Property Prices-People deluded.

ShadowHearth

Aprilmay wrote: »

Yes she is in a home share but its HER on own home on HER terms. And yes we all know where house prices are at the moment- but I don't get why everyone tries to have a go at someone who's bought a home - she happy with her home and the price she paid for it & she has an extra €700 a month in income from her lodgers. Why are people trying to pick flaws and tell her she should be miserable. We know there are people in major negative equity at the moment but not everyone feels like they've a noose around their neck with mortgage.

Will agree. I stayed away from this thread, but that was my opinion too.

There are deluded people like the fella in Lego and estate with a 2 bed house for 470k mentioned above. On the ather hand there are people who got homes and paying it out with no trouble. They don't care it droped in price, they happy to pay for theyr own mortgage and not to rent and pay for someone else's mortgage.

Yes it droped in price, some people are deluded, some just don't care and happilly live in theyr own house.

So why should someone go " haha now your house does not cost as much as it did, you should be crying like a little girl "

Aprilmay

ShadowHearth wrote: »

Will agree. I stayed away from this thread, but that was my opinion too.

There are deluded people like the fella in Lego and estate with a 2 bed house for 470k mentioned above. On the ather hand there are people who got homes and paying it out with no trouble. They don't care it droped in price, they happy to pay for theyr own mortgage and not to rent and pay for someone else's mortgage.

Yes it droped in price, some people are deluded, some just don't care and happilly live in theyr own house.

So why should someone go " haha now your house does not cost as much as it did, you should be crying like a little girl "

Exactly my point I'm in the process of selling and I do feel for people -the home I'm selling was €640k at the peak I did not pay anything anyway near that price -anyway I'm selling at €360K but someone I know in work has a friend in the same house that has a €500k mortgage on their home and I will probably sell mine for less than listed because we know the market is bad but I can't imagine what those people must feel when they see what we are selling for it must be stomach churning and I certainly would not take pleasure out of it.
And before anyone tries to make a smart comment -I'm not in negative equity in my home far from it (being a child that was in school in 80s my mother taught us how to manage our money during the last bad recession )

Ray Palmer

Has anybody properly worked out how much money they are or could have saved in actual monthly costs rather than property value?

So you have things like the interest rate you can get now versus the tracker rate 60% of the mortgage holders have.

Rate of rent during the boom and at present versus the mortgage payments people have.

Stamp duty at the time and how much it would be reduced to now.

There are lots of factors and people just seem to like shouting about the direct house prices st the moment

iguana

Aprilmay wrote: »

Why are people trying to pick flaws and tell her she should be miserable.

Nobody said she should be miserable. If she made her decision for emotional reasons and is happy with it then that's great. However, just because a decision was emotionally right doesn't mean that it was financially sound. From a financial perspective it was a pretty awful decision. But if on balance the emotional gains outweigh the financial losses to her then of course she should be happy with her decision and her life.

But don't try and pretend that just because it feels good that it made monetary sense. It didn't. But coming out with "it hasn't really lost value" or comparing the costs of renting alone to paying a mortgage reliant on lodgers, or (unbelievably) claiming that the money saved by having lodgers out weighs the loss from the last two years of house price drops, is either deluded or disingenuous. And when people come online and make such statements they will be picked apart so nobody else reading this makes the same mistakes, thinking it's not a terrible financial move.

If someone says owning their own house for a few extra years is such a fantastic feeling that it makes a 6 figure loss palatable to her, then nobody should argue with that. But if they say they haven't lost out on any money by not waiting then it will be picked apart.

Aprilmay

iguana wrote: »

Nobody said she should be miserable. If she made her decision for emotional reasons and is happy with it then that's great. However, just because a decision was emotionally right doesn't mean that it was financially sound. From a financial perspective it was a pretty awful decision. But if on balance the emotional gains outweigh the financial losses to her then of course she should be happy with her decision and her life.

But don't try and pretend that just because it feels good that it made monetary sense. It didn't. But coming out with "it hasn't really lost value" or comparing the costs of renting alone to paying a mortgage reliant on lodgers, or (unbelievably) claiming that the money saved by having lodgers out weighs the loss from the last two years of house price drops, is either deluded or disingenuous. And when people come online and make such statements they will be picked apart so nobody else reading this makes the same mistakes, thinking it's not a terrible financial move.

