Propert Collapse - has it even started?

P. Breathnach

waffleman wrote: »

I know of a case where a family couldnt make the mortgage repayments and gave the keys back to the bank. They then arranged to rent the house back from the bank. Most probably to avoid uprooting the kids. To me this seems crazy - then again I dont know all the cirumstances like number of years left on mortgage etc.

Interesting. I didn't know that arrangements like that were on the menu.

How well it works out for each party depends on the numbers, the very information that you don't have. But I presume they both see it as better than a repossession and a sale on the open market.

Bandit12

The nightmare scenario is a 80% drop from the peak in 2007 and the best i've heard is a further 10-15% drop. I'd say the truth will be somewhere in between that. One things for sure only a fool would be buying a house or apartment in this day and age.

waffleman

Bandit12 wrote: »

The nightmare scenario is a 80% drop from the peak in 2007 and the best i've heard is a further 10-15% drop. I'd say the truth will be somewhere in between that. One things for sure only a fool would be buying a house or apartment in this day and age.

Here is an example of a 1000 sq foot 1 bedroom apartment for 55k that has been on the market for a while where I live (granted I live in a small rural town but this still represents a big drop in price)

http://www.mccauleyproperties.com/APT506.htm

Fact is it still isnt selling even at this low price.

ei.sdraob

waffleman wrote: »

Here is an example of a 1000 sq foot 1 bedroom apartment for 55k that has been on the market for a while where I live (granted I live in a small rural town but this still represents a big drop in price)

http://www.mccauleyproperties.com/APT506.htm

Fact is it still isnt selling even at this low price.

where in Ireland is that? looks quite spacious

ill take 10 of them! BTL ftw :pac: :pac: :pac:

P. Breathnach

ei.sdraob wrote: »

where in Ireland is that? looks quite spacious

ill take 10 of them! BTL ftw :pac: :pac: :pac:

It's in Moville -- not a bad location for a holiday home. The second property tax is a bitch, though, so I'm not putting in an offer.

I.S.T.

AlekSmart wrote: »

It looks to me that at some point in the mid future at least some of the housing/commercial development stock will HAVE to be demolished and ploughed back into agricultural use......We cannot eat concrete,nor will we be able to grow stuff in it either !!! :eek:

Do you really think we are short of agricultural land? What about all those unused fields I see everything I drive around the country?

I heard a saying one time and it went something like this: If the Dutch lived in Ireland and the Irish lived in Holland, Ireland would feed the whole of Europe and Holland would sink. I think there is a lot of truth to this.

ei.sdraob

P. Breathnach wrote: »

It's in Moville -- not a bad location for a holiday home. The second property tax is a bitch, though, so I'm not putting in an offer.

uhm yeh north of (London)Derry
could make for a nice quiet office if theres broadband out there
i sure hope this whole BTL business dies a painful death it deserves


went on daft earlier, some sellers in Roscommon are getting desperate http://www.daft.ie/1338729
this here must have cost close to 200K to build + land (if not more)


driving around Galway country is crazy as well, so many McMansions left half build or in progress

jimmmy

waffleman wrote: »

Here is an example of a 1000 sq foot 1 bedroom apartment for 55k that has been on the market for a while where I live (granted I live in a small rural town but this still represents a big drop in price)

http://www.mccauleyproperties.com/APT506.htm

Fact is it still isnt selling even at this low price.

Put in an offer of 95% of the asking price and you may get it. Now where did I hear the 50 k figure mentioned before + what did it represent ?
To put 50k in context, its amazing a lovely clean 1000 sq.ft apartment could be got for a years average public service salary. How much further can property fall ? Usually property is a multiple of years salary.

I.S.T.

If anyone is really interested in seeing how much prices have dropped download the Property Bee add on for Firefox. Once installed it will show you the history of price drops for each property on daft.ie. My area in Dublin has lots of examples of 40% drops.

