Been waiting for prices to fall further..going to buy now..am I mad?

AARRRGH

jetski wrote: »

Link or STFU

You know we have a vicious budget coming next week which is going to make our recession even worse?

Today's housing prices will be totally unaffordable shortly.

jetski

im well aware of the budget. i want to see a link to this 30%. dont agree when you say our recession even worse. its gonna be more like make our recession a bit shorter and sharp maybe.

AARRRGH

I will admit 30% in one year seems a bit unrealistic, but 30% in two years... that could happen.

cls

BendiBus wrote: »

Yes, I do.



No I wouldn't. If you disagree then explain with the aid of an example.



A high interest bank account actually (i.e. returning in excess of inflation)

Here's my example (purely theoretical as I am a homeowner)

Estimate 1000pcm rent.
Saving 500pcm for a deposit.
I currently have 30K saved.
My starting net worth is 30K (all cash no assets)

Say I buy now:

• 30K deposit
• 300K house
• 270K mortgage
• Monthly repayments of €1500 (4.5% over 25 years)

On 26.03.2010:

• Asset worth €270K (dropped by 10%)
• Mortgage outstanding €264K
• Cash NIL

My Net Worth is 6K (positive equity no cash) I'm down 24K in a year



Say I wait and buy the same (or similar) property in 12 months:

• 38K deposit (an extra 12 months savings plus interest)
• 270K house
• 232K mortgage (using all savings for deposit)
• Monthly repayments of €1319 (4.5% over just 24 years)

On 26.03.2010:

• Asset Worth 270K (just bough it)
• Mortgage outstanding 232K
• Cash NIL

My net worth is 38K. I'm up 8K in a year

So I'll own my house on the same date either way.

If I wait a year I'm better off by 32K immediately and another 180pm for the next 24 years.

If I'm confident prices will fall by 10% in the next 12 months then it's a no-brainer.

I've used Karl Jeacles Mortgage calculator to work out the figures above. Any errors are my own

It's all on paper unless you sell. My pension is down 40%. Am I going to stop making payments? No. Why? Because it will go back up. It's the natural order of the capitalist world. There are ups and there are downs. Would I let the thought of prices dropping over the next 3 years stop me buying a nice house at an affordable price and then some leaving me with enough to rennovate it? No not at all. And thats the difference here. You're all still stuck in 2006. Buy now before prices are unaffordable has changed to hold off until prices bottom out. Its nonsense. Some of us are not investing, we're buying homes. Prefably at affordable prices and at the right time depending on our circumstances. The irony is by renting you're prolonging the decline. People don't need to sell up when theirs mugs covering not only the mortgage interest but the management fees and then some. Some are even paying off the mortgage out right. Call it a service, call it what you like but any one who calls it "financailly sensible" is talking through their hats.

ntlbell

The_Goose135 wrote: »

There is no garenentee that the house prices will drop like in Bendibus's example just like there is no garentee that buying now will save you money in the long term.

of course there is no guarantee, so all you can go on is the evidence you have today and that evidence is currently pointing to more drops

there is not 1 bit of evidence to suggest otherwise, if you have some I would love to read/hear it

ntlbell

cls wrote: »

It's all on paper unless you sell. My pension is down 40%. Am I going to stop making payments? No. Why? Because it will go back up. It's the natural order of the capitalist world. There are ups and there are downs. Would I let the thought of prices dropping over the next 3 years stop me buying a nice house at an affordable price and then some leaving me with enough to rennovate it? No not at all. And thats the difference here. You're all still stuck in 2006. Buy now before prices are unaffordable has changed to hold off until prices bottom out. Its nonsense. Some of us are not investing, we're buying homes. Prefably at affordable prices and at the right time depending on our circumstances. The irony is by renting you're prolonging the decline. People don't need to sell up when theirs mugs covering not only the mortgage interest but the management fees and then some. Some are even paying off the mortgage out right. Call it a service, call it what you like but any one who calls it "financailly sensible" is talking through their hats.

can you explain how buying into an overpriced fallen market makes financial sense?

irishguy

What are people using for a guide of percentage decline? The ESRI/PTSB survey (I presume) which suggests dublin house prices have fallen C. 22% from the peak, but any houses that are selling now are 40-50% down (I am getting this figure from my personal experience as I am looking at buying at the moment) otherwise they aren't selling. So the market has already priced in a drop of around 18 to 28%. Do people think that they are going to fall another 30% on top of this .i.e 70% off peak drop?