If someone says owning their own house for a few extra years is such a fantastic feeling that it makes a 6 figure loss palatable to her, then nobody should argue with that. But if they say they haven't lost out on any money by not waiting then it will be picked apart.

I think its just peoples way of dealing with it a bad financial decision and some people are totally deluded and its not a good way of doing it. I think what I'm trying to say is some people seem to take delight in others misfortune, I'm a mother and I find it heartbreaking to see families loosing their homes and I know other people are feeling so desperate with their situations that they are taking their own lives.
I know some people here are offering good advice but others I feel are mocking and taking delight in it which I feel is wrong to do.

iguana

Ray Palmer wrote: »

Has anybody properly worked out how much money they are or could have saved in actual monthly costs rather than property value?

No we're all idiots. :rolleyes: Of course people have. In very, very simple terms, I not only have a lot more in my pocket each month by renting (as I compare like with like). But I have calculated that each year I hold out saves me 3 years off the back end of my mortgage. So I was on track to have paid my mortgage off when I was 52, if I bought now (on a similar property to my old one) I'd have it paid back by 43. In another few years that will be lower again and with added saving we will very likely buy for cash, at which point interest rates rises will be a good thing as they'll boost our savings.

ronan45

HUH??? What my 1 bed apartment in Ballymun is still worth 385,000. and ill have no-one tell me any different

OMD

iguana wrote: »

No we're all idiots. :rolleyes: Of course people have. In very, very simple terms, I not only have a lot more in my pocket each month by renting (as I compare like with like)..

It depends though when you decided to rent rather than buy. If you decided in 2007 then well done. House prices have fallen and so have rents.

If you decided in 1990 then not so well done. The person buying in 1990 could easily have gotten a 20 year mortgage and now have it paid off for less than you could have rented an equivalent property over the same period. Everyones decisions are different and have different financial consequences

Lyn256

Yes! I know how much I've saved in the last 8 months-at least €40k
I don't know about anyone else but thats a huge amount of money to me.
Sold in Sept 10 and right now a similar house in my old estate is for sale for €40k less than I asked for mine. I actually think its overvalued in the current market in that similar estates with similar style/quality houses are asking as much as €60k less than what we sold for last year. (3 bed semi west dublin) We sold for 5% less than asking.
Renting since Nov 2010-house is ok-decor not great but landlord is professional and reliable and we really like the area that we're living in.
Between the cost of our old mortgage and the rent that we are paying (less the interest we're getting on the equity that we got out of the house)-renting is costing us approx €100 extra per month and I think that we're prob paying a bit too much rent coz originally we looked for a shorter lease and were happy when the landlord agreed to the shorter term but 7 months later we're still here and not going anywhere in the coming months.
Still looking to buy but not in a rush-haven;t seen the right house in the right location but will buy when we do.
As time goes on-its looking more and more like we will be buying with little or no mortgage-thats going to be huge for us-it means that I can stay home with the kids when they're small and as time goes on-it means that we will be able to save for their college and our pensions.
Every €10k we save in borrowing represents at least €60pm repayments (20 year mortgage) out of our aftertax income. So within a year we're figured that our borrowings for our next house will be at least €60k less than we anticipated last year. It is likely to be €80-€100k less-thats a lot of extra money in our pockets every month. As the mother of 2 under 4 year olds-it means that as time goes on we will be better able to provide for our family while giving us less stress and a better family life
We didn;t sell with any big masterplan to rent for the longterm but as time goes by-it just seems like the best thing to do.

Ray Palmer

iguana wrote: »

No we're all idiots. :rolleyes: Of course people have. In very, very simple terms, I not only have a lot more in my pocket each month by renting (as I compare like with like). But I have calculated that each year I hold out saves me 3 years off the back end of my mortgage. So I was on track to have paid my mortgage off when I was 52, if I bought now (on a similar property to my old one) I'd have it paid back by 43. In another few years that will be lower again and with added saving we will very likely buy for cash, at which point interest rates rises will be a good thing as they'll boost our savings.

In very simple terms I am still paying less on my mortgage than rent for the last 7 years and even though house prices dropped I am paying less if I bought the house now at a cheaper price if I could get the mortgage. That is me but I am sure some people are only focusing on the house price. I will also have paid for my house by the time I am 50. Interest rate charges are not equating very well on saving to charges for the money at the moment.

