How to tell when the market is nearing the bottom!!! Easy

bobbiw

Lots of people are thinking of buying and saying that they dont want to miss the bottom but that it is impossible to time or tell.

This is nonsense.

Its very easy to see how much house values will fall, you cant do it now but month by month you can.

House prices have fallen every month and will continue to do so for the next 3-5 years I guess. Am I right I cant tell now but I can tell month to month.

So if prices drop on average 1% a month that will be 12% a year or close to 50% by year 4. Although I do reakon that the price of drops will accellerate.

So when to buy,

Not when you like a house

Not when you can afford it.

Buy it when all economic indicators are showing that prices are stabalising. So when you see that houses are droping by .01% a month for 6 months there is a good chance you are at the bottom.

But its only a chance.

Seriously do you really want to buy something today for 400k to find it levels off at 200k and doesnt go back up to 400k ever.

Ireland if it ever does see the price of houses increase again will see it at the modest 3-4% a year that most cyclical economies do.

irlrobins

You're stating the obvious really. The only weakness is that market data lags actual market activity so you might be beyond the bottom before the data shows it.

bobbiw

irlrobins wrote: »

You're stating the obvious really. The only weakness is that market data lags actual market activity so you might be beyond the bottom before the data shows it.

Its amazing how many people miss the obvious though isint it.

Its clear that people are accepting 20% off their price, when that stops then you know things are turning.

And of course it wont turn overnight, you will have a good deal of time, perhaps even a year or more to understand that.

So suddenly when that 3 bed house you are after is up for 120k and they are not shifting and the same is throughout the nation then you know where things stand.

And forget all the crap about the cost to build a house, it means absolutly nothing.

A house is worth what you can sell it for, not what it cost you to build it .

D3PO

bobbi how about some fact to go with your opinion. house prices falling for the next 5 years I think you will be hard pressed to find any economic commentator to agree with that

bobbiw

D3PO wrote: »

bobbi how about some fact to go with your opinion. house prices falling for the next 5 years I think you will be hard pressed to find any economic commentator to agree with that

There are no absolutes and what I am saying is my own personal opinion based on experience and my understanding of economics.

I think Ireland can escape a worse situation if the goverment were not the idiots they are and actually borrowed in order to stimulate the economy.

Just wait till the next budget when they hammer everyone really hard. They are just not used to the decline in Tax revenue and realise that they do not have and will not have the money needed to run the mess that they got themselves into.

Irish people did have a part to play but thats human nature, people were not greedy, they just didnt want to miss the boat that they were told was about to sail away.

Senna

D3PO wrote: »

bobbi how about some fact to go with your opinion. house prices falling for the next 5 years I think you will be hard pressed to find any economic commentator to agree with that

And we were hard pressed to find economic commentators who foretold of the bubble bursting (although there were some).

I still reckon the best guide is house price compared to income. If you find a ideal (suitable) house that you will be happy to live in for the next 20/30/40 years and its 3.5 times one persons wage, then you will be making a good decision, it may not be the absolute bottom, but it wont be as far off for a home (not just a house).

Just using your comments on house prices dropping by 12% a year, but i would hope the market will accelerate to the bottom quicker, then they might continue on the following path:


Year- Average House Price
2009- 250k
2010- 220
2011- 195
2012- 172
2013- 151
2014- 133
2015- 119

Considering the average wage is 32k and 3.5 times that is 112k, then it wont be anytime soon that the average earner can buy an average (national average price) house.

20goto10

bobbiw wrote: »

Lots of people are thinking of buying and saying that they dont want to miss the bottom but that it is impossible to time or tell.

This is nonsense.

Irish people will never learn. Everyone is an amatuer economist. Remember, the peak was reported about 6 months after it actually happened. Waiting for a loud speaker announcement will end in tears because by that time vendors will already be increasing their prices.

My advice, unless you are actually an economist or an estate agent who has access to the facts and figures then you should concentrate on your own situation.

Number one, is it affordable?
Number two, is it the ideal home for you?

Because in the current climate you should settle for nothing less than ideal. What will the people who wait get? Yep, they'll get something that is less than ideal.

mathie

bobbiw wrote: »

Its clear that people are accepting 20% off their price, when that stops then you know things are turning.

I know - for a fact - of a property that went for asking in the last fortnight.
So does it mean the market has turned?

All this percentage off stuff is nonsense.
Some properties are priced to sell.
In my area the same 3-bed property can be bought from 7 different vemdors from between 220K - 350K.
So in my mind the 220K is priced to sell whilst the 350K is a delusional price.

gurramok

mathie wrote: »

I know - for a fact - of a property that went for asking in the last fortnight.
So does it mean the market has turned?

