Huge negative equity on apartments.

MadsL

JohnCleary wrote: »

I hate to be a cnut, but the property crash is the best thing that's ever happened to me.

I know a lot of idiots made bad choices, but on the positive, it has given a new generation great opportunity (the ones who didn't go mad spending when society encouraged it)

Oh dear. I guess you think you are going to buy property at bargain basement prices and make a killing. Sigh.

I don't see any great opportunity, rather myself and my wife were forced to emigrate, and we didn't 'party' but rented (and were laughed at when we warned others not to buy) - Ireland is fucked for the next 20 years as far as I can see. Please don't ask me to have any sympathy for those who couldn't do basic maths in 2005-6 and see the crash coming, their folly effectively has forced many out of the country through no fault of their own.

MysticalRain

Thinkingaboutit wrote: »

They pay their mortgage and have nothing else. Most other western countries, largely more successful than this place, have non recourse, or highly limited legal recourse for banks, typically one case, so I cannot see the problem. A lot of mortgage debt by people who gave up on their houses is written off anyhow. Same with corporate debt incurred during and in connection with Celtic Tiger construction boom.

It is simply not reasonable, and happens nowhere else, to expect someone to live a mistake like this for a lifetime. They cannot discharge the debt through bankruptcy as the system remains insanely harsh. Only in 2011 could a person exit the process after 12 years. It is a waste of person's life on this earth.

In most other western countries, people would have been renting at the age these people bought their houses. Or continuing to rent for the rest of their lives. Ireland as a very low rate of house repossessions compared with other countries (something I suspect these people are playing on i.e. hoping for some kind of deal where they get to keep their house for a greatly reduce mortgage). I think the situation wouldn't be so bad if the government simply left the market take it's natural course, and let a flood of cheap, repossessed houses drive down prices further (which is what happens in other countries).

Bullseye1

A large portion of the money paid for the house was paid directly to the government in VAT, taxes paid by construction workers and Stamp Duty. They also pumped billions into the banks to cover their loses and some people want people thrown out onto the streets because they have been unfortunate to lose their jobs. This country is truely gone to the dogs.

Thinkingaboutit

Prices fell far more than any mainstream voice predicted. Even people who made largely sensible purchases of a home for their family are in negative equity. A significant portion of the population having little disposable income for the rest of their working life, will just mean more failure for this country. The Party of Fail: The Irish Pirate Party decided not to regulate the market properly, leaving us with the mortgage overhang, and so many barely habitable hovels that were self certified by Celtic Tiger cowboy builders. The FF: the Pirate Party are the reason why the taxpay has to pay for banks.

OP will have to wait. If the Euro fails, most of this will be lost in the economic deluge. Possibly, some form of resolution that allows a person to remedy a bad lifetime decision, might appear. That said, some here, would have coronaries at very idea of mortgage debt relief. Oh well.

MadsL

Thinkingaboutit wrote: »

Prices fell far more than any mainstream voice predicted. Even people who made largely sensible purchases of a home for their family are in negative equity. A significant portion of the population having little disposable income for the rest of their working life, will just mean more failure for this country. The Party of Fail: The Irish Pirate Party decided not to regulate the market properly, leaving us with the mortgage overhang, and so many barely habitable hovels that were self certified by Celtic Tiger cowboy builders. The FF: the Pirate Party are the reason why the taxpay has to pay for banks.

OP will have to wait. If the Euro fails, most of this will be lost in the economic deluge. Possibly, some form of resolution that allows a person to remedy a bad lifetime decision, might appear. That said, some here, would have coronaries at very idea of mortgage debt relief. Oh well.

"Largely sensible"??? There was no house purchase that was sensible in those years. The sensible people I saw at the time were selling up and renting in 2007, were there really people who bought at that time making transactions that you would describe as sensible?

noxqs

In the rest of the world people invest in bonds and stocks instead of houses.

The returns are staggeringly higher than a house can ever give. It's at best an inflation hedge.

Irish mentally of houses being some kind of asset thats investmentgrade is backwards and quite simply not true. If you can rent a 3 bed for less than you can get a current mortgage (trackers never coming back) - and you put the difference into bond/stock funds, you'd be so much better off than buying after 30 years.

A house is a terrible, horrible asset - no one invests in houses, only the loans.

Irish landlordism as it is right now where rents are based on prices that was 260% higher (60% drop requires a 260% increase in prices to recoup) will not last and yields will plummet wiping them out in the process as well. The demographic outflow and empties will ensure this. Nevermind the influx of neo-landlords who got apts at 100K and less competing for rents with the 350K+ landlords.

So why a young couple would rush to buy property now would be a complete bewildering mystery unless they can't find any suitable rentable accomodation.