If I was renting I would have probably not saved as much money as I have and I would not own any furniture or improved the property further than I could rent. Good for you to be able to rent and save but if you could do that surely you could have reduced the term of the property you bought along the way? Are you sure you did your sums correctly considering everything?

At the moment it is not worth me reducing the term of my mortgage due to the interest rate I have. I get more for it in the bank.

Ray Palmer

Lyn256 wrote: »

Yes! I know how much I've saved in the last 8 months-at least €40k.

The answer is actually no if that is how you calculated it.

OMD

Ray Palmer wrote: »

In very simple terms I am still paying less on my mortgage than rent for the last 7 years and even though house prices dropped I am paying less if I bought the house now at a cheaper price if I could get the mortgage. That is me but I am sure some people are only focusing on the house price. I will also have paid for my house by the time I am 50. Interest rate charges are not equating very well on saving to charges for the money at the moment.

If I was renting I would have probably not saved as much money as I have and I would not own any furniture or improved the property further than I could rent. Good for you to be able to rent and save but if you could do that surely you could have reduced the term of the property you bought along the way? Are you sure you did your sums correctly considering everything?

At the moment it is not worth me reducing the term of my mortgage due to the interest rate I have. I get more for it in the bank.

I am in a pretty similar situation although I did pay off some of my mortgage to avail of PTSBs 10% extra offer. It would have cost me a hell of a lot more to rent rather than buy. Bought first house in 1995. Sold twice in mean time and bought again. Used the equity each time to improve my quality of life and am now working part-time and spending the rest of the time with the family withsubstantial savings behind me. I could easily pay off the mortgage over the next 5 years (sooner if I went full time) but why bother. If PTSB come back with a better offer to get me off the tracker then I will consider it.

Lyn256

Ray Palmer wrote: »

The answer is actually no if that is how you calculated it.

?? Not sure what you mean by no

I've at least €40k more in the bank than I would have if I sold today.

Also the type of property that I'm looking to buy has fallen by at least €50k.

TommyTippee

I can't fathom how in 2009 someone can put themselves in a position where they need TWO lodgers to help pay their mortgage and will still be in a precarious position when they come off their fixed rate.

That is a woeful financial decision and in no way deserves congratulations or anything else.

It is stupid decisions like this, all driven by the "rent is dead money" rubbish that has the economy the way it is, and the only people winning here are the bank's shareholders.

I can't believe that some people have learned nothing about personal finance and long term borrowing in the last 7 years. That, to me, is a disgrace.

iguana

Ray Palmer wrote: »

Are you sure you did your sums correctly considering everything?

Are you for real? You equate 50 to 35 and then question my mathematical ability? Seeing as the last house on my street sold for €629k, (asking €685k) last year and I pay €1150pm in rent, I can assure you my sums are correct.

And I don't leave my savings in this country or currency. ECB IRs are irrelevant to me.

Ray Palmer

iguana wrote: »

Are you for real? You equate 50 to 35 and then question my mathematical ability?

I didn't do that so yes I question your mathematical ability. Are you paying all your taxes with your money out of the country?:D

iguana

Ray Palmer wrote: »

I didn't do that so yes I question your mathematical ability.

Yes you certainly did.

I will also have paid for my house by the time I am 50.

I'm in my early 30s and realistically plan to either be a mortgage free property owner or a potential cash buyer buy 35. Big, big difference between 35 and 50. I know you don't know exactly how old I am but I'm clearly a good chunk beneath 43 if I need to wait another few years and add my savings before I can buy outright.

You also came out with this gem.

Good for you to be able to rent and save but if you could do that surely you could have reduced the term of the property you bought along the way?

Of course I could have reduced the term when I had a mortgage, I actually had a deal where I could knock a low 5 figure sum off it each year without it changing the rate I was paying. But I could never have even dreamed of reducing the term as much or as quickly as house price falls are doing for me by STRing. That's the point of the whole argument I was making.

solovely

TommyTippee wrote: »

I can't fathom how in 2009 someone can put themselves in a position where they need TWO lodgers to help pay their mortgage and will still be in a precarious position when they come off their fixed rate..