All this percentage off stuff is nonsense.
Some properties are priced to sell.
In my area the same 3-bed property can be bought from 7 different vemdors from between 220K - 350K.
So in my mind the 220K is priced to sell whilst the 350K is a delusional price.

'Priced to sell' amongst a host of competitors will attract a bid, thats certain for an urban well located pad.

OP, just watch the economy. ESRI stats are at least 6 months behind the curve.

A simple joe soap way of calculating if that bottom is reached is..

"is that house asking for 250k-400k in junkie central worth buying to you?"

And of course, factor in rents. When it gets cheaper to buy than rent and along with an economic upturn, then raise your eyebrows.

Himselfe

I keep reading on these forums people saying that if you will be happy to live somewhere for 20-30 years and can 'afford' or if its your 'ideal home' then what difference does it make. Just go ahead and buy it. It doesn't matter that you're being ripped off.

For me anyway, its about value first, then affordability. Just because you can afford something doesn't mean you're getting good value. This smacks of the 'Property Ladder' mentality to me. Its another phsychological ploy to fool people into thinking they are getting value and to get them to buy houses. Or maybe Irish people have it so ingrained into their mentality that they'll think of any excuse to make it ok to buy.

To take 2 examples from this thread alone:

20goto10 wrote: »

Number one, is it affordable?
Number two, is it the ideal home for you?

and

Senna wrote: »

If you find a ideal (suitable) house that you will be happy to live in for the next 20/30/40 years and its 3.5 times one persons wage, then you will be making a good decision, it may not be the absolute bottom, but it wont be as far off for a home (not just a house).

bobbysands81

Senna wrote: »

And we were hard pressed to find economic commentators who foretold of the bubble bursting (although there were some).

I still reckon the best guide is house price compared to income. If you find a ideal (suitable) house that you will be happy to live in for the next 20/30/40 years and its 3.5 times one persons wage, then you will be making a good decision, it may not be the absolute bottom, but it wont be as far off for a home (not just a house).

Just using your comments on house prices dropping by 12% a year, but i would hope the market will accelerate to the bottom quicker, then they might continue on the following path:


Year- Average House Price
2009- 250k
2010- 220
2011- 195
2012- 172
2013- 151
2014- 133
2015- 119

Considering the average wage is 32k and 3.5 times that is 112k, then it wont be anytime soon that the average earner can buy an average (national average price) house.

If anyone thinks that the average house price is going to fall to 119k in 2015 then they are utterly deluded!

El Stuntman

bobbysands81 wrote: »

If anyone thinks that the average house price is going to fall to 119k in 2015 then they are utterly deluded!

in the same way that anyone who thought that house prices would keep rising for ever (and then leveraged themselves up the hilt to acquire a property 'portfolio') was utterly deluded

black swans, bobby, black swans

mathie

gurramok wrote: »

'Priced to sell' amongst a host of competitors will attract a bid, thats certain for an urban well located pad.

OP, just watch the economy. ESRI stats are at least 6 months behind the curve.

A simple joe soap way of calculating if that bottom is reached is..

"is that house asking for 250k-400k in junkie central worth buying to you?"

And of course, factor in rents. When it gets cheaper to buy than rent and along with an economic upturn, then raise your eyebrows.

Did I miss something here?

gurramok

bobbysands81 wrote: »

If anyone thinks that the average house price is going to fall to 119k in 2015 then they are utterly deluded!

They doubled between 2003 and 2006, now where is that delusion?

gurramok

mathie wrote: »

Did I miss something here?

'Mad prices', it should ring an alarm bell that the bottom ain't here yet.

jhegarty

El Stuntman wrote: »

in the same way that anyone who thought that house prices would keep rising for ever (and then leveraged themselves up the hilt to acquire a property 'portfolio') was utterly deluded

black swans, bobby, black swans

+1

I am not sure who annoyed me more. The people who said it would never fall , or the people who said it will never rise again.

20goto10

Himselfe wrote: »

I keep reading on these forums people saying that if you will be happy to live somewhere for 20-30 years and can 'afford' or if its your 'ideal home' then what difference does it make. Just go ahead and buy it. It doesn't matter that you're being ripped off.

For me anyway, its about value first, then affordability. Just because you can afford something doesn't mean you're getting good value. This smacks of the 'Property Ladder' mentality to me. Its another phsychological ploy to fool people into thinking they are getting value and to get them to buy houses. Or maybe Irish people have it so ingrained into their mentality that they'll think of any excuse to make it ok to buy.

Value for money falls under affordability and "ideal". If you are worried about being ripped off then you should only buy when prices are increasing because clearly your definition of being ripped off is buying something that will decrease in value. Maybe you are in the antiques trade?

