To buy, or not to buy?

Dr_Phil

Hi everyone,

Myself and my OH decided to purchase a house in D3 priced about 350k.. I'm still having a bit of doubts though.. We are silly enough to pay the asking price, as the property is very spacious, has great potential and we both love it since we've seen it. It's gonna be a long-term family home we would like to keep and eventually pass on to our child when we retire/die. Contracts are due to be sign next week.

I'm a permanent employee in one the big Irish banks (IT), my wife is a civil servant (permanent job in health service, maternity) and to be honest I'm still having some bad thoughts about it.. The monthly repayments are 1/4 of our total income for the moment, however I'm concerned of how will the things go in the future. From what I hear and what people say: "If you plan for this to be your home - go for it" but it's a huge responsibility and a biggest decision in my life I've made so far. I'm not sure if I can handle it. I have to say that our current place drives me insane, but that's not a major factor that pushed us to start looking for a gaff.. I don't wanna pay dead-money-rent anymore, I wanna have a bit of space, comfort (but nothing mad) and something that I can look after and make it my own way.

Should I think again and chase the property market like I was doing for the past 6 months? Or should I sign the contracts and start a new, happy life? I simply wanna do it, but I'm afraid that something goes wrong and some stage, I don't know, with jobs, health, whatever... I'm very nervous in general and all these doubts might just be a projection of my mind and things are going to be just as fine, as I dreamed of?

Any comment on it is more than welcome.

Agent J

Interest rates will rise within the next year.

You need to factor those in your repayments. Stress test what you are paying with another 3-4% interest.

Personally i follow the adage that if Tom Parlon is on the radio saying "The property market has hit bottom" then there is another 20% fall at least to go.

If you really like the place then it is your decsion but i think there is more room in the market for a drop which will see when the rates rise. Rates rise will mean those people/developerts who are at the edge paying interest only will get pushed to the wall then have no choice but to panic sell.

Just my 2cent.

Dr_Phil

Agent J wrote: »

Interest rates will rise within the next year.

65% of my "preferential for bank employees" mortgage is on up to 3% fixed rate for life. So it's not that bad I guess.

Thanks very much for your say.. My hands get sweaty when I think of signing for a debt up tp 350.000 euro.

Agent J

Dr_Phil wrote: »

65% of my "preferential for bank employees" mortgage is on up to 3% fixed rate for life. So it's not that bad I guess.

Thanks very much for your say.. My hands get sweaty when I think of signing for a debt up tp 350.000 euro.

I'd like to point out that is a very good thing to be feeling.
If you werent nervous then i'd be worried.

I'd check the small print on that one and work out the balance on increase interest rates anyway.

Also bear in mind your bank will have to charge BIK on that so if rates go up above 3% then your rate of tax (20/41)% will be charged on the rest of it.

Drummer Mummer

Its a buyers market right now, make sure you are not paying over the odds for the property as people are so anxious to sell they will try anything, by that I mean, try to keep the price up. No doubt you have researched the market in the area you are looking to settle down in but be aware there is great value out there if you look. Whatever you decide, good luck

Senna

Why are you paying the asking price?? What would that property have sold for in 2006?
Yes, alarm bells should be ringing in your ears. Unless the asking price of this house is 50% less than the 2006 price and the asking price is 20% less than any similar property, i'd run from the current deal.

Dr_Phil

Senna wrote: »

Why are you paying the asking price?? What would that property have sold for in 2006?
Yes, alarm bells should be ringing in your ears. Unless the asking price of this house is 50% less than the 2006 price and the asking price is 20% less than any similar property, i'd run from the current deal.

That's a good one.

We've been looking for a suitable house for 6 months+

One of them priced 360k (we offered 350k - approved loan, to the owner of the property, not the EA) is gone for over 360k last summer. Another few we were bidding on are gone (gone for good, people moved in already) and I know we offered a good price - but there were people willing to pay more. Two of the houses were sold well above the asking price (315k asking, sold for 329k) on the same street that "our" house is. It was worth approximately 500k+ 2 years ago, now priced circa 350k. I have funny feeling that if we decided to leave it, it would be gone long time ago. I don't wanna risk loosing it. A while ago I got a house, but I wasn't ready so I said to the EA "Listen, we are not ready, I know its silly but I think we should wait". The house was for 335k, we booked for 330k. Next day it got "Sale agreed", then "Sold"... Recently a family moved in.

