates were way way higher than they are now as was income tax and also nowadays you have two workers in a home not the way it used to be when the wife stayed at home.

ionix5891

jetski wrote: »

What if a house is 10x times a salary. when they were 5 times a salary interest rates were way way higher than they are now as was income tax and also nowadays you have two workers in a home not the way it used to be when the wife stayed at home.

its still crazily overpriced and they have a long way to fall

for most of the history house prices in most countries is on average 3x the salary (with unemployment rising fast, unless you work for the state your are worrying now about loosing a job)

spockety

jetski wrote: »

What if a house is 10x times a salary. when they were 5 times a salary interest rates were way way higher than they are now as was income tax and also nowadays you have two workers in a home not the way it used to be when the wife stayed at home.

Which came first, the chicken or the egg?

I'd wager that we had to move to a two income household economy just so people could fund the purchase of an overpriced house.

The_Conductor

jetski wrote: »

What if a house is 10x times a salary. when they were 5 times a salary interest rates were way way higher than they are now as was income tax and also nowadays you have two workers in a home not the way it used to be when the wife stayed at home.

Well- its increasingly the case that its one worker in the household again- and in a lot of cases, that one worker has taken a paycut.....

Income tax is increasing.

Back 10-15 years ago- the situation was that a couple had a pooled tax free allowance and bands- so if there was only one person working he/she could use their partner's band to keep all (or a large lump) of their income at the lower rate. When McCreevy brought in individualisation of the tax bands- this 'anamoly' was done away with- the government were making it increasingly difficult for a couple to have a stay-at-home member. This was government policy- not market economics. So- its not fair to simply say that today you have dual income households- without acknowledging that our previous tax regime encouraged single external earners, but no-more.

ionix5891 wrote:

for most of the history house prices in most countries is on average 3x the salary (with unemployment rising fast, unless you work for the state your are worrying now about loosing a job)

Don't bet on it. Just looking at one government department- the media are reporting there will be a 10% cut in headcount in Teagasc and 15% in the Department of Agriculture. State sector employees are in exactly the same boat as everyone else.......

ntlbell

jetski wrote: »

What if a house is 10x times a salary. when they were 5 times a salary interest rates were way way higher than they are now as was income tax and also nowadays you have two workers in a home not the way it used to be when the wife stayed at home.

and now in a lot of cases you have two people without any job at all.

you can't factor in two wages from the start as in most cases you will lose one income if they decide to have kids and even if they both return to work your amount of expendable income drops considerably to pay for child care etc

you shouldn't be basing the amount you can borrow on earnings you have today you should be working on the likely income in the future, obviously every case is different but I would only ever take one single income into consideration if there is any likelihood one will be lost for whatever reason.

e.g. if you have a household with 2 x avg ind wage on 35k 10 x salary is a 700k house.

these two people shouldn't be buying a house for 350k never mind 700k

for this couple to be anyway comfortable they should be looking at 115-130k with a 20-25k deposit over 15-20years this leaves room for interest hikes and the removal of one of the incomes should they decide to have kids and live a relatively comfortable lifestyle.

10 X's salary for most avg earners is just crazy and another reason we're in this mess in the first place.

AARRRGH

People are waiting for a recovery.

*NEWSFLASH* There won't ever be a recovery.

Save your cash for a few more years.

astrofool

ntlbell wrote: »

and now in a lot of cases you have two people without any job at all.

you can't factor in two wages from the start as in most cases you will lose one income if they decide to have kids and even if they both return to work your amount of expendable income drops considerably to pay for child care etc

you shouldn't be basing the amount you can borrow on earnings you have today you should be working on the likely income in the future, obviously every case is different but I would only ever take one single income into consideration if there is any likelihood one will be lost for whatever reason.

e.g. if you have a household with 2 x avg ind wage on 35k 10 x salary is a 700k house.

these two people shouldn't be buying a house for 350k never mind 700k

for this couple to be anyway comfortable they should be looking at 115-130k with a 20-25k deposit over 15-20years this leaves room for interest hikes and the removal of one of the incomes should they decide to have kids and live a relatively comfortable lifestyle.

10 X's salary for most avg earners is just crazy and another reason we're in this mess in the first place.

I still feel your reasoning for figures is stuck in the 80's.