Take it from the Germans, they're smart and financially savvy, they almost all rent. And interestingly if you look at the prices in Berlin like-for-like apts they're half price to current Dublin prices. Why is Dublin such a special little princess?

It's going to get worse before it gets better.

Thinkingaboutit

MysticalRain wrote: »

In most other western countries, people would have been renting at the age these people bought their houses. Or continuing to rent for the rest of their lives. Ireland as a very low rate of house repossessions compared with other countries (something I suspect these people are playing on i.e. hoping for some kind of deal where they get to keep their house for a greatly reduce mortgage). I think the situation wouldn't be so bad if the government simply left the market take it's natural course, and let a flood of cheap, repossessed houses drive down prices further (which is what happens in other countries).

A good many US states have a vast shadow housing inventory of unknown size that banks decided to rent back to the ex borrower or just lock up until things improve. Mass repossession won't help anyone. This country doesn't even have a vaguely adequate stock of public housing, and the rental market is probably still in something of a bubble cause by government having to subside rent for too many people. I think maybe if the government perhaps converted a lot of mortgages into rentals (it happens here to a small extent and all those who pay only part of the mortgage are in effect renters of a sort) maybe a slow rent to buy, although the question would arise as to who the landlord might be.

Dum_Dum

If I was caught in such a situation, I would reject debt slavery and declare bankruptcy in a lenient jurisdiction such as the UK. Everybody deserves a second chance.

Thinkingaboutit

Dum_Dum wrote: »

If I was caught in such a situation, I would reject debt slavery and declare bankruptcy in a lenient jurisdiction such as the UK. Everybody deserves a second chance.

That is only open to someone with interests in the UK, I think, though I am open to correction on that. Otherwise the bk can be challenged. Debt slavery is only justifiable in the most perverse moral system. Everyone does deserve a second chance. We make mistakes. Unlike many in the thread, we cannot all see into the future.

MysticalRain

Thinkingaboutit wrote: »

A good many US states have a vast shadow housing inventory of unknown size that banks decided to rent back to the ex borrower or just lock up until things improve.

Mass repossession won't help anyone. This country doesn't even have a vaguely adequate stock of public housing, and the rental market is probably still in something of a bubble cause by government having to subside rent for too many people. I think maybe if the government perhaps converted a lot of mortgages into rentals (it happens here to a small extent and all those who pay only part of the mortgage are in effect renters of a sort) maybe a slow rent to buy, although the question would arise as to who the landlord might be.

Repossessions will help the market return to a normal equilibrium which helps the future generation who want to buy houses. I can't see the Irish banks locking up houses indefinitely (they will just go to rack and ruin and ultimately be worth nothing).

The government needs to get the fcuk out of the rental market altogether. If the property bubble has convinced me of anything, it is that the more the government gets involved in the property market, the bigger the mess they create. The problem with the cute hoors in this country is that they will interpret a "rent to buy" scheme as a the same thing as a mortgage, except with reduce terms. A better scheme would involve extending the duration of a mortgage so it is more manageable in the long term. Let's say from 30-50 years, and if it isn't paid off by then, the debt stays attached to the house and whoever wants to buy it has to factor that into the purchase price (or if it is passed to children from parents, they will have to pay off the balance).

MysticalRain

MadsL wrote: »

"Largely sensible"??? There was no house purchase that was sensible in those years. The sensible people I saw at the time were selling up and renting in 2007, were there really people who bought at that time making transactions that you would describe as sensible?

The other aspect of this is that these people would be under the exact same "debt slavery" if the bubble hadn't burst. NE equity only matters if you are planning on selling your house. If you simply want to raise a family in a home that you are planning on living in for the next 50 years, it doesn't really matter either way.

Halloran springs

We missed the boat lads, apparently the time to buy and get on the ladder was July/August 2007.

http://www.independent.ie/opinion/analysis/the-smart-ballsy-guys-are-buying-up-property-right-now-1047118.html

Pity I wasn't "smart" or "ballsy" enough to get on the ladder back then

Thinkingaboutit

MysticalRain wrote: »

The other aspect of this is that these people would be under the exact same "debt slavery" if the bubble hadn't burst. NE equity only matters if you are planning on selling your house. If you simply want to raise a family in a home that you are planning on living in for the next 50 years, it doesn't really matter either way.

It does matter. The debt and repayment are huge, and there is no hope of ameliorating it by downsizing the home, or refinancing the mortgage debt. Only the relatively low rates for a lot of people have kept things from getting really bad.

Government has a responsibility to create a solid framework for economic activity, and then step back or step in as needed. The imaginary 'Free Market' is not going to do that. Other places managed to regulate housing better, whether through controlling credit and related matters strictly, or rents under certain circumstances (although politicising rent rates in this country would be insane given the unfit for use political system).