It's not an investment. It's a family home. A real home we wanna give to our kid, with real Christmas Tree, nice kitchen full of herbs and cosy bedroom. I want to have a bit of space to invite my child's friends, just to live normal life.

But as stated above, I'm terryfied by the amounts of money and still when I read/listen/watch people I just get depressed and think that maybe I should stay in the sh1thole we live in now, keep the head down and wait the storm? But if the prices will start going up - I will most likely never buy a house in such a nice, convenient place for that price.

Richiecats

Let's hope your wife can pay the bills as your jobs not safe by a long way

Dr_Phil

Richiecats wrote: »

Let's hope your wife can pay the bills as your jobs not safe by a long way

Why do you think so? I'm not saying it is toally safe, just curious.. I actually do some hard work in IT and I'm not one of those pr1cks in finances on 70k+ /year getting paid for farting in the chair, ready for voluntary redundancies and getting another 100k for that..

EDIT: In fairness her job isn't 100% secure either. And she's facing another paycuts next year. But if our jobs are relatively "unsecure" what jobs are secure then??

Stky10

Richiecats wrote: »

Let's hope your wife can pay the bills as your jobs not safe by a long way

Hmmm... in that sense, he's a lot better setup for life than a lot of people over the past ten years who bought, and who shouldn't have, or who shouldn't have been allowed to.

Everyone's circumstances are different I suppose, but personally... I can't see why anyone would buy now... since there isn't a credible person out there that can tell me that house prices will be higher in 6-12 months time than they are now. So, in effect for the privilege of owning a house for the next year (ie buying now rather than the reduced value of a similar house in a years time) the OP will pay at least 20-50k, plus the interest on this over 30 years. That potentially could be up to a years salary before tax (possibly more), all thrown away on a moment of rashness.

You say you don't want to pay dead rent money anymore, how's 50k+ of property ownership overpayment striking ya?.

Diarmuid

Dr_Phil wrote: »

I'm still having a bit of doubts though.. We are silly enough to pay the asking price,

Enough said. Offer them a lower price or walk away.

Dr_Phil

Stky10 wrote: »

You say you don't want to pay dead rent money anymore, how's 50k+ of property ownership overpayment striking ya?.

I've already paid my landlord for the past few years 50k+ rent (dead money). I guess I'm gonna live another 40 years, I also believe I won't spend these years being homeless in the cartoon box under the bridge. That means I will have to live somewhere and - obviously - pay rent. Aproximate cost: 50k / 5 years.

40 years=50k*8. 400k for paying off someone else's mortgage, leaving my child and wife with nothing after I die and live under risk of being asked to move out in my 70's...

That's the way I see "dead money". Pay whole life and own nothing. Pay and end up on the street.

As for the house price: I might go into negative equity next year. And next. And next after next. I don't care, as it is not an investment. But is there anyone who can tell me 100% that the price of my property will never ever go above 350k again or at least for the next 10 years? Prices go up and down, there are bottoms, there are peaks. That's the way it's always been and that the way I see it.

I might be wrong though.

JuliusCaesar

Why don't you offer a lower price and see what they say first?

Are you borrowing 350K, or is the house price 350K?

Dr_Phil

JuliusCaesar wrote: »

Why don't you offer a lower price and see what they say first?

Are you borrowing 350K, or is the house price 350K?

I did offer lower price, but there was another couple willing to pay more. So per my previous experience I decided to go ahead rather than loosing another suitable house. Some may think I was bidding against myself, so I thought earlier (It's a buyers market, don't be fool) but the minute I said "Ok, we won't pay any more) someone else jumped in and the house was gone.

I'm borrowing 330k, but I'm allowed 350k - don't wanna do it really, however this is the amount we planned to borrow initially.

Agent J

Rent is not dead money.