Dual incomes are taken into account, when kids come along people adjust their lifestyle as necessary. I don't think we'll ever see the end of women on the career ladder.

15-20 years is the time most people should aim to have their mortgage paid off by, but this is usually done through overpayment after taking a 25-35 year term. I don't think we'll ever see 15-20 years as the default mortgage anymore.

Most banks are basing mortgage repayment ability on % of income after tax rather than multiple, they'll look at what you've been able to save, and any current loans severely reduce the mortgage you can get. This is a far better way than a broad multiple, as some people can afford to spend more on a home than others, even on the same wage.

ntlbell

astrofool wrote: »

I still feel your reasoning for figures is stuck in the 80's.

Dual incomes are taken into account, when kids come along people adjust their lifestyle as necessary. I don't think we'll ever see the end of women on the career ladder.

15-20 years is the time most people should aim to have their mortgage paid off by, but this is usually done through overpayment after taking a 25-35 year term. I don't think we'll ever see 15-20 years as the default mortgage anymore.

Most banks are basing mortgage repayment ability on % of income after tax rather than multiple, they'll look at what you've been able to save, and any current loans severely reduce the mortgage you can get. This is a far better way than a broad multiple, as some people can afford to spend more on a home than others, even on the same wage.

The mortgage repayment ability shouldn't be left up to banks YOU should be working out your repayment ability not the bank.

It's fine to say if kids come along you just make some lifestyle changes, if you have maxed out your borrowing based on two wages now suddenly 1200e a month is going to pay for childcare and if you take all the other expenditures of having kids into consideration all the lifestyle changes in the world won't make up for a sudden 1200-1500e missing a month not to mention the drop in wages while one is out of work.

No one's saying we're going to see the end of women working, but the difference in take home pay with all the extra outgoings should be taken into consideration by YOU and not the bank.

I agree you should be looking at your spending power based on your overall lifestyle but my point is it shouldn't be based on right now you should leave plenty of room and have it properly stress tested.

This is not living in the 80's it's living in reality.

Like the credit limit on a card most people think it's some sort of target to r each and the amount a bank will lend you is not a target.

Borrow what you can comfortably afford that leaves you with the money you require for the lifestyle you wish to lead after.

punchestown

Slideshowbob wrote: »

Anyone heard of remarkable reductions on guide prices against actual prices houses went for?

Can we stay on topic please folks? Original post asks the very relevant question relating to actual sale prices. Again, a thread relating to property gets taken over by certain vested interests who obviously have no interest in falling prices.

astrofool

People don't think of credit card limits as a target, people are idiots.

People will borrow what they have to, to get the home they want. Sometimes this involves more sacrifice than was initially prepared for (but this is always the case when buying property, apart from the last few years). It can mean holidaying less, getting a new car when necessary, rather than yearly, and going out less often, but everyone is against everyone else when it comes to housing, the person willing to borrow more, will ultimately outbid for the home and get it.

Right now, and for the next few years, supply is high, the economy is a downer, so prices will drop, but even today, in this climate, banks are not using anything like the criteria you are using to give out loans, and I don't think they ever will.

spockety

astrofool wrote: »

People will borrow what they have to, to get the home they want. Sometimes this involves more sacrifice than was initially prepared for (but this is always the case when buying property, apart from the last few years). It can mean holidaying less, getting a new car when necessary, rather than yearly, and going out less often, but everyone is against everyone else when it comes to housing, the person willing to borrow more, will ultimately outbid for the home and get it.

Mate, no offence, but the sacrifices you are talking about "holidaying less", less regular car purchases etc., are nothing. The sacrifices that really HAVE been made as a result of this bubble are people not engaging in prudent saving and taking out risky 100% mortgages, people paying for their house for FORTY YEARS (:eek: :eek:) instead of 20, people putting their children's and their families welfare second by having to take on second jobs or multiple income households just to fund this 40 year escapade.

This bubble has destroyed a generation, I really believe that. People are stuck in negative equity paying off huge mortgages over 40 years to live in houses/apartments that they can never move from no matter how much they want to grow their family or move job.

Holidaying less? Only getting a car every couple of years?! Good lord give me a freakin' break.

ntlbell

astrofool wrote: »

People don't think of credit card limits as a target, people are idiots.