It is great to have all these people who could see into the future in 2007. I wonder if a search of their posts (if I was very bored) would support their claims of perspicacity through time and space.

MysticalRain

Thinkingaboutit wrote: »

It does matter. The debt and repayment are huge, and there is no hope of ameliorating it by downsizing the home, or refinancing the mortgage debt. Only the relatively low rates for a lot of people have kept things from getting really bad.

It is only a "big problem" for the few tens of thousands people saddled with the debt. It is not a huge problem for the rest of the country relative to other economic issues going on right now.

Government has a responsibility to create a solid framework for economic activity, and then step back or step in as needed. The imaginary 'Free Market' is not going to do that. Other places managed to regulate housing better, whether through controlling credit and related matters strictly, or rents under certain circumstances (although politicising rent rates in this country would be insane given the unfit for use political system).

I get that. Which is why I don't have a problem with some government regulation of the market. The problem of course is that the government (and the Irish establishment in general) have a vested interest in pumping up the property market. So they are never going to behave like a rational, honest actor when it comes to their role in regulating the property market.

As an aside, many of the same people complaining here about NE would have screamed bloody murder if government intervention in 2006 had driven down the value of the over priced houses they just bought (especially the buy-to-let crowd who make up a big chunk of the NE folks).

It is great to have all these people who could see into the future in 2007. I wonder if a search of their posts (if I was very bored) would support their claims of perspicacity through time and space.

Off you go. I've done it myself. It's quite hilarious seeing familiar faces from these threads trying to talk sense into the boards.ie equivalents of Ailison O'Riordans and Brendan O'Connors back in 2006-7. "Seeing into future" is exactly what you need to do every time you make a life-changing decision like purchasing a house. Some people are just better at it than others (it helps if you are the kind of cynic who laughed at likes Bertie rather than taking his word at face value. Or believed the estate agent who sold you that house actually had your best interests at heart).

Make sure to take note when you are looking back over these threads in 5 years time: the same cynics here are also predicting another 10-20% decline in house prices in the next 2-3 years, then flat-lining with the occasional dead-cat-bounce for the rest of the decade and a gradual uptick in the decade after that. We'll see who's proven right eventually.

sdanseo

MysticalRain wrote: »

It is only a "big problem" for the few tens of thousands people saddled with the debt. It is not a huge problem for the rest of the country relative to other economic issues going on right now.

..and even then, only some people are affected in real terms. If you signed up to pay the mortgage, can still repay it, and are not looking to sell the home; then there is little or no REAL impact on your day-to-day finances. The problem only arises when you find yourself unemployed or looking to move because you now have kids, etc.

I'm not trivialising the issue, more pointing out that negative equity in itself doesn't have to be a big deal for someone who is happy in their home and safely employed.

apache

Just skimmed the thread. I got a mortgage for my apartment fairly easily in 2007. Am a public servant so it was no problem. But with pay cuts and now find myself out of work on disability its very stressful and in process of restructuring mortgage but of course bank are not playing ball. I didn't pay 400k or anything like it. Management fees are an issue which foolishly i didn't factor in.
However at least i'm not paying dead money. My mortgage is the same as renting 2 bed apartment - no difference. In the near future i will have to default due to finances and i refuse to worry about it. I have been so stressed and done everything i can to meet and set up talks with banks. I done my bit - nothing more i can do.

apache

Lando Griffin wrote: »

Could be worse. You could be in an apartment block with only half the units occupied. Then again with so many on the housing list one would expect that such units be filled and reducing the list. Then at least you would be living in a vibrant exclusive apartment block like what was in the glossy brouchures.

That is whats exactly happening! Empty units are being bought by DCC at rock bottom prices and given over to social housing. So you end up with a huge mortgage living next to someone who wrecks the place. In my experience you don't respect anything if you are given it for nothing. So annoying!

Edit - just read the whole thread. Nobody forced a gun to my head when buying. Still costs the same to rent as to buy so still happy i bought. Not planning on going anywhere and don't need to ask someone if i can redecorate etc.
So no big deal.

Only problem is social housing and those who don't pay management fees and place goes to ruin. And as i said earlier being out of work at mo due to illness and not being able to afford it. i will be defaulting for a while after lots of searching of ways around but i will be paying it all back so big swing....

TheChizler

Halloran springs wrote: »

We missed the boat lads, apparently the time to buy and get on the ladder was July/August 2007.

http://www.independent.ie/opinion/analysis/the-smart-ballsy-guys-are-buying-up-property-right-now-1047118.html

Pity I wasn't "smart" or "ballsy" enough to get on the ladder back then

It reads like satire... Ahh, the benefit of hindsight!