This is something which needs to be beaten into every man, woman and child in this country to try and prevent such a property bubble happening again.

Renting suits a particular state and time. If that is no longer for you that is fair enough but it doesnt not mean you have "wasted" the money over the last 8 years.

The attitude that renting is dead money leads to a belief that you need to stop paying it as soon as possible and get on the property ladder at all costs as quickly as possible...

Senna

Dr_Phil wrote: »

That's a good one.

We've been looking for a suitable house for 6 months+

One of them priced 360k (we offered 350k - approved loan, to the owner of the property, not the EA) is gone for over 360k last summer. Another few we were bidding on are gone (gone for good, people moved in already) and I know we offered a good price - but there were people willing to pay more. Two of the houses were sold well above the asking price (315k asking, sold for 329k) on the same street that "our" house is. It was worth approximately 500k+ 2 years ago, now priced circa 350k. I have funny feeling that if we decided to leave it, it would be gone long time ago. I don't wanna risk loosing it. A while ago I got a house, but I wasn't ready so I said to the EA "Listen, we are not ready, I know its silly but I think we should wait". The house was for 335k, we booked for 330k. Next day it got "Sale agreed", then "Sold"... Recently a family moved in.

It's not an investment. It's a family home. A real home we wanna give to our kid, with real Christmas Tree, nice kitchen full of herbs and cosy bedroom. I want to have a bit of space to invite my child's friends, just to live normal life.

But as stated above, I'm terryfied by the amounts of money and still when I read/listen/watch people I just get depressed and think that maybe I should stay in the sh1thole we live in now, keep the head down and wait the storm? But if the prices will start going up - I will most likely never buy a house in such a nice, convenient place for that price.

You seem to know a lot of information that isn't available to the general public, is this because someone in your bank has been telling you? or are you listening to EA bullsh1t? The same EA who probably fell out of his chair with surprise when you offered him the full asking price.

Of course houses sell, houses were selling during the depth of the recession (late 2008/early 2009) only in small numbers, but there are very few unique houses in Ireland. Your saying you have to jump on this house now or you wont get the house you want, but i'm guessing the house is no different than the couple of hundred others within a mile. If you dont buy this house now, someone else probably will, but there'll be another one (few) on the market when you look again.

Seen you took the time to start this thread i think you are having doubts, and you probably should. You are in a very lucky situation by getting a life time fixed rate of 3%. This does mean you can spend more than some else with the same earnings, but that doesn't mean you shouldn't get as good a deal as possible.

Diarmuid

Dr_Phil wrote: »

I did offer lower price, but there was another couple willing to pay more. So per my previous experience I decided to go ahead rather than loosing another suitable house. Some may think I was bidding against myself, so I thought earlier (It's a buyers market, don't be fool) but the minute I said "Ok, we won't pay any more) someone else jumped in and the house was gone.

You are making both cardinal sins in this falling market
1. Don't pay the asking price
2. Don't get hung up on one place.

Seriously if you are questioning yourself at this stage, imagine in 3 years time when your interest payments are at least double what you are going to be thinking. does not apply in this case

BTW how do you know that another couple were willing to pay more? Did the guy selling the house tell you?

Dr_Phil

Agent J wrote: »

The attitude that renting is dead money leads to a belief that you need to stop paying it as soon as possible and get on the property ladder at all costs as quickly as possible...

Good point, but...


If we can afford to pay monthly repayment, as it's nearly same or less than my rent - why not to move out and buy something? Therefore, having such opportunity as myself and OH, isn't it a huge waste of money to stay for another 5 years in 2 bedroom flat, paying off landlord's mortgage?

Of course, not at all costs. It's just a change of a place to my own, much bigger, brighter - while monthly payments remain the same.

I know I sound like I was looking for excuse, but am I wrong?


@ Diarmuid - We walked off a few times before ("Come on, it's a joke, it's a buyers market now!!!"), and the sale was agreed on these properties a short while after. Going further that way we will never buy a house.

Diarmuid

Dr_Phil wrote: »

Good point, but...