I don't NEED two lodgers, soon I will only have one. I CHOOSE to have two lodgers so that I can afford to have the lifestyle I desire (new clothes, out 2 nights a weekend, city breaks, foreign holidays, nice car, etc.). I obviously calculated my mortgage based on my salary and what I could pay back worst case scenario if mortgage rates go up and I can't get lodgers. I could still afford it, just not live as nicely as I currently CHOOSE to.

Thanks a million to the posters who supported me. Glad to see there's still people out there who value emotional security and happiness over meaningless euros in the bank (in a foreign bank in Iguana's case). But then it does seem that happiness to lots of people is based on money in the bank, smugness and being "right" all the time!

iguana

solovely wrote: »

Glad to see there's still people out there who value emotional security and happiness over meaningless euros in the bank (in a foreign bank in Iguana's case).

I have loads of emotional security. I have owned a house, it was over-rated. Having a big cushion of savings and an amazing rental house beats having a mortgage hands down. Having a reasonable expectation that I won't have rent or a mortgage when I have school going children brings a phenomenal amount of "emotional security" as it will allow me to afford the education which is likely to suit them best and also be with tjem full-time when they aren't at school. It means my husband can pick and choose what work he does and not take any contracts that don't suit or excite him.

My main "emotional security" however has jack to do with money or bricks. It comes from my marriage, my family and friends, and even my dogs. I'd give up everything I own for them if I had to. Real emotional security is about love. And I'm afraid to say, I would hate, hate, hate to have a lodger, for any reason. Outside of death and serious illness it's my worst nightmare. I could never relax if I had a flatmate in my home.

As well as that I have said if the emotional security you gain from your house outweighs the financial drawbacks that's really great. But don't try to argue that it makes financial sense too, as it doesn't even begin to. You wanted the emotional security you would have of owning a house and you bought it at a high price. It was value to you but don't try to claim it was a bargain. That's where people take issue. It's not an attack on your choices, it's an attack on misleading information which could encourage someone else to do something they'd regret.

Dades

mikemac wrote: »

Will we see gazundering in Ireland?
Seller desperate to sell, maybe in a chain with a bridging loan and right before the contracts are signed the buyer demands a lower price or they walk.

Heard a story from my EA last week - buyer demanded 40k off price immediately prior to signing. Surveyor was in after the price agreed of course.

TommyTippee wrote:

It is stupid decisions like this, all driven by the "rent is dead money" rubbish that has the economy the way it is, and the only people winning here are the bank's shareholders.

I take it you haven't owned bank shares in the last few years. :pac:

Duckjob

iguana wrote: »

I have loads of emotional security. I have owned a house, it was over-rated. Having a big cushion of savings and an amazing rental house beats having a mortgage hands down. Having a reasonable expectation that I won't have rent or a mortgage when I have school going children brings a phenomenal amount of "emotional security" as it will allow me to afford the education which is likely to suit them best and also be with tjem full-time when they aren't at school. It means my husband can pick and choose what work he does and not take any contracts that don't suit or excite him.

This^^

Any chance I could get a brain graft from you for Mrs Duckjob ?

I'd love to own my own house now, but I can wait longer, because much more important to me is setting us up for a life without financial stress and hardship, so that we can actually enjoy our lives.

I've no intention of renting all my life, but right now here today, and for the short-medium term, the money you are saving by not buying is by far the easiest money you'll ever save in your life.

TommyTippee

Dades wrote: »

I take it you haven't owned bank shares in the last few years. :pac:

Ooops

I meant stakeholders, rather than shareholders!

johndaman66

TommyTippee wrote: »

Ooops

I meant stakeholders, rather than shareholders!

I don't particularly see how any of the very very vast majority of them are winning either?

okiss

For some of us selling a house or apartment we currently live in is not important at the moment. We are living in the area that suit us, we can pay our mortgage each month, have savings and can work within a budget.
I know people who borrowed in the boom. One person I know drove a 10 year old car, had no holidays ect to save for the deposit and for some furniture for the house. Because of this they could cope with the down turn when it came unlike others who borrowed money to fund there lifestyles during the boom.
Irish people have a thing that rent money is dead money and we need to get out of that mindset. Renting can keep a person flexible in regards to jobs and give people more spending/ saving power as some people have said in this thread .
House prices will continue to fall and we need house prices that are realistic - 3 to 5 times normal yearly salary cost. We need to have a min 10% deposit so we not borrowing the unrealistic amounts.
When interest rates do rise as they have started to it won't mean we are out of our home within 12 months because we can't afford the payments.
We need to learn from the boom and bust conditions we now have.
Do we need the new car, new top of the range furniture for the house and the 3 holidays a year or do we say I can do with out this until I can afford it.