MadsL

Thinkingaboutit wrote: »

There is a matter of proportion here. If someone bought into hype in 2003 and bought something that later dropped from 450k to 99k, should they have to have that around their neck for a lifetime? A huge portion of the population are in stasis, adults who made one mistake and their blameless children, because the Party of Fail: the Irish Pirate Party allowed the housing market to become so highly distorted.

If they bought in 2003 they probably weren't so badly hit.
Tell me though, should some of my friends whose whole pension scheme got wiped in the dot com crash have that round their necks for a lifetime, what makes the Irish property crash so especially heinous?

Thinkingaboutit wrote: »

It is simply not reasonable, and happens nowhere else, to expect someone to live a mistake like this for a lifetime.

Err, where do I get my rebate for my investment losses in the dot com crash? Do I have to live with my mistake for a lifetime?

Thinkingaboutit wrote: »

Everyone does deserve a second chance. We make mistakes. Unlike many in the thread, we cannot all see into the future.

Those who lost the most were incapable of seeing into the present. The writing was very clearly on the wall pointing to a crash. Those that chose to believe "Ah, Ireland is different" are the ones you are asking for my sympathy, not happening.

apache wrote: »

However at least i'm not paying dead money.

You think? Have the last few years taught you nothing? What do you think interest on a loan and stamp duty are if they are not 'dead money'?
Please, educate yourself about the dead money myth.

http://www.news.com.au/realestate/experts/busting-the-rent-myth/story-fneofxxf-1226421779502

http://www.jdlstrategies.com.au/investment-profiler/94-is-rent-money-really-dead-money

http://www.guardian.co.uk/money/2010/nov/14/home-ownership-renting

apache

I don't need educating thanks mads. As i already said it would cost me the same to rent a 2 bed apartment so its not dead money. Its only dead money if you want to profit from it or move on.

This thread smacks a little of looking down your nose at buyers. A little insecurity perhaps? I certainly would not like to rent. And deffo not when i'm in my 60s! The less overheads at that age the better when getting the pension. Its called looking to the future and not living in the now. But whatever makes you feel happy...

They are all opinion pieces that you posted and you know what they say about opinions....

MadsL

Care to explain why renting is dead money then?

Insecurity? LOL, I just bought in the US for far, far better value after years of avoiding the real Irish dead money trap...

apache

Bully for you!

personally its not dead money for me. What part of its the same amount paying a mortgage than renting do you not understand?

how is that dead money? Plus i own it. I don't need to ask anyones permission with what i do to it.

I was talking generally in the latter part of my post but cheers for letting me know how deadly you are.

MadsL

apache wrote: »

Bully for you!

personally its not dead money for me. What part of its the same amount paying a mortgage than renting do you not understand?

how is that dead money? Plus i own it. I don't need to ask anyones permission with what i do to it.

That's not what I asked. I can see how you think paying a mortgage is not dead money, but why do you think renting is dead money, apart from the usual Irish insecurity about not 'owning' the property. And I've news for you, you don't own your property til the last payment has been made, the bank do.

So again please explain how renting is dead money.

apache

No its not news for me that i don't own it. Are you 5? Who thinks they own it? Surely its just a figure of speech?

renting means you can never settle and leave your own mark on a place. No point in putting money into it because that is dead money. Moving is a pain. People like stability not putting dead money into a place.

I didn't have to pay stamp duty as a first time buyer either so your point about that is null and void.

Also having to repeat myself but don't want to be still paying money in my 60s on living arrangements. You would nearly pay a mortgage twice over in your lifetime if you continued to rent. That is dead money!

MadsL

apache wrote: »

No its not news for me that i don't own it. Are you 5? Who thinks they own it? Surely its just a figure of speech?

Just so we are clear. (Any need for the insults?)

renting means you can never settle

My last place I rented for 7 years.

and leave your own mark on a place.

My last landlord was quite happy for me to decorate as I wished.

No point in putting money into it because that is dead money.

The previous owner at the place I just bought put $125,000 into it (I've seen the receipts for the work done) trust me, he didn't get anything like his purchase price plus $125k back on the property.

Moving is a pain.

So is paying stamp duty.

People like stability not putting dead money into a place.

Again, do explain what you mean by renting being dead money, a little maths would be appreciated.

apache

I have answered all those questions yet you choose to ignore them. It shows you don't pay attention when twice you mentioned stamp duty and i said i didn't pay it as a first time buyer.
No point in repeating myself.

MadsL

apache wrote: »

I have answered all those questions yet you choose to ignore them. It shows you don't pay attention when twice you mentioned stamp duty and i said i didn't pay it as a first time buyer.
No point in repeating myself.

I'm pointing out that you will pay it when you move, a renter doesn't.

Again, mathematically - how is renting dead money? I take it you didn't read any of the links I posted.

You say you are a first time buyer in your 60s, if you have only recently bought - tell me how you personally plan to take advantage of all that non-dead money when you pay off the mortage in your 90s.