If we can afford to pay monthly repayment, as it's nearly same or less than my rent - why not to move out and buy something? Therefore, having such opportunity as myself and OH, isn't it a huge waste of money to stay for another 5 years in 2 bedroom flat, paying off landlord's mortgage?

Of course, not at all costs. It's just change of the place to my own, much bigger, brighter - while monthly payments remain the same.

I know I sound like I was looking for excuse, but am I wrong?

This is exactly the same reasoning we heard in the middle of the fcukin bubble.

Just go ahead and buy. :rolleyes:

Stky10

Dr_Phil wrote: »

40 years=50k*8. 400k for paying off someone else's mortgage, leaving my child and wife with nothing after I die and live under risk of being asked to move out in my 70's...

That's the way I see "dead money". Pay whole life and own nothing. Pay and end up on the street.

That's everybody's different circumstances. However your 330k mortgage is going to cost you a lot more than 330k after 30 years interest payments on it (mortgage rates will go up next year, but who knows what way they'll go over the next 30 years). Add in the property tax coming down the line, and the cost of maintaining the property. And add in it being another thing to making it more difficult for you to leave the country as it goes down the tubes over the next 5 years.

Dr_Phil wrote: »

As for the house price: I might go into negative equity next year. And next. And next after next. I don't care, as it is not an investment. But is there anyone who can tell me 100% that the price of my property will never ever go above 350k again or at least for the next 10 years? Prices go up and down, there are bottoms, there are peaks. That's the way it's always been and that the way I see it.

I might be wrong though.

Actually, there have been places like Japan and Canada that prices have never recovered to boom time values. Prices will go up again eventually, but almost certainly due to inflationary reasons rather than a boom. We're an island economy, with our biggest market being our European neighbours, but because we're on the peripherary, we're always going to have higher transport costs etc. So I don't see that boom coming back anytime soon. Even the stuff we manufacture here costs more here at the moment than it does up north, and that difference isn't accounted for just by the VAT difference rate, so how much longer can anything manufactured here be made for a competitive rate?

http://www.independent.ie/national-news/no-vat-change-to-counter-retail-exodus-to-the-north-1944041.html

Dr_Phil

Diarmuid wrote: »

This is exactly the same reasoning we heard in the middle of the fcukin bubble.

Just go ahead and buy. :rolleyes:

I allow myself to disagree - hope you don't mind?

The stuff I used to hear was "I don't care that the monthly repayment will be 50% of our joint income, I can always sell it as the prices went up again. See, just this week I "earned" 40k, it's just impossible to loose"

... and one day prices didn't go up again, moreover - they fell... The lad has lost his job and 2k per month grew up to incredible amount they couldn't afford.

That's what's happened.

SIX PACK

Dr_Phil wrote: »

Hi everyone,

Myself and my OH decided to purchase a house in D3 priced about 350k.. I'm still having a bit of doubts though.. We are silly enough to pay the asking price, as the property is very spacious, has great potential and we both love it since we've seen it. It's gonna be a long-term family home we would like to keep and eventually pass on to our child when we retire/die. Contracts are due to be sign next week.

I'm a permanent employee in one the big Irish banks (IT), my wife is a civil servant (permanent job in health service, maternity) and to be honest I'm still having some bad thoughts about it.. The monthly repayments are 1/4 of our total income for the moment, however I'm concerned of how will the things go in the future. From what I hear and what people say: "If you plan for this to be your home - go for it" but it's a huge responsibility and a biggest decision in my life I've made so far. I'm not sure if I can handle it. I have to say that our current place drives me insane, but that's not a major factor that pushed us to start looking for a gaff.. I don't wanna pay dead-money-rent anymore, I wanna have a bit of space, comfort (but nothing mad) and something that I can look after and make it my own way.

Should I think again and chase the property market like I was doing for the past 6 months? Or should I sign the contracts and start a new, happy life? I simply wanna do it, but I'm afraid that something goes wrong and some stage, I don't know, with jobs, health, whatever... I'm very nervous in general and all these doubts might just be a projection of my mind and things are going to be just as fine, as I dreamed of?