They're not idiots they just lack education in finance management which I know when I was in school I was never even thought how to manage a simple budget etc, if this hasn't changed it needs to.

astrofool wrote: »

People will borrow what they have to, to get the home they want. Sometimes this involves more sacrifice than was initially prepared for (but this is always the case when buying property, apart from the last few years). It can mean holidaying less, getting a new car when necessary, rather than yearly, and going out less often, but everyone is against everyone else when it comes to housing, the person willing to borrow more, will ultimately outbid for the home and get it.

You're trying to justify why people make huge mistakes when buying a home, they shouldn't be borrowing what they have to they should borrow what they can afford and shouldn't be the defacto.

You don't get up to your eyes in 40 years debts because someone might outbid you if they can afford to do so then you will just have to bide your time save more and wait for the right opportunity you don't ruin yourself financially to outbid someone else this just plain stupidity and again what caused the problems we have today.

astrofool wrote: »

Right now, and for the next few years, supply is high, the economy is a downer, so prices will drop, but even today, in this climate, banks are not using anything like the criteria you are using to give out loans, and I don't think they ever will.

It makes no difference what the banks are using and again YOU need to work out if something is affordable or not YOU need to work out what you need to live a lifestyle your comfortable with this is something you seem to have a lot of difficulty with.

It won't be long before someone on the avg ind wage will be able to afford a nice 3 bedroom home in a working class area going on 3-4x wages.

In some places we're not too far away as it is.

astrofool

House prices will generally reflect what the banks will allow to be borrowed, I don't see that changing.

Buying a house has never been easy on people financially, I don't see that changing too soon either. Prudence is not part of human nature, before sub prime mortgages, people took out credit union loans as the deposit, stupid, but it happened.

punchestown

astrofool wrote: »

House prices will generally reflect what the banks will allow to be borrowed, I don't see that changing.

What are banks lending these days though? Are they looking for a strict record of savings over a sustained period of time and a deposit of at least 15% (as they were when I bought) or are there still horror stories of 100% mortgages being given out? The deposit aspect is crucial. If banks are seeking 20%, how many ftb's would have €60,000 to purchase an average house in Dublin?

321654

punchestown wrote: »

What are banks lending these days though? Are they looking for a strict record of savings over a sustained period of time and a deposit of at least 15% (as they were when I bought) or are there still horror stories of 100% mortgages being given out? The deposit aspect is crucial. If banks are seeking 20%, how many ftb's would have €60,000 to purchase an average house in Dublin?

92%. At least thats the best ive been approved for. Not going to do anything yet though til i see some proof of a sustained turn - which might be a while. But im ready to go when i feel the time is right.

321654

astrofool wrote: »

I still feel your reasoning for figures is stuck in the 80's.

Dual incomes are taken into account, when kids come along people adjust their lifestyle as necessary. I don't think we'll ever see the end of women on the career ladder.

15-20 years is the time most people should aim to have their mortgage paid off by, but this is usually done through overpayment after taking a 25-35 year term. I don't think we'll ever see 15-20 years as the default mortgage anymore.

Most banks are basing mortgage repayment ability on % of income after tax rather than multiple, they'll look at what you've been able to save, and any current loans severely reduce the mortgage you can get. This is a far better way than a broad multiple, as some people can afford to spend more on a home than others, even on the same wage.

Excellent post.

All my friends who got 30 and 35 year mortgages are eating into them big time with over payments. Amazing what a couple of hundred extra a month will knock of a mortgage. Noone expects to even take 20 years to pay it off. The overpayments introduce some safety too in that if an emergency happens (like no job) and they need to take a payment holiday they can use up the over payments.

Eglinton

321654 wrote: »

Excellent post.

All my friends who got 30 and 35 year mortgages are eating into them big time with over payments. Amazing what a couple of hundred extra a month will knock of a mortgage. Noone expects to even take 20 years to pay it off. The overpayments introduce some safety too in that if an emergency happens (like no job) and they need to take a payment holiday they can use up the over payments.

You assume peoples' salaries increase year on year. This may not be the case and for the first time in a long time, they may actually decrease for a few years.

ntlbell

astrofool wrote: »

House prices will generally reflect what the banks will allow to be borrowed, I don't see that changing..