Oh, and by the way - interest rates do rise.

apache

Lol i don't intend to move and i'm not in my 60s. I said i will have all mortgage paid off by then. I don't want to be renting in my 60s.

Again it is obvious you are not listening to me so i'm no longer entertaining you. Have answered all your questions already.

Back home in ireland its breakfast time!

MadsL

apache wrote: »

Have answered all your questions already.

I've only asked one. Why is rent dead money? You utterly failed to show how mathematically renting is dead money vs buying. All the rest was your "feelings" about buying.

Cushie Butterfield

MadsL wrote: »

I've only asked one. Why is rent dead money? You utterly failed to show how mathematically renting is dead money vs buying. All the rest was your "feelings" about buying.

After repaying a mortgage for 25 years (for example) you end up owning the property - you have something to show (or sell) for the money you have spent.

After renting for 25 year (& often paying the same or less in the form of mortgage repayments) you have nothing to show (or sell) for the money you have spent - it's dead money.

Interest rates rise (& fall) - so do rents.

I think what apache is trying to explain to you that he has no intention of moving, so stamp duty doesn't enter the equation. He will never be forced to move either, unlike someone who is renting. He has a place to call his own, & instead of repaying other people's mortgages for them he is paying his own. Think of it as saving for his future.

trodsky

Ghandee wrote: »

Do debts cross international borders?

Emigrate if they don't.

That's what I did.

Get the hell outta there and leave the keys in the door.

I never heard a thing again

MadsL

Cushie Butterfield wrote: »

After repaying a mortgage for 25 years (for example) you end up owning the property - you have something to show (or sell) for the money you have spent.

Add up the interest, the fees and charges, the stamp duty, the potential future losses, the cost of maintenance, the property taxes and you will soon see that people rarely actually make a profit on houses. Generally their maintainance costs and interest on the mortgage comprise a hefty sum. A house is a utility not an investment.

After renting for 25 year (& often paying the same or less in the form of mortgage repayments) you have nothing to show (or sell) for the money you have spent - it's dead money.

Except that you have the cash difference between buying and renting available for investment in whichever marketable securities are doing well. A homeowner has no such liquidity.

Interest rates rise (& fall) - so do rents.

And a renter is better positioned to take advantage of regional variations, and has almost instant mobility. Negative equity traps the buyer into being unable to move for work or other economic reasons. A renter can take advantage of rent drops, or move easily for more lucrative work. Moving incurs further 'dead money' costs for the homeowner.

I think what apache is trying to explain to you that he has no intention of moving, so stamp duty doesn't enter the equation.

Must be nice to have that level of job security, and high boredom threshold...

He will never be forced to move either, unlike someone who is renting.

Tenants rights are now relatively strong in Ireland, you cannot be evicted on a whim.

He has a place to call his own, & instead of repaying other people's mortgages for them he is paying his own. Think of it as saving for his future.

You do see why that view is an illusion don't you?

I rented for 7 years at €1600 a month - close to 135k in rent. Dead money huh? Except had I paid a mortgage I would have bought the property I rented for close to €475k which is now worth what -€200k? - so renting just saved me taking the loss plus the interest over 7 years (close to 160k depending on the amortization schedule and interest rate) and any fees and maintance.

So I am good in a falling (crashing) market to the tune of 475-200=loss avoided of 275k + interest paid of 160k - my rent of 135k = 300k - residual value 200k = 100k better off by renting.

Who paid dead money in that case? The renter or buyer?

JustAThought

I remember waiting to view an appartment to rent & the line of people behind me - it was an appartment overlooking a park & I really wanted to rent it. Behind me in the viewing Q was an " old" ( 50-ish) guy; and a woman in her forties looking all stressed & harassed. I remember thinking how awful it would be at that age to be q-ing to rent & to have to do a house-share. At least if you own, you'll never have that issue & be relatively in control.

I recall 2006 & back then you could just still buy & get a mortgage on a house as a single person - just. It wasn't by any means the top of the Market. I know people who bought in 2010 & are really in bad debt /negative equity troubles now.

Where is the humanity in all of this ? People & young couples who had been renting for years or saving & living as married couple with their parents wanted a home for their families in an environment where for 10 years + they had watched the prices of small commuter belt homes & basic appartments become more & more unobtainable .
Not everybody wanted to emigrate or sign up for council housing- people wanted to do the right thing & have stability & a home they could live in with their families & without worrying about dead money, lease renewals, being not renewed at the end if the lease, or having to move / lease renewal when children came along - many landlords wouldnt and still wont rent to folk with children or pets.

It's really horrible to read some of the predatory nasty knife twisting messages here. It just says a lot about the bitterness & insecurity of those who feel it so important to jeer & belittle those who are doing the right thing but are down. Very Irish.