Any comment on it is more than welcome.

whats the rush???
My Opinion would be to hold out for another 18 months at least!!! The Irish Property Market is still in free fall the house in question whats the chance you could purchase it for €50,000 less in 12 months ??? you probably think your getting a great deal at the price your getting it now... But ye will be fair sick if ye buy now & in a year or 2's time could of got the property for considerably less... & were hearing lots of those stories...
My advice would be continue renting until we have really hit the bottom of the barrell & dont listen to the government if their saying the market is picking up usually thats just a tactic to get people to part with their cash again.... they have done enough damage as it is.:mad: All the best

Dr_Phil

SIX PACK wrote: »

My advice would be continue renting until we have really hit the bottom

How do I know it's the bottom? And who I am supposed to listen to know that this is the "real" bottom? It's almost impossible to buy at the very bottom unless you are extremely lucky. If all the average Murphy's knew all them bottoms and peaks they would be loaded

iguana

How long will you mortgage term be OP? 25 years? If you wait another 18 months you could probably buy with a 20 year term, or maybe quite a bit less. 18 months of paying rent now in exchange for 5 years less of mortgage repayments is the opposite of dead money.

SIX PACK

Its Not the Bottom thats the thing! only advice i can give & im no expert is to Keep an eye on what prices the are going for around that particular area on websites like Myhome.ie or Daft Im living in carlow & house prices are continuing to plummet down here me & girlfriend Wanted to buy last yr but were refused a mortgage--- was probably for the best because since then i have been let go... & the house Remax were hounding us to take has since dropped from €195,000 to €145,000 & still not sold...
at the end of the day its up to yourselves if ye want to be up to yer eyeballs in debt personally wouldn't fancy it... Life is too short... Maybe ye can easily afford it but at least wait for this budget & see what more taxes & cuts are coming... Adios

Dr_Phil

iguana wrote: »

How long will you mortgage term be OP? 25 years? If you wait another 18 months you could probably buy with a 20 year term, or maybe quite a bit less. 18 months of paying rent now in exchange for 5 years less of mortgage repayments is the opposite of dead money.

I want it to be 35 years with plan of paying it all off within 15-20 years (yes, it is possible). 35 years is just in case if the plan will not work out/partially work so that the repayments won't kill me.

18 months... That's what I read on "the property pin" for past 9 months. And 9 months later it's still 18 months... Looks to me like it's another urban legend - 18 months=the cure. I wonder how people know it's going to be 18 months? And that the property in this area will go down by 50k? Well, if it will - it will but it's no longer 500k as it used to be. And most likely within 5 years will go up for the same 50k.

It's just my opinion.


@ SIXPACK - I value you opinion (as everybody else's) - I'm just a man in doubts whos half way through in buying a house... So it's normal that I'm trying to defend the decision we have made. But I read and consider every say here in this thread.

iguana

Dr_Phil wrote: »

18 months... That's what I read on "the property pin" for past 9 months. And 9 months later it's still 18 months... Looks to me like it's another urban legend

18 months ago people thought if they waited 18 months and prices may have dropped by 30-40%. Instead they seem to have dropped by 50% and it's now clear that we still have a long way to go. Prices in Ireland were so over-priced 3 years ago that most people couldn't fathom just how ridiculous they were. We were conditioned to think that outlandishness was normal that our assumption of what the bottom was way off base.

When I realised at the start of 07 that the crash had started I thought that around summer 09 would be a good time to buy and estimated a 30% drop. In that time it started becoming more and more obvious that it would take longer to unravel, because it had further to unravel than I ever imagined. We're really only facing the truth in increments.

I currently think that 18 months from now prices will be down 30% from where they are now. However I also suspect that by then it will be obvious that the bottom is still a way off. I'm happy to rent for as long as I can reason that each year renting is two or more years off the back of my mortgage.

Dr_Phil

iguana wrote: »

18 months ago people thought if they waited 18 months and prices may have dropped by 30-40%. Instead they seem to have dropped by 50% and it's now clear that we still have a long way to go.