Another thing, when prices were on the up the smart people got out before the peak, the lucky people got out at the peak and people who waited for the RTE news to tell them prices have peaked are still trying to sell . Now the clear difference is you're not going to be stuck with a liability if you wait to buy in a falling market. But anyone who thinks everyone is just going to put their coats on and go get a bargain as soon as the bottom is called are going to end up buying something they're less than happy with.

I've said it on here before, there is an abundance of properties that nobody wants to live in no matter what the state of the market. Before they were justified as being "starter homes" and people said sure I'll upgrade in a few years. The reality is there is no such thing as a starter home. There's good homes and there are sh!t homes. IMO, now (as in right now and over the next year or 2) is the time to get yourself a good home.

Himselfe

20goto10 wrote: »

clearly your definition of being ripped off is buying something that will decrease in value. Maybe you are in the antiques trade?

My definition of being ripped off is being fooled into buying something that is waaaay overpriced. And no, I'm not in antiques!!

20goto10 wrote: »

I've said it on here before, there is an abundance of properties that nobody wants to live in no matter what the state of the market. Before they were justified as being "starter homes" and people said sure I'll upgrade in a few years. The reality is there is no such thing as a starter home. There's good homes and there are sh!t homes. IMO, now (as in right now and over the next year or 2) is the time to get yourself a good home.

I agree. The whole 'starter home' thing is a load of rubbish.

ionapaul

'Affordable' is a silly way to base a decision to buy a property on, IMHO. As I've said here before, I can easily afford to continue to drink milk if it cost €50 a litre. I wouldn't need to moderate my intake of milk at all! Likewise, a loaf of bread for €50 is affordable to me. The question really should be what value I place on items; on property, I base the value on the achievable rent - I'm a dispassionate buyer!

robd

bobbysands81 wrote: »

If anyone thinks that the average house price is going to fall to 119k in 2015 then they are utterly deluded!

Cognotive dissonance !!!!

bobbiw

A lot will depend on the effect of the American turnaround over the next year. If the Irish goverment manages the economy and if europe come to Ireland assistance then the collapse would be less likely.

Thats the best case scenario where I would see prices dropping steadily until people decide they are at a level they can live with and at a level where they get a loan easily.

Prices would rise but more in the 2-3% per annum.

It could get a lot worse but hopefully not.

I have no interest in buying property in Ireland at any price but I do see that you will have a national average of 100k plus and less than 100k in the regions.

bobbysands81

El Stuntman wrote: »

in the same way that anyone who thought that house prices would keep rising for ever (and then leveraged themselves up the hilt to acquire a property 'portfolio') was utterly deluded

black swans, bobby, black swans

Agreed mate...

but for a variety of reasons there is no way that the "average house price" will fall that far. Prices will remain falling for some time but an average house price will not drop as far as 119k.

I will wager any amount of money with anyone in relation to this.

bobbiw

bobbysands81 wrote: »

Agreed mate...

but for a variety of reasons there is no way that the "average house price" will fall that far. Prices will remain falling for some time but an average house price will not drop as far as 119k.

I will wager any amount of money with anyone in relation to this.

Why, no one would have predicted that Ireland would be an economic cautionary tale only a few years after being the number one economy globaly.

Wait till the next budget and see how the goverment worsen the situation in order to shore up their finances.

Increased income taxes
They might scrap the levy to make you think you are getting more.

Its silly to think that the average price of a home is Ireland could not be less than 100k.

Ireland is nothing special anymore and overseas investment is headed to eastern europe more and more.

wrightao

bobbiw wrote: »

There are no absolutes and what I am saying is my own personal opinion based on experience and my understanding of economics.

I think Ireland can escape a worse situation if the goverment were not the idiots they are and actually borrowed in order to stimulate the economy.

Just wait till the next budget when they hammer everyone really hard. They are just not used to the decline in Tax revenue and realise that they do not have and will not have the money needed to run the mess that they got themselves into.

Irish people did have a part to play but thats human nature, people were not greedy, they just didnt want to miss the boat that they were told was about to sail away.

Problem with Government borrowing to stimulate is that it strangles further the private sector as to repay the Keynsian input, you have to either raise money by borrowing (as you suggest) or by taxing. Both hurt the private economy as interest rates go up or tax rates and thereby discourage investment. Even Roosevelt swore off Keynes before he died. Another issue is that you need a balanced budget to start stimulating the economy by borrowing. We arent in this position, we cant afford govt spending/ borrowing as a percentage of our GDP to exceed 60%. And another thing, another poster suggested that the cost of building isnt a important. Absolute c""p if you dont mind me saying. When the cost o building outrips the cost of selling the house, we will eventually have a dearth of houses as no one will want to build. Then price rise again. Very simple. This 5 year house drop idea is very empty in theory. As the economy rises and banks borrow again, prices will stabilise and start going up again. I agree we wont have the huge price rises we saw before, no one wants that, but fact is demand soon will outsrip supply as we have a growing population, one of the only in Europe and soon everything becomes a distant memory. Even the big R

gurramok

Here we go again about this 'growing population'. Ask any landlord about why their gaffs are empty recently and they say the 'foreign tenants' fecked off back home to put it bluntly.