MadsL

JustAThought wrote: »

I remember waiting to view an appartment to rent & the line if people behind me - it was an appartment iverlooking s park & I really wanted to rent it. Behind me in the viewing Q was an " old" ( 50-ish) guy; and a woman in her forties looking all stressed & harassed. I remember thinking how awful it would be at that age to be q-ing to rent & to have to do a house-share. At least if you own, you'll never have that issue & be relatively in control.

I recall 2006 & back then you could just still buy & get a mortgage on a house as a single person - just. It wasn't by any means the top of the Market. I know people who bought in 2010 & are really in bad debt /negative equity troubles now.

So are you saying it is still better to own even if prices are still falling? Just to save queuing to rent (when was this by the way? No shortage of rental properties now.)

Where is the humanity in all of this ? People & young couples who had been renting for years or saving & living as married couple with their parents wanted a home for their families in an environment where for 10 years + they had watched the prices of homes & basic appartments become more & more unobtainable . Not everybody wanted to emigrate or sign up for council housing- people wanted to do the right thing & have stability & a home they could live in with their lived one without worrying about dead money, lease renewals, being not renewed at the end if the lease, or having to move / lease renewal when children came along - many landlords wouldnt rent to folk with children.

Again with this dead money nonsense...can people not do simple maths..?

It's really horrible to read some of the predatory nasty knife twisting messages here. It just says a lot about the bitterness & insecurity of those who feel it so important to jeer & belittle those who are doing the right thing but are down. Very Irish .

Who is jeering? A few home truths is not jeering. If people say I was foolish not to forsee the dot.com crash that is simply truth not jeering. The fact that people I know deliberately ignored advice not to buy is a hard truth, but truth nonetheless - not everyone who bought in 06-07 is an innocent 'victim'.

uberalles

Mcsavage did a great scetch on telling his parents that he was a renter. The shame of it. I will see if I can get a link but at the mo I'm on a smart phone.

StillWaters

MadsL wrote: »

Cushie Butterfield wrote: »

After renting for 25 year (& often paying the same or less in the form of mortgage repayments) you have nothing to show (or sell) for the money you have spent - it's dead money.

Except that you have the cash difference between buying and renting available for investment in whichever marketable securities are doing well. A homeowner has no such liquidity

What difference? Apart from the anomalous period of the bubble, it has always been cheaper to buy than rent here. And as some posts here suggest, even some bubble buyers have more cash liquidity than their renting neighbours due to cheap credit at the time.

Feelgood

MadsL wrote: »

I rented for 7 years at €1600 a month - close to 135k in rent. Dead money huh? Except had I paid a mortgage I would have bought the property I rented for close to €475k which is now worth what -€200k? - so renting just saved me taking the loss plus the interest over 7 years (close to 160k depending on the amortization schedule and interest rate) and any fees and maintance.

So I am good in a falling (crashing) market to the tune of 475-200=loss avoided of 275k + interest paid of 160k - my rent of 135k = 300k - residual value 200k = 100k better off by renting.

Your argument is a but crazy here mate.

Lets say during those 7 years you rented at 1600 a month, I bought an apartment for 120k which I completely paid off over the same 7 year period.

7 years are now up and I now completely own my apartment and am mortgage free and have somewhere to live for the rest of my life, you however are going to pay another 135k for the next 7 years rent and beyond after that.
Now you are paying dead money in rent?.

I see what you are saying, but it really depends on the situation. You are forgetting that the lifetime of a normal mortgage is around 25-30 years, whereas you would have to continue to pay rent when
my mortgage is cleared. so could end up paying rent for 40-50 years?. After that 40-50 years you have nothing to hand down to your kids and nowhere to call home.

Gauss

Feelgood wrote: »

MadsL wrote: »

I rented for 7 years at €1600 a month - close to 135k in rent. Dead money huh? Except had I paid a mortgage I would have bought the property I rented for close to €475k which is now worth what -€200k? - so renting just saved me taking the loss plus the interest over 7 years (close to 160k depending on the amortization schedule and interest rate) and any fees and maintance.

So I am good in a falling (crashing) market to the tune of 475-200=loss avoided of 275k + interest paid of 160k - my rent of 135k = 300k - residual value 200k = 100k better off by renting.

Your argument is a but crazy here mate.

Lets say during those 7 years you rented at 1600 a month, I bought an apartment for 120k which I completely paid off over the same 7 year period.

7 years are now up and I now completely own my apartment and am mortgage free and have somewhere to live for the rest of my life, you however are going to pay another 135k for the next 7 years rent and beyond after that.
Now you are paying dead money in rent?.

I see what you are saying, but it really depends on the situation.