What has this to do with it? if people who couldn't afford to buy in the last few years they should have a fair amount saved by renting...

so now you have a huge lump some to start with and houses are becoming very reasonable, so over the last number of years when it wasn't affordable you should of got rid of all debt you have proof of your few years of saving and can buy something you want at a great price and getting cheaper?

what other people are doing or what banks are doing is irrelevant if you have your head screwed on you won't get into any trouble..

astrofool

ntlbell wrote: »

What has this to do with it? if people who couldn't afford to buy in the last few years they should have a fair amount saved by renting...

You were trying to base house prices on the same lending criteria as from the 80's, I was trying to point out that the demographics have changed in the mean time, and the old formula were useless, as the banks will never limit themselves to those criteria any more. Even now, during the credit crunch, banks lending practices still allow for 92% loans over 35 years.

Firetrap

It would be interesting to know how many people who've been renting do have a large lump sum saved up. Or did the so-called Celtic Tiger cubs blow their money?

bill_ashmount

Slideshowbob wrote: »

Anyone heard of remarkable reductions on guide prices against actual prices houses went for?

Article in the property supplement of the Examiner on Saturday that said there was a development in Fermoy with 3 bed semis for about €150,000 (I think). Also mentioned a housing estate somewhere in Wexford I think where prices were similar to this. Not sure what the prices would have been at the peak but you can be guaranteed they would have been a lot higher. Be interesting to see how much more they come down.


Check online @ www.examiner.ie, I'm not sure if this supplement is available online though.

spockety

astrofool wrote: »

You were trying to base house prices on the same lending criteria as from the 80's, I was trying to point out that the demographics have changed in the mean time, and the old formula were useless, as the banks will never limit themselves to those criteria any more. Even now, during the credit crunch, banks lending practices still allow for 92% loans over 35 years.

People should limit themselves to better lending practices than the banks are willing to follow.

Have we learned nothing in the last 10 years?

Income multiples are a historical norm, but granted it is a flawed calculation. Percentage of disposable income stress tested against 2-3% rises in interest rates, over a period of 20 or maybe max 25 years at a LTV no higher than 92% is what we should be aiming for.

30/35/40 year mortgages are a disgrace, and the sooner people realise this, the better.
They have skewed the market, and continue to skew it.

punchestown

321654 wrote: »

Excellent post.

All my friends who got 30 and 35 year mortgages are eating into them big time with over payments. Amazing what a couple of hundred extra a month will knock of a mortgage. Noone expects to even take 20 years to pay it off. The overpayments introduce some safety too in that if an emergency happens (like no job) and they need to take a payment holiday they can use up the over payments.

Funny that because a number of my friends are in serious trouble. One girl who took out an interest only mortgage on her home in Clonee 2 years ago has made no impact on the prinicpal sum of her mortgage. The apartment has dropped by €150,000 (realistical valuation)
Another couple who took out the classic 35 year mortgage one monthly wage covering the mortgage payment for the month living off the other partners wage. He has just lost his well paid job. Her job is under serious threat.

Sadly, I am fairly certain the above two scenarios are playing out in thousands upon thousands of households up and down the country.

ntlbell

astrofool wrote: »

You were trying to base house prices on the same lending criteria as from the 80's, I was trying to point out that the demographics have changed in the mean time, and the old formula were useless, as the banks will never limit themselves to those criteria any more. Even now, during the credit crunch, banks lending practices still allow for 92% loans over 35 years.

huh?

I'm not basing house prices on anything I'm stating how I think one should go about buying a house IF they can afford to do so.

nothing has changed in how you should calculate affordability and if you can't afford to buy then you don't you don't keep going untill a bank gives you a loan that you cannot afford.

as i keep telling you this is not about the banks LIMITING you it's about YOU LIMITING you...do you see the difference?

what % banks are giving and the amount of years should be irrelevant to the person buying a home, if they have a 10-20% deposit and find somehwere for 3-4x's there wages the bank will lend it and they will get what they can AFFORD, if not keep renting keep saving and bide your time.

the more you save the bigger the down payment the shorter the mortgage the smaller the montly payment the more affordable the house becomes.

this is nothing to do with the 80's it's nothing to do with banks calculations it's about YOU working out what YOU can afford..

Freddie59

punchestown wrote: »

One girl who took out an interest only mortgage on her home in Clonee 2 years ago has made no impact on the prinicpal sum of her mortgage.

It's an interest only mortgage? Might have something to do with it.....