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Given too big of a mortgage?

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    #92
    Scofflaw
    Registered Users Posts: 23,283 ✭✭✭✭Scofflaw


    baaaa wrote: »
    Well,I hope you guys know how lucky you were to be able to sort the hype from the reality.
    But look,even if people predicted a huge crash I don't think anone predicted the enormity of what happened.
    I had money saved for stuff,enough to scrape by with a bit of luck and a few weeks work here and there,but I wasn't prepared for this.

    Funnily enough, it doesn't really work out any different, apart from not having bought a house. "Planning" for the bubble to burst just means not taking up the opportunities a bubble offers - you don't make the crazy money, but you still pay the crazy prices (I mean for goods and services, like rent).

    If it turns out to mean I can buy a house in the downturn, that would be great, but now, of course, the banks aren't lending, which means that the amount I can probably get as a mortgage has shrunk at least as fast as house prices - and the recession affects everybody's business.

    cordially,
    Scofflaw


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    #93
    baaaa
    Closed Accounts Posts: 606 ✭✭✭baaaa


    Scofflaw wrote: »
    Funnily enough, it doesn't really work out any different, apart from not having bought a house. "Planning" for the bubble to burst just means not taking up the opportunities a bubble offers - you don't make the crazy money, but you still pay the crazy prices (I mean for goods and services, like rent).

    If it turns out to mean I can buy a house in the downturn, that would be great, but now, of course, the banks aren't lending, which means that the amount I can probably get as a mortgage has shrunk at least as fast as house prices - and the recession affects everybody's business.

    cordially,
    Scofflaw
    Yeah that's a way of looking at it alright,but I wasn't in it really for the things of a bubble like crazy profits,prices etc..It sounds like I was some investor or something,I just wanted a place to live..


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    #94
    nesf
    Registered Users Posts: 27,645 ✭✭✭✭nesf


    baaaa wrote: »
    Yeah that's a way of looking at it alright,but I wasn't in it really for the things of a bubble like crazy profits,prices etc..It sounds like I was some investor or something,I just wanted a place to live..

    Most people were just looking for a place to live. It was just an added comfort to have paper profits building up "just in case" they needed to sell. In a downturn you're wedded to your property and can't sell because of negative equity.

    In reality, you could spend the next ten years in the same house regardless of boom or bust and materially things might be pretty much the same but the psychological comfort of being able to sell, despite not needing to, is easy to underestimate I think.


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    #95
    Scofflaw
    Registered Users Posts: 23,283 ✭✭✭✭Scofflaw


    baaaa wrote: »
    Yeah that's a way of looking at it alright,but I wasn't in it really for the things of a bubble like crazy profits,prices etc..It sounds like I was some investor or something,I just wanted a place to live..

    In a sense, though, that's what the construction sector was - a bubble economy. It's not anywhere even approaching normal to start working in industry on €35K, and two years later move up to a €70K job, with or without training.

    cordially,
    Scofflaw


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    #96
    baaaa
    Closed Accounts Posts: 606 ✭✭✭baaaa


    nesf wrote: »
    Most people were just looking for a place to live. It was just an added comfort to have paper profits building up "just in case" they needed to sell. In a downturn you're wedded to your property and can't sell because of negative equity.

    In reality, you could spend the next ten years in the same house regardless of boom or bust and materially things might be pretty much the same but the psychological comfort of being able to sell, despite not needing to, is easy to underestimate I think.
    Very true although I'd like to add that I fear this reality has the potential to be very different from what we're used to.


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    #97
    nesf
    Registered Users Posts: 27,645 ✭✭✭✭nesf


    baaaa wrote: »
    Very true although I'd like to add that I fear this reality has the potential to be very different from what we're used to.

    Of course. My point was that all other things being equal, a person would be happier with a mortgage "in profit" than one in negative equity despite their salary, home and mortgage payments all being the same. Add in a depression into the picture and things get much worse, which has been mirrored in consumer sentiment these past two years.


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    #98
    baaaa
    Closed Accounts Posts: 606 ✭✭✭baaaa


    Scofflaw wrote: »
    In a sense, though, that's what the construction sector was - a bubble economy. It's not anywhere even approaching normal to start working in industry on €35K, and two years later move up to a €70K job, with or without training.

    cordially,
    Scofflaw
    The sector was a bubble alright but I'm always hesitant to agree with people when they include the actual labour in that bubble.
    I know for the standard worker that 70k may seem a ****load for relatively unskilled work but when I pull out my paypacket to show them the hours most say it's fair money,we'd be workin 65 hours a week,6 days a week,in a relatively dangerous job(I tore my cruciate and was out for months).Tax took most of my earnings,the takehome hourly rate was average,it was all huge amounts of overtime.


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    #99
    Scofflaw
    Registered Users Posts: 23,283 ✭✭✭✭Scofflaw


    baaaa wrote: »
    The sector was a bubble alright but I'm always hesitant to agree with people when they include the actual labour in that bubble.
    I know for the standard worker that 70k may seem a ****load for relatively unskilled work but when I pull out my paypacket to show them the hours most say it's fair money,we'd be workin 65 hours a week,6 days a week,in a relatively dangerous job(I tore my cruciate and was out for months).Tax took most of my earnings,the takehome hourly rate was average,it was all huge amounts of overtime.

    Sure - I don't mean to sound like I'm carping, but even with all that, a situation where you can earn €70K after two years, even if it is overtime, isn't sustainable.

    I went through the dot-com bubble myself, where a guy fresh out of school with a bit of HTML and a good line of talk could set himself up earning silly money pulling silly hours coding, plus paper wealth in the tens and hundreds of thousands. That wasn't sustainable either (although physical injury wasn't a big risk, apart from keyboard RSI!). Still, people bought into the whole thing, and threw their money around like it was never going to end - at the end of it, they were lucky if they had as much as when they went in.

    cordially,
    Scofflaw


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    #100
    baaaa
    Closed Accounts Posts: 606 ✭✭✭baaaa


    Scofflaw wrote: »
    Sure - I don't mean to sound like I'm carping, but even with all that, a situation where you can earn €70K after two years, even if it is overtime, isn't sustainable.

    I went through the dot-com bubble myself, where a guy fresh out of school with a bit of HTML and a good line of talk could set himself up earning silly money pulling silly hours coding, plus paper wealth in the tens and hundreds of thousands. That wasn't sustainable either (although physical injury wasn't a big risk, apart from keyboard RSI!). Still, people bought into the whole thing, and threw their money around like it was never going to end - at the end of it, they were lucky if they had as much as when they went in.

    cordially,
    Scofflaw
    Yeah I knew it was wrong that I was earning more than most of my mates with 3rd level qualifications,I suppose the graft helped rationalise it,however I didn't in my wildest dreams think it would come to such an abrupt stop.
    When you say at the end of it, they were lucky if they had as much as when they went in,I also don't wish to be harping but,and it's a big but,it could be said that I went in with nothing and came out with a debt of over half a million.I don't think the dot com people suffered such vast negative equity and such little prospect of any work,although I'm open to correction on this.


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