It depends on the price of the house, there's always a price where it makes more sense to buy than rent.

Gauss

Gauss wrote: »

I know of people paying off 400k mortgages on apartments worth about 100k. I'm sure there plenty even worse off than that.

If I were them I'd hand in the keys to the bank and say good luck. See ya later.

I'd prefer to rent for the rest of my life than pay off a ridiculous mortgage.

Would you do the same?

Just sit it out until the ECB prints so much money that you can repay your mortgage with a few postage stamps! http://www.flickr.com/photos/atl_pops/167280690/

MysticalRain

apache wrote: »

Just skimmed the thread. I got a mortgage for my apartment fairly easily in 2007. Am a public servant so it was no problem. But with pay cuts and now find myself out of work on disability its very stressful and in process of restructuring mortgage but of course bank are not playing ball. I didn't pay 400k or anything like it. Management fees are an issue which foolishly i didn't factor in.
However at least i'm not paying dead money. My mortgage is the same as renting 2 bed apartment - no difference. In the near future i will have to default due to finances and i refuse to worry about it. I have been so stressed and done everything i can to meet and set up talks with banks. I done my bit - nothing more i can do.

If you loose the house because you default, then what you paid for buying the house in 2007 will also be dead money.

the_syco

Thinkingaboutit wrote: »

Some people in this thread treat money owed to the conmen and failures in Irish Banks as a profound moral obligation.

Most of said people thought that they were super smart buying a "step on the property ladder" that would allow them to sell in a few years to buy an even bigger house...

Thinkingaboutit wrote: »

Prices fell far more than any mainstream voice predicted.

Anyone who said any different were said to be mad. And were ignored. Plenty of "mainstream" people said it, but these too were ignored. Only those that said there'd be a soft landing were listened to.

MysticalRain wrote: »

Repossessions will help the market return to a normal equilibrium which helps the future generation who want to buy houses.

Sadly the dumb fcuks will flock en masse to buy the "cheap" houses with the intent to "upgrade" at a later stage. And some will expect the government to provide them an escape route should their gamble not work. Heck, most of the people in shoeboxes expect the government to give them a way out now because their gamble of buying small so that they could later buy big failed :pac:

MysticalRain wrote: »

The government needs to get the fcuk out of the rental market altogether.

The only way this will happen is if they sell all council houses to a private corporation. Can't see that happening.

MysticalRain wrote: »

If you simply want to raise a family in a home that you are planning on living in for the next 50 years, it doesn't really matter either way.

And yet these people think they're entitled to dept write-off.

MysticalRain wrote: »

As an aside, many of the same people complaining here about NE would have screamed bloody murder if government intervention in 2006 had driven down the value of the over priced houses they just bought (especially the buy-to-let crowd who make up a big chunk of the NE folks).

Agreed!

MysticalRain wrote: »

We'll see who's proven right eventually.

Looking at Japan, we'll be here a while. Germany have an idea where debt is passed down to the kids.

apache wrote: »

In the near future i will have to default due to finances

apache wrote: »

This thread smacks a little of looking down your nose at buyers. A little insecurity perhaps? I certainly would not like to rent. And deffo not when i'm in my 60s!

If you default, you loose the apartment.
But don't worry, you won't be renting. You'll be homeless; have fun with that.

apache wrote: »

I said i will have all mortgage paid off by then.

So, do you intend on defaulting, or can you pay your mortgage loan?

Overthrow

Unless there was a clear and significant financial advantage to be had, I'd much prefer to continue renting.

In renting you're paying for a service - it's not 'dead money'. That service is the living of somewhere that is of your choosing and in most cases for as long as you practically choose to do so.

Another factor that's often forgotten when talking about the numbers is quality of life. For many who bought, their life now is commuting 2 or 3 hours a day, to be able to live in a house they never see. A renter can live minutes walk away from their place of work and actually own those extra hours. The 15 hours of travel a week is almost the equivalent of an extra 2 days of work. And the cost of petrol is further crippling to these people and it's just going to get worse.

The Irish mentality of owning your own bit of land has really diminished the quality of life for many who flocked to the ridiculously dispersed 'commuter belt' developments, most of which are nothing compared to the image that was sold through the brochures.

So it should not be all about the numbers. While renting might be patronisingly seen as dead money by some, what most are paying for is a much better quality of life, closer access to shops, entertainment, hospital(s), schools etc. The easy option to move elsewhere should there be a good reason to do so. Hopefully this bust will show Irish people that the be all and end all is not owning your own bit of land, because for many that do, the bit of land owns them.

Irishcrx

Lot of rubbish been talked on here but I think it's just a case of each to their own. When the boom was on and people were buying , renting was very hard. I can't remember how many placed I went to with ques of people , horrid estate agents who were basicly taking back handers to give people houses/apartments. Landlords were crap , wouldn't fix anything sometimes having to go weeks without a washing machine and this attitude of like or lump it because they could get someone else in to the house in a matter of days.