Freddie59

jetski wrote: »

Link or STFU

Link? Do you not look at daft.ie my friend?

Or maybe www.treesdontgrowtothesky.com

Much as you are trying to upsell the 'we've reached the bottom' line you, or your ilk, cannot change market forces.:D

Now, put up - or shut up.:)

Senna

I have not read most of the posts since my last post, just too many and most long.

OP, you have the cash (most of it) the house is average at the moment and needs a fair bit of renovation to make better. I think you said the area is perfect.
Would it not be better to search the market now for an ideal house that doesn't need renovations? Your missus doesn't want to continue renting but how would she feel about buying somewhere else now? yes moving a pain in the ass, but if its to your permanent home she might not mind.

You said above that there is a house in the same estate for sale for 380 and you think it would sell for 350k. I think you should realise how screwed up the market is and how strong a position you are in (cash buyer). You have a set limit (your cash amount). I would look at ideal houses (regardless of price) and offer what your budget is, the asking price could be 20/30/40% more but there is sellers out there who would be delighted to get a cash buyer that could move quickly and would be less likely to pull out in the middle. Developer or builder would probably give a bigger discount to you with cash than they would to a FTB, cash is king now that banks wont lend to every tom, dick or harry.

phantom_lord

ntlbell wrote: »

I can't belive in 2009 after 3 years of falling house prices and thread after thread people still don't understand when to rent and when not to rent

there is really no surprise the country is up to it's nipples in shiote.

we need to bring basic financial planning into primary schools

sur renting is dead money yo.

i don't think people really realise just how much they pay in interest on a mortgage. say a mortgage for 300k, for 30 years at 5%, the cost of the loan is over 270k. if u can hold on for a year or two and wait for a 10% drop in prices, you're not only saving the ~30k drop in price, your also saving almost another 30k in interest payments over the life of the loan.

It's all on paper unless you sell. My pension is down 40%. Am I going to stop making payments? No. Why? Because it will go back up. It's the natural order of the capitalist world. There are ups and there are downs. Would I let the thought of prices dropping over the next 3 years stop me buying a nice house at an affordable price and then some leaving me with enough to rennovate it? No not at all. And thats the difference here. You're all still stuck in 2006. Buy now before prices are unaffordable has changed to hold off until prices bottom out. Its nonsense. Some of us are not investing, we're buying homes. Prefably at affordable prices and at the right time depending on our circumstances. The irony is by renting you're prolonging the decline. People don't need to sell up when theirs mugs covering not only the mortgage interest but the management fees and then some. Some are even paying off the mortgage out right. Call it a service, call it what you like but any one who calls it "financailly sensible" is talking through their hats.

this is all just nonesense imo.

gurramok

Mary D wrote: »

ARRRRGH, just out of interest do you think it makes financial sense to pay someone else's mortgage for a year or so until house prices start to rise again (in which case you will ultimately pay more for your hourse than you would now, plus you would have wasted a lot of money on rent) whilst leaving your money sitting in a low interest bank account. Just curious as to how people think about their money, mortgages, investments etc.

Pay rent about 14k a year.

House price goes down by more than 14k on target house, equals saving money, its a no-brainer.

Idea is to rent until the bottom is reached and then buy. How hard is that to understand?

The_Conductor

jetski wrote: »

Link or STFU

Jetski- you're normally a lot more reserved....
You are well aware of the forum rules- in particular, if you disagree with what someone posts- refute the post, without attacking the poster. Please keep this in mind.

SMcCarrick

Gurgle

smccarrick wrote: »

Jetski- you're normally a lot more reserved....
You are well aware of the forum rules- in particular, if you disagree with what someone posts- refute the post, without attacking the poster. Please keep this in mind.

SMcCarrick

I though his reply was beautifully succinct and to the point, given the 'everybody knows' trash thats been banging around.

The_Conductor

Gurgle wrote: »

I though his reply was beautifully succinct and to the point, given the 'everybody knows' trash thats been banging around.

Perhaps. I do apply the same rules on everyone posting here- regardless of what is being posted. If I were not to act in an impartial manner- I would not be doing my job as a moderator properly.

Shane

lukasbasic

if you have the cash a need the place to live - yes
if you need to take a mortage and this depends on your job -
the crisis is in the beginning and we will see a total collapse of the economy.
this will either mean that you will loose your house, or pay it off very cheap as the euro will become toilet paper.

is_that_so

lukasbasic wrote: »

the crisis is in the beginning and we will see a total collapse of the economy.
... the euro will become toilet paper.