Sponge Bob

The nothing or less than nothing argument is quite important . Houses in places like East St Louis or Detroit or indeed in parts of Baltimore and Cleveland are worth less than nothing . They have been going downhill for 50 years or more.

That is because these places have property taxes and the only way out of property tax is to flatten the property .

We have only just introduced a baby property tax. Wait until an empty house in Cavan has a carrying cost of €1500 a year in tax as against demolishing it , on the other hand , which would cost €3000 .

Scofflaw

omahaid wrote: »

Legally he is, but will he? Will everyone? I doubt it. My point is that this house will not sell (therefore is worthless) and the loan is absorbed by the bank and as we all know the bank never loses money, someone else pays. If it is another bailout then the taxpayer pays for a house that is worthless.

People did this in the UK after the Eighties property boom collapsed...the banks were still pursuing them into the early part of this decade. The debts don't go away, and they are not picked up by the taxpayer - they are a debt, the same as any other, and the banks will pursue them.

cordially,
Scofflaw

Niall Keane

Eventually the fall will level off when Irish people stop viewing houses with the intent of making a profit and “trading-up”, when domestic property stops being investment, of course it has in reality, but this needs to sink into people’s minds.
Then people might actually question you know the irrelevant stuff of the last 10 years like design, does this house work for me? Is it cheaper to build a house that does?
Eventually when the construction trade settles down, i.e. when nearly everyone is let go, when the cost of materials and workmanship firm up and when your contractor probably will last the build, then judgements can be made on how much a home (not a property) will cost to build. The only reason to settle for living in a ready-made house, be it second hand or designed by a developer is either location or cost, and when people realise they won’t be trading up, they’ll think real hard about settling for crap design or a bad location. Crap property will have to price itself accordingly, to attract interest. (let’s not mention NAMA)
How many people in Co. Meath believed that they would commute 3 hours to Dublin every day for life and remain absentee parents? I bet most thought that within 5 years they could trade up to Raheny etc.? How many people still live in minimum size apartments instead of the homes they hoped to bring a family up in?
When this sinks into the Irish mentality, when a house once again becomes a machine for living in, and not a box to generate profit or equity, when we learn to find value in how we live now, and not in how we hope to live, only then will property prices stabilise.

stevedublin

omahaid wrote: »

But if it doesnt cover the outstanding loan then what? If person A buys the house for €400k, does a runner, bank sells for €200k, what happens to the other missing €200k? Normally it would be written of as a bad debt, but if this happens on a large scale then another bailout? The house, by the fact it exists, costs the taxpayer at least €200k. Its value is minus €200k, worth less then 0.

I think you've just discovered a new branch of maths!

omahaid

stevedublin wrote: »

I think you've just discovered a new branch of maths!

Coolio for me What I describe is an extreme case but I'd compare it to the shop keeper with a pint of milk, if he doesn't sell it before it goes off he throws it out; to him that pint of milk had a negative value. And what I read about NAMA, SPV, Anglo Irish, AIB and BOI is a new type of maths to me :P

NewDubliner

omahaid wrote: »

Coolio for me What I describe is an extreme case but I'd compare it to the shop keeper with a pint of milk, if he doesn't sell it before it goes off he throws it out; to him that pint of milk had a negative value.

Or maybe the goods in question are some very nice Tulip bulbs?

SkepticOne

omahaid wrote: »

Coolio for me What I describe is an extreme case but I'd compare it to the shop keeper with a pint of milk, if he doesn't sell it before it goes off he throws it out; to him that pint of milk had a negative value. And what I read about NAMA, SPV, Anglo Irish, AIB and BOI is a new type of maths to me :P

I think the key thing is that a house is always worth what someone else is prepared to pay. Who owns it, how much they borrowed for it, how much has been written off. All of that is irrelevant.

It is true though that people doing a runner on their mortgages is a problem for the banks and given that this is Ireland this will be passed on to the public.