Thing's have changed now yes, house prices are down and it's easier to rent. For some they get good landlords and like the ability to move about a bit, for others landlords are still crap and you are still only borrowing someone elses home and paying their mortgage for them or making them money that's the cold hard truth no matter what way you spin it.

I bought in 2008 and despite everything that has happened, I love my house I pay less on my mortgage incsluding home and life assurance than my friends do on rent and some of the places they are in are dives. I love having the ability to want to do something with the house and been able to do it of my own free will without asking permission, I love that my family will grow up here and that one day they will raise a family in it to. I love having my two dogs , I like been able to wall mount my TV without been told to take it down. I like not having to worry about being ripped off on my deposits anymore.

And I'm not someone who is taking an 'old' approach to things, I'm 25 but I'm sure there is a lot of people with the same mind set. My mortgage will be paid off when I'm 45 and I'll own the house outright again no matter what the spin is on renting I wouldn't be able to say that if I rented all that time.

apache

MysticalRain wrote: »

If you loose the house because you default, then what you paid for buying the house in 2007 will also be dead money.

i won't lose the apartment. i have a guaranteed job. i will never be laid off. i took the job knowing that. i bought on the back of that. the past 4 months i am out of work due to illness. i hope to return in the next year. i still get paid from the job. it covers the mortgage. i will default for a few months and pay it all back when i return to work. no big deal. i have talked to the bank about it. but it seems the bank are only willing to step up if you are in arrears hence my starting to default from this month. they don't want my apartment. they will suck it up. they will get it all back anyway!

i certainly don't want to be elderly and renting. i will have my mortgage paid off and have no living expenses.

and i do like the area i live in - thats why i thought long and hard before i bought.

again nobody held a gun to my head. i knew the risks and my mortgage is still cheaper than renting.

Lollipops23

In all honesty I don't have an issue with renting even after I've married and had kids. I always thought I'd be buying the first chance I got, but even with both our (decent) incomes I doubt they'd let us have one even if we wanted one.

the_syco

apache wrote: »

i will default for a few months

I think default may not be the word, then.

apache wrote: »

i have a guaranteed job. i will never be laid off.

Once upon a time, people thought the price of houses would only go up...

apache

the_syco wrote: »

I think default may not be the word, then.


Once upon a time, people thought the price of houses would only go up...

default is the right word. when the banks don't play ball till you are in arrears you have to default ie not pay until they agree to a restructured payment plan. unfortunately thats the way it works as i have found out.

i do have a secure job. only way i could lose my job is if i get sacked due to misconduct. i'm a prison officer. we are busy every day 24 hrs a day, 365 days a year packed to the rafters!

whats the story here with people trying to belittle others?

the_syco

apache wrote: »

default is the right word. when the banks don't play ball till you are in arrears you have to default ie not pay until they agree to a restructured payment plan. unfortunately thats the way it works as i have found out.

How odd. Maybe your place is not be in high demand, and thus they don't care?

apache wrote: »

i'm a prison officer.

Ah. Well then, you have one of the few secure jobs. A lot of people in the public sector think they are unsackable but they are very replaceable.

apache wrote: »

whats the story here with people trying to belittle others?

Those with houses have been belittling those who rent since before the boom, but now they're trying to play the victim asking for handouts.

apache

they deal with those first who are in arrears. i keep getting put to the bottom of the pile as i am still paying the full amount even though i entered into talks over 2 months ago. the only way they will deal with me is if i start to default. well thats the way i find it anyway. the banks don't want houses. theres not THAT many people buying.

i'm not asking for any handouts. anything i owe i will pay back as soon as i can.

Gurgle

MadsL wrote: »

I rented for 7 years at €1600 a month - close to 135k in rent. Dead money huh? Except had I paid a mortgage I would have bought the property I rented for close to €475k which is now worth what -€200k? - so renting just saved me taking the loss plus the interest over 7 years (close to 160k depending on the amortization schedule and interest rate) and any fees and maintance.

So I am good in a falling (crashing) market to the tune of 475-200=loss avoided of 275k + interest paid of 160k - my rent of 135k = 300k - residual value 200k = 100k better off by renting.

Who paid dead money in that case? The renter or buyer?

Absolutely true, for these last 7 years. Everyone with access to a crystal ball in 2005 knew that buying wouldn't be a profitable short term investment.

But you're comparing peak vs trough prices, how does it / will it work out over 25 to 40 years?
How does it look for someone who bought in 2000 vs renting for the last 12 years?
How about someone who bought in 1987 and just finished paying off their mortgage last week? Would they have been better off renting for 25 years through the height of the boom?