But isn't it that some (considered as good) areas have lost some value - i.e. "my" house came down from 500k to 350k - and the prices in the area seem to stay dead-still for the past few months? The real "players" that seem to have a huge influence on the average property value are places like Tyrrelstown, Clonsilla - all the new estates (ghettos) in the middle of nowhere priced mad at the top of the bubble, now worth less than my hamster's poo?

It's a mistake to assume that prices have fallen and will fall further equally everywhere across the country.


@ Iguana - what will you do if you happen to realise that it's very hard to get a house you're looking for, simply because there is much more people bidding over your offer? 1, 2, 10 houses and still no house, then you decide to offer asking price and you hear someone gives more. What will you do? How many times, how many years you can play a tough fella walking away believing it's "buyer's market"? When kids grow up and you get old.. What will you do?

Diarmuid

Dr_Phil wrote: »

I allow myself to disagree - hope you don't mind?

The stuff I used to hear was "I don't care that the monthly repayment will be 50% of our joint income, I can always sell it as the prices went up again. See, just this week I "earned" 40k, it's just impossible to loose"

... and one day prices didn't go up again, moreover - they fell... The lad has lost his job and 2k per month grew up to incredible amount they couldn't afford.

That's what's happened.

Ok. Fair enough. Maybe I was being harsh.

However all the indicators - economy shrinking, housing bubble bursting, unemployment increasing, wages shrinking, international recession and taxes increasing, point to a continuing fall in house prices. To me it just sounds like you have made a decision to buy (at the asking price) and are looking for validation for that decision.

Caveat emptor, as they say.

iguana

Dr_Phil wrote: »

@ Iguana - what will you do if you happen to realise that it's very hard to get a house you're looking for, simply because there is much more people bidding over your offer? 1, 2, 10 houses and still no house, then you decide to offer asking price and you hear someone gives more. What will you do? How many times, how many years you can play a tough fella walking away believing it's "buyer's market"? When kids grow up and you get old.. What will you do?

There are well over 200 houses on the market in Dublin that meet my minimum standards, and I have fairly strict standards, so I'm quite sure that won't happen. It will clearly be and remain a buyers market for a very long time, we have an oversupply of houses, rising unemployment and emigration. The market won't turn under these circumstances. We will have plenty of notice before the prices start to rise again.

As for kids, I was nearly 8 when my parents bought their house. And up until they signed contracts on that house I had little idea about the pros and cons of renting versus buying and even less interest. Our house was our house as far as I was concerned. If they had never bought a house I would have grown up never caring. Children don't know if they are in a rented house or an owned one, it doesn't bother them.

Dr_Phil

Diarmuid wrote: »

However all the indicators - economy shrinking, housing bubble bursting, unemployment increasing, wages shrinking, international recession and taxes increasing, point to a continuing fall in house prices. To me it just sounds like you have made a decision to buy (at the asking price) and are looking for validation for that decision.

Yes, we have paid the booking deposit. Still have to sign contracts though.

Now, eurozone is out of recession. 2010 is going to be tough in Ireland, unemplyment will go slightly up, however at the moment live register eases. 2011 is predicted to be a bit better and once UK and States will recover Ireland will certainly follow them. Neither boom nor recession are static and endless. It will not be like that forever, same it was stupid to expect that the boom/bubble will last forever.

Anyway, I see media play significant role in brainwashing - my say is to cheer up, nothing lasts forever, in another 3 years we'll be all laughing.

As a side note - for the past 2 months I keep seeing: 200 jobs Dublin, 6400 jobs Tallagh, and so on, so on... It's totally opposite to what I used to see 2 years ago (200 gone, 650 gone, disaster, hell, etc.) So slowly but surely - it will recover.

As for property prices, for the government to make some money on NAMA, they will have to stimulate the property market, and they will. All this recession is just a way of making a HUGE money by just a few. A bit of conspiracy theory here, but I don't care :P


EDIT:

Unemplyment figures

Boom times - 4,7%
Now - 11%
Foreigners registered (as blamed for draining a huge amounts from Social Welfare and "first to let go") - 3%
That gives an estimate 3,3% jump from the "boom times" in unemployment for the Irish.

Panic and brainwashing.