Anyone else depressed with house hunting?

Ray Palmer

seb65 wrote: »

It's not just a year's rent, it's the cost of negative equity should the Dublin prices drop again. If you take out a mortgage for a house that in a year decreases in value by 40,000 you will pay almost double through mortgage interest. Essentially, throwing 65-70,000 down the drain.

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Negative Equity has no cost unless you sell. 40k drop is pretty big but is depends on how much the property cost for it to be a substantial issue.

Either way what you are saying depends on you actually picking the right price to buy at. It isn't a 40k or 80k gamble unless you are right that is what will happen or likely to happen.

It doesn't really matter to a lot of people because they are at a point they can't wait. If you missed buying a few years ago and you are the wrong side of 40 you won't be able to get a mortgage to buy a property. Not saying that is everybody but enough to be part of the surge right now.

I get what you are saying but it appears to be an over simplistic view to take people don't have all the time in the world to wait on the market to do something that make it a sure thing. Nobody has accurately predicted what happen in the Irish property market. Saying there will be a crash isn't it as some of them said this and house prices are still above the points they said this.

MouseTail

seb65 wrote: »

The changing to post codes, the recent emerging markets crises, the potential for house repossessions/debt deals and the re-start of Dublin building could see house drops again.

Ive been on this site whilst people argued the following would cause (further) drops: collapse of euro, end of MIR, mass reposessions, publishing of Propery Price Register, end of corporate tax rate etc etc

believe me, postcodes will not adversely affect house prices.

caew

Ray Palmer wrote: »

Negative Equity has no cost unless you sell. 40k drop is pretty big but is depends on how much the property cost for it to be a substantial issue..

I agree with this and the rest of your post.

We have been looking for a house since last march and speculating on prices going up/down/repossessions/cash buyers etc etc

We decided to buy now as it is the right time for us and where we are in our lives and our relationship.

We are buying a house we want to spend the next 30 years plus in. If the house prices go down, that is irrelevant to us as we are not selling. If house prices go up while we are trying to work out the market, however, that could mean that we are unable to afford the house we want in the area we want.

We have now gone sale agreed on a house, hopefully it will complete successfully, we got the house we want at a price we can afford, I now don't consider rises/falls in the housing market relevant to me anymore.

seb65

caew wrote: »

I agree with this and the rest of your post.

We have been looking for a house since last march and speculating on prices going up/down/repossessions/cash buyers etc etc

We decided to buy now as it is the right time for us and where we are in our lives and our relationship.

We are buying a house we want to spend the next 30 years plus in. If the house prices go down, that is irrelevant to us as we are not selling. If house prices go up while we are trying to work out the market, however, that could mean that we are unable to afford the house we want in the area we want.

We have now gone sale agreed on a house, hopefully it will complete successfully, we got the house we want at a price we can afford, I now don't consider rises/falls in the housing market relevant to me anymore.

That's fine. My suggestion was that if someone overpays on a property that decreases in value by a more than negligible in amount in a short period of time - i.e. six months to a year, than the money spent on the house is money trapped. Whereas, I could have invested that money into something else.

Personally, I'm going to wait until June to actively try and purchase a house, unless I see something I really, really like. I think their will be more sense to the market by then. That's just how I feel, but it's to each his/her own really.

caew

seb65 wrote: »

That's fine. My suggestion was that if someone overpays on a property that decreases in value by a more than negligible in amount in a short period of time - i.e. six months to a year, than the money spent on the house is money trapped. Whereas, I could have invested that money into something else. QUOTE]


I think the word 'invested' is key. Some people consider the purchase of a house as an investment and therefore look for a return on it and as you say something else could offer a better investment for you in the short term.

We all have different motivations for buying a house, mine is long term, as you said each to their own.

Arbiter of Good Taste

Ray Palmer wrote: »

If you missed buying a few years ago and you are the wrong side of 40 you won't be able to get a mortgage to buy a property.

That is not true. The mortgage will just be for a shorter term.

kennyb3

Ray Palmer wrote: »

Negative Equity has no cost unless you sell.

What about the opportunity cost of the money being used to fund a higher mortgage?

If you'd bought at the lower price you'd have