How and when is all of this actually going to happen?

cls

phantom_lord wrote: »

this is all just nonesense imo.

Oh yeah I see what you mean. If somebody had just put it so eliquently as this in the first place we wouldn't be having 15 pages of discussion :rolleyes:

I'll take your response as a compliment, if thats the best you can come up with to refute my post.

AARRRGH

phantom_lord wrote: »

i don't think people really realise just how much they pay in interest on a mortgage. say a mortgage for 300k, for 30 years at 5%, the cost of the loan is over 270k. if u can hold on for a year or two and wait for a 10% drop in prices, you're not only saving the ~30k drop in price, your also saving almost another 30k in interest payments over the life of the loan.

Irish people are brainwashed when it comes to owning property.

You could draw them a nice picture showing the above and they'd come back with "but rent is dead money" and "sure I'm not going to pay someone else's mortgage".

I swear it makes me wonder if we've somehow been genetically altered by centuries of oppressive landowners.

The_Conductor

Lol- I laughed only half because what you're saying is true- half out of the sheer frustration of saying just this on a loop for several years straight.......

ntlbell

cls wrote: »

Oh yeah I see what you mean. If somebody had just put it so eliquently as this in the first place we wouldn't be having 15 pages of discussion :rolleyes:

I'll take your response as a compliment, if thats the best you can come up with to refute my post.

you seem to pick and choose what you respond to.

Lets say it's not nonsense, can you explain how buying into an overpriced falling market makes financial sense?

thanks

cls

ntlbell wrote: »

you seem to pick and choose what you respond to.

Lets say it's not nonsense, can you explain how buying into an overpriced falling market makes financial sense?

thanks

Finance is only part of the picture. The OPs case is the perfect example of the real reasons why people buy a home and the financial aspect is only part of his dilema, there's more to it than that. Its a case by case basis and you can't generalise it by saying buying into a falling market is stupid, period. But here you go anyway, it makes financial sense when your rent is costing more than your mortgage interest and the fact that prices are falling will not matter if you're there long term. It also makes financial sense to have the bargaining power and the choice to pick and choice. In 10-15 years time it will all happen again. Ask the people in the UK who bought into a falling market in the early 1990's if they now regeret it. You talk as if you have a crystal ball and know for a fact what the future holds. That kind of talk comes from inexperience. There's one fact here and that is things go up and down. That's life. Stay at home with mommy and daddy or pay someone elses mortgage for as long as you like. But don't make out you're smarter than everyone else, you're situation does not apply to everyone.

SparkyLarks

Forget what house prices are going to do for a minute.

here are some questions.
1) Do you like the house, do you want to live there until you have the mortgage paid off?
2) Can you afford the monthly repayment and have the lifestyle that you want.
3) If you want to live in that area then who owns the other houses, how likel are they to sell if property prices are low.

Here are my predictions for the next 12-18 months. As prices drop people who don;t have to sell won't.
The houses in good area's, i.e. close to schools hospitals public transport will stop falling as people will want to live there and will stay in those houses. Houses in the middle of nowhere will fall to silly amounts.
In the US at the moment houses prices ar 50% off their peak, but the majority of sales are foreclosures, the houses in good area's of city's wher people aren't forced to sell are down about 20%.


Intrest rates will rise. As the recession ends, I'm not predicting growth yet but the shrinking to stop. the sales will end as suppliers get rid of their excess stock. That will push prices up and the ECB will put rate back up.

This will push house prices down but if you can get a house now at a low fixed rate, for 5 year, you might end up paying less than waiting for a year if the interest rates go up. If interest rates stay low that will provide a cushion for falling prices

I'd be wary of the use of the 3-5 times ratio, remember that was true when interest rates were 12-16% and income tax was 60% at the higher rate. so people had a lot less disposable income. I'd also use 40% of the net income of the average home buyer( bit of guess work needed there). and the monthly rent of the property x 11 x 14( That is the price at which an investor would buy so a home owner may reasonable pay 20% more). That give a few other figures.

So yes there will be great deals in the next year but maybe not where you want to live. If you'd have a happy family and save yourself too moves,i.e to the new rented house and into the new house you buy.

Personally I've stopped trying to predict the future and i'm looking to buy a house than I can afford and still live the life I want and that I want to live in for the next 30 years.