Dannyboy83

ei.sdraob wrote: »

I dont think theres much left to fall from here, maybe 10-20%

what we will have is a long slow stagnation period where prices would be static (which is almost same as falling assuming everything else is inflating)

in some areas the prices of new build detached houses (not apartments there to many of them and they have long way to go) are approaching or have approached the price of land + cost to build

the cost to build cant go down unless cost of materials and labor (min wage) does

the cost of land will be held up by NAMA and if the greens get their way and start dezoning

The point I was trying to make tho, is that with all the extra burden on the taxpayer, those price will have to fall & continue to do so for the foreseeable future. There is no other way.

Price of Land will continue to decrease & Cost to build will continue to fall

Properly Explosion Vs. Property Implosion
A) Real Wage growth & tax reduction until 2008-> Vs. Real Wage contraction & tax levies/increases until 2012 onward
Increased demand/Immigration -> Vs. Reduced Demand/Emigration
C) Greed/Equity/High inflation/zero deflation -> Vs. Fear/Debt/growing deflation
D) Historically Low Interest Rates (on a booming economy) -> Vs. Increasing Interest Rates (on a devastated economy)
E) Grants/Tax Relief -> Vs. No Grants/Tax Relief & New Property Taxes/Water Charges etc.
F) Gov Incentives for married couples etc. Vs. Removal of incentives to encourage women to enter workforce

All circumstances seem to have transitioned from the optimal scenario for growth Vs. The optimal scenario for complete meltdown.
But we are not yet seeing this reflected in national property prices (even by half).

Amhran Nua

ei.sdraob wrote: »

the cost of land will be held up by NAMA and if the greens get their way and start dezoning

With a giant overhang in developed property as we have at the moment, the cost of land won't be pertinent for quite some time, I'd say.

Mr.Micro

We must be the laughing stock of Europe. Nobody mentions the Celtic tiger now, as it was a pyramid built on hot air, inflated credit, greed and egos. The banks have been in a hiatus since they had to be rescued. Once NAMA gets going we might see a few changes with the newly invigorated and greedy banks in the form of repossessions amounting to even more of a glut in property thus driving prices lower still. Having said that logic does not come into it when its FF at the helm, and maybe they will start Celtic Tiger 2 as Nama will be sweeping the bloated debts under the carpet for now. The banks will be debt free, all shiny and new and looked after by the Financial Regulator. I can feel my confidence rising already.

Rev. BlueJeans

P. Breathnach wrote: »

Interesting. I didn't know that arrangements like that were on the menu.

How well it works out for each party depends on the numbers, the very information that you don't have. But I presume they both see it as better than a repossession and a sale on the open market.

They seem to be. Indeed, your neighbours could be renting rather than paying the mortgage, and pride understandably being what it is, very few people need ever know.

I think it is something we may see more and more.

Rujib1

omahaid wrote: »

I actually dont accept every house can be sold for some amount. There are housing estates around the country (I know of some here in Ennis) that are complete with only a handful of houses occupied. If one of these houses is deserted, mortgage abandoned, house unsold, what then? This is not an exceptional circumstance either. What is that house worth? Unsold, it needs to be maintained? Or will it be left to ruin? If it cannot be sold and the mortgage is not paid off, what is that house worth?

In the US, any amount of unfinished housing developments have simply been bulldozed by the banks, because the developer is gone belly up, and the the future economic value is not looking good.

Could happen here I guess.

Absurdum

Sponge Bob wrote: »

The nothing or less than nothing argument is quite important . Houses in places like East St Louis or Detroit or indeed in parts of Baltimore and Cleveland are worth less than nothing . They have been going downhill for 50 years or more.

That is because these places have property taxes and the only way out of property tax is to flatten the property .

We have only just introduced a baby property tax. Wait until an empty house in Cavan has a carrying cost of €1500 a year in tax as against demolishing it , on the other hand , which would cost €3000 .

Parts of the US like those you mentioned are simply ghettoes in industrial wastelands. There is no hope of any sort of employment prospects and these areas are simply uninhabitable due to crime etc. You can't compare this to deepest darkest Cavan, which is a beautiful part of the country, and still close to Dublin.