Anyway, it does not matter about a growing population. We could be an African country with huge population growth, point being having a growing population does not neccesarily mean we get wealthier to afford houses.

bobbiw

gurramok wrote: »

Here we go again about this 'growing population'. Ask any landlord about why their gaffs are empty recently and they say the 'foreign tenants' fecked off back home to put it bluntly.

Anyway, it does not matter about a growing population. We could be an African country with huge population growth, point being having a growing population does not neccesarily mean we get wealthier to afford houses.

Exactly, in the rat race that ireland has become how many people who have money are having kids. Two people working etc.

The population isint growing, in fact it is shrinking.

wrightao

gurramok wrote: »

Here we go again about this 'growing population'. Ask any landlord about why their gaffs are empty recently and they say the 'foreign tenants' fecked off back home to put it bluntly.

Anyway, it does not matter about a growing population. We could be an African country with huge population growth, point being having a growing population does not neccesarily mean we get wealthier to afford houses.

Well actually, sorry to disappoint but a growing population is important for one reason, its human capital. More people to pay taxes, more people to spend, more affordable social entitlements unlike most of Europe which will be crushed by not having enough workers to pay for pensioners. On another note, Africa is not where it is because of a large and growing population but through other endemic issues. Anyway, who mentioned Africa.Yes, immigrants have been leaving but thats always the case with a boom and bust.

bobbiw

wrightao wrote: »

Well actually, sorry to disappoint but a growing population is important for one reason, its human capital. More people to pay taxes, more people to spend, more affordable social entitlements unlike most of Europe which will be crushed by not having enough workers to pay for pensioners. On another note, Africa is not where it is because of a large and growing population but through other endemic issues. Anyway, who mentioned Africa.Yes, immigrants have been leaving but thats always the case with a boom and bust.

Its clear that there will always be bias on this board for either a soft landing or a bust. Obviously people have vested interests and the people who have a house and see its monetary value evaporate are not happy and hope to see it rise again in the medium term.

On the other side we have people who have not been able to afford a house and see a collapse as a way for them to get a property of their own.

Both groups could be completly wrong.

Houses could keep falling, not many people see them as the investment they once where and this will get worse as we will see the people who swooped in and "low balled and got a deal" find themselves in NE in the next 12-18 months.

But I assure you if and when properties drop to an 125 average, the average joe on 30k a year will not be getting one.

because for that to happen we need a bigger catastrophy like massive interest hikes, banks not lending and very high taxation.

In the 80s you could get a nice house for 50k, not everyone had one because they couldnt afford it. Thats life!

And I have no vested interest either way as I have no property in Ireland and I wouldnt buy at any level.

ktc1

bobbysands81 wrote: »

Agreed mate...

but for a variety of reasons there is no way that the "average house price" will fall that far. Prices will remain falling for some time but an average house price will not drop as far as 119k.

I will wager any amount of money with anyone in relation to this.

If you define an average house as a three bedroom semi outside Dublin, then in many cases I can see the price coming back to circa €120k.

New semi-d's in an estate in my town went for €128k in January 2002 on the introduction of the euro (Irish punt £100k). At the height of the bubble they were going for €280k. Asking price is now back to €200k (selling price may even be lower). I reckon in 2-3 years it'll be back to what they originally sold for or less. This level would also equate to a 6% gross rental yield.
This type of house would have sold for for cira €85k in the late nineties. It continues to puzzle me that people had no problem with prices continuing to rise steeply after we already had two Bacon reports on high prices, yet cannot countenance that they could fall so dramatically. It was tulipmania, plain and simple.

Hobky

Bobbysands1 - Is the €119k referred to a real or nominal average house value?

If we're talking real numbers then I might well fancy a flutter here.

Please confirm time horizon (you're suggesting never - we'll need a definitive period), the odds on offer, the index base to be used (bear in mind the ESRI/PTSB HP Index may soon be discontinued) and the min/max bet you would consider.

bobbiw

Hobky wrote: »

Bobbysands1 - Is the €119k referred to a real or nominal average house value?

If we're talking real numbers then I might well fancy a flutter here.

Please confirm time horizon (you're suggesting never - we'll need a definitive period), the odds on offer, the index base to be used (bear in mind the ESRI/PTSB HP Index may soon be discontinued) and the min/max bet you would consider.

I would consider putting 10k down.