Best of luck with what you decide

ntlbell

cls wrote: »

Finance is only part of the picture. The OPs case is the perfect example of the real reasons why people buy a home and the financial aspect is only part of his dilema, there's more to it than that. Its a case by case basis and you can't generalise it by saying buying into a falling market is stupid, period. But here you go anyway, it makes financial sense when your rent is costing more than your mortgage interest and the fact that prices are falling will not matter if you're there long term. It also makes financial sense to have the bargaining power and the choice to pick and choice. In 10-15 years time it will all happen again. Ask the people in the UK who bought into a falling market in the early 1990's if they now regeret it. You talk as if you have a crystal ball and know for a fact what the future holds. That kind of talk comes from inexperience. There's one fact here and that is things go up and down. That's life. Stay at home with mommy and daddy or pay someone elses mortgage for as long as you like. But don't make out you're smarter than everyone else, you're situation does not apply to everyone.

As I said many times I have no crystal ball I don;t know what tomorrow holds.

But what I have TODAY is a hell of a lot of good information to go on, this information is pointing towards further falls in the market.

I'm a home owner, I don't live with "mammy" but right NOW it would make sense for people to live with mammy and save.

Can you please as I have asked twice all ready

explain why buying into an OVERPRICED and FALLING market makes financial sense?

What we have to suggest price drops will continue.

Unemployment rising at unprecedented levels
Banks demanding large deposits and PROOF of savings.
A huge overhang in empties.
A lot of trader uppers heading into negative equity or all ready in it.
A budget around the corner that threatens to remove more spendable income
rising emigrations.
Falling rents.

The list is endless, can you provide such a list to show why how prices will NOT fall further? or to backup when they might stop?

Kipperhell

I am a bit surprised that so many people can only see the financial side of this in the most basic way.

There are a few additional factors that should be considered.

The persons age comes into play very quickly. If somebody was 26 and decided to buy a place but discovered prices were rising very fast and was still not earning much money yet. They decide to wait as there wages should be higher in two years, have more savings. Now 28 prices have gone up much more than his wages and his savings don't help. Waits another 2 years and the salary increases but prices do too. Still thinks prices are too high so goes another 2 years. Now 32 and house prices have started to fall really dramatically so is too afraid to invest people say wait 3 years. 9 years later still has no place other than various places he rented and no general assets like furniture maybe a big screen TV.:)

At 35 you might just think it is time to own and be looking past any drop in the short term. If you love the house and location it might be the right time to buy for the person. Simply if you plan in living some where for 10 years the price in 10 years is what you should be concerned about

phantom_lord

cls wrote: »

the fact that prices are falling will not matter if you're there long term.

this is so illogical. you're saying it doesn't matter that you're buying at an inflated price now because it's bound to go up in the future? you don't mind the fact that you're paying an over inflated price for the house and almost the same again in interest?

Because it will go back up. It's the natural order of the capitalist world.

no it's not.

or pay someone elses mortgage for as long as you like.

you really need to get over this and look at the simple maths behind what we're talking about.

phantom_lord

cls wrote: »

Oh yeah I see what you mean. If somebody had just put it so eliquently as this in the first place we wouldn't be having 15 pages of discussion :rolleyes:

I'll take your response as a compliment, if thats the best you can come up with to refute my post.

lol, there was so much wrong with it i couldn't be bothered going through it, so i just dismissed it with a wave of my hand

cls

phantom_lord wrote: »

lol, there was so much wrong with it i couldn't be bothered going through it, so i just dismissed it with a wave of my hand

Again, thank you for the compliment. Talking on here reminds me of when I was 10 years old. The phrase "Oh yeah? well you're a stupid head" springs to mind. You clearly don't get my point of view. I don't know what the average age is on here but one things for sure there's a lot of ignorance and immaturity.

phantom_lord

*yawn* are u ever gonna answer this question?

explain why buying into an OVERPRICED and FALLING market makes financial sense?

Gurgle

ntlbell wrote: »

explain why buying into an OVERPRICED and FALLING market makes financial sense?

I'll take a stab at this with an analogy:

Buying a home is more like buying a new car than investing in stocks and shares.

But who in their right mind would buy a new car?

Guaranteed to fall in value and NEVER recover, massively overpriced - a huge expenditure compared to public transport (analogous to renting a home).

And yet hundreds of thousands of new cars are bought in Ireland every year.

What (if anything) do you drive ntbell?

AARRRGH

That's a good analogy, however it is also known that buying a new car does not make financial sense.

Just because lots of people do it doesn't make it right.