kippy

okiss wrote: »

For some of us selling a house or apartment we currently live in is not important at the moment. We are living in the area that suit us, we can pay our mortgage each month, have savings and can work within a budget.
I know people who borrowed in the boom. One person I know drove a 10 year old car, had no holidays ect to save for the deposit and for some furniture for the house. Because of this they could cope with the down turn when it came unlike others who borrowed money to fund there lifestyles during the boom.
Irish people have a thing that rent money is dead money and we need to get out of that mindset. Renting can keep a person flexible in regards to jobs and give people more spending/ saving power as some people have said in this thread .
House prices will continue to fall and we need house prices that are realistic - 3 to 5 times normal yearly salary cost. We need to have a min 10% deposit so we not borrowing the unrealistic amounts.
When interest rates do rise as they have started to it won't mean we are out of our home within 12 months because we can't afford the payments.
We need to learn from the boom and bust conditions we now have.
Do we need the new car, new top of the range furniture for the house and the 3 holidays a year or do we say I can do with out this until I can afford it.

While renting in a lot of circumstances is obviously a good way of living, there are other circumstances where buying makes more sense.
Renting in this country suits a lot of people at various stages in their life but renting long term for a family isn't as straightforward as it is in other countries. And the thoughts of having to uproot a whole family and everything that goes with it every few years because of an issue with the landlord etc is not something that a lot of people want to buy into.

There's also a factor that sometimes a person can buy a property for less around the same price that they rent it for. I know thats exactly what myself and my wife found in galway about 5 years ago. We looked at our jobs/propects/savings/interest rates/rents/future family plans etc and made the call that buying a house made a lot more sense than renting. And thats a decision we don't regret at all.....
Why? Because we plan on living in the place long term, we are paying less than renting (19 years time we'll own it outright) and the place/area suits our needs now and into the future. We are subject to rate rises, maintenance costs, property tax most likely and all the other costs associated with owning a house but we've worked that in to our decision making process in as much a way as possible.

My point is - there's absolutely nothing wrong with buying a house - so long as you:
1. Buy it for the right reasons (You plan on living in it long term and in as much a way as possible you have determined it will fit your needs into the future)
2. You protect yourself (as much as possible) against job fluctuations/health issues.
3. You dont get a mortgage over 20/25 years.
4. You factor in various rises that could happen.
5. You work out rental versus mortgage costs versus salary costs.

Theres absolutely nothing wrong with renting either if that suits you.


I think the "property ladder" is the worst concept to get into the Irish Psyche (in general)
People bought 1 and 2 bed apartments and dwellings that were totally unsuitable for their future needs (perhaps they were grand for a few years) in the hope that prices would rise, they would sell and move to a bigger more suitable place.
So now you have a lot of people who bought one or two bed apartments which are unsuitable for family life stuck with them.

dan_d

+1.

Everything in moderation!!!

Obviously it's not going to suit everyone to buy, or to rent. But people do have the right to chose and say that they prefer one option over the other, without having everyone jump down their throats...seeing as we're all such experts in finance and property following the last 10 years. There ARE some good deals out there right now, there are people that can afford them and will be able to into the future, there are people that are buying a home, not a "starter home". And it's their right to do that if they chose, without being painted as either complete idiots or villains that will be demanding bailouts from the taxpayer in 2 years time.

If it suits you to rent, then good for you.If you want to buy, and you've done extensive research into what you're paying and how you can afford, then good for you too.And you're under no obligation to defend that decision to anybody else, least of all on an internet forum.

Ray Palmer

iguana wrote: »

Yes you certainly did.

Sorry did you post it earlier in the thread. Don't take note of every little mention right through a thread.

I'll actually own two houses by 55. Earlier if I decide to pay off the loans early but there is no point. Most mortgages have a point in the year you can pay off a lump sum so nothing strange about that. I could probably sell the other house and reduce my term but no incentive for that.


Good for you that you decided to risk your money in other investments rather than home ownership.

I would say from your tone that you are still relying on house prices going down so you can buy outright. Fine principle if you are willing to take the risk. Interesting you avoided the issue of tax on the earnings of your investments. I get more rent than you are paying on a much cheaper house so great for you on that count too.

As I said I have spent money on furniture and doing my house up. Simply you can't get a house like mine on my road as I have changed it to my taste and it took time not just money. Rather not wait more years to get to that point myself.

You have focused on the house price alone and not all expenses and are exempting your saving as they would have been while owning. I don't need to know all the details but you are selectively calculating with renting as your preferred choice based on how you are describing your situation.

Whatever, still doesn't mean everybody else who owns is an idiot or losing money.

Freddie59

lainey316 wrote: »

Um, I am actually. Sorry, not a clue what point you're trying to get at there :rolleyes:

You cannot pigeon-hole 'every estate in ireland' to be the same. There are some estates whose houses would dwarf some country manors. Too much of a generalisation there methinks.

iguana

Ray Palmer wrote: »

Whatever, still doesn't mean everybody else who owns is an idiot or losing money.

Did anybody say that anywhere?

Sorry did you post it earlier in the thread. Don't take note of every little mention right through a thread..............................................Interesting you avoided the issue of tax on the earnings of your investments.

About as interesting as paint drying really. Of course I'm fully tax compliant, I'd hardly be talking about it online if I wasn't.:rolleyes:

Simply you can't get a house like mine on my road as I have changed it to my taste and it took time not just money. Rather not wait more years to get to that point myself.

My rental house is ridiculously gorgeous, my furniture is my own, the location is utterly perfect for the point I am at in my life. I mean come on, I'm hardly going to spend that amount of cash each month on something substandard.

I would say from your tone that you are still relying on house prices going down so you can buy outright. Fine principle if you are willing to take the risk.

Nothing in my "tone" at all. It's right there in my words. I have cash enough to buy a damn nice, well located house right now. But affordability ≠ value. I don't like wasting money. Even if I have €20 in my pocket I'm not going to spend 85c on a Mars bar in Centra when I can buy a pack of 5 for €1.29 in Tescos. So I'm not going to buy an overpriced house and lose (at least) tens of thousands of euros just because I can.

D3PO

this thread seems to have gone down a total different rabbit hole.

However just becasue somebody paid move than they woudl now. Doesnt make it a bad financial decision. And even if it is mathematically a bad financial decision the majority of all financial decisions we make from the lowest level up are bad ones.

As Iguana just posted peopel will spending 85 cent on a mars bar thats a bad decision when they could have bought in bulk and the unit cost would ahve been a fraction.

going to a restaurant bad decision buy and cook the same food at home makes more financial sence

go to the cinema bad decision wait for it to show on TV for free.

go to a concert bad decision buy the cd hear the same music for a lot less

buy a car drive it off the forcourt and see it depreciate immediatly. The fact is almost every purchasing decision made is a bad one mathematicaly. Now a house just tends to be on a larger scale but the premise is the same.

Im in neg equity, I dont care if people tell me I made a bad financial decision. Besides the fact that neg equity only impacts me if I need to or want to sell which I dont.

I have paid approx € 28,000 more in mortgage payments than if I rented a similar house over the past 6 years and the argument people will make is that if I rented and put that money on deposit and bought right now Id have a be much better off.

I dont buy it my tracker essentially means that even at todays reduced purchase prices I would still have a similar monthly mortgage outgoing. It also assumes that I would be vigilant enough to save every penny of that money.

On paper thats fine but its not realistic to assume that is the norm. Human nature would dictate that I would have spent a portion of that money be it on a summer holiday, weekends away, probably sepnt more on my up coming wedding or something else that takes my fancy. Assuming that most people would have banked the lot of that difference are dilusional and cannot see beyond the numbers to real life situations.

Im not even going to go into capital reduction on my mortgage, mortgage interest relief gained versus rent reilief and stamp duty comparrisons etc becasue to get that forensic is pointless and varies so much from situation to situation that it cannt be applies across every person in neg equity.

clearly there are people in neg equity that made bad decisions, but you cannot assume everybody that bought made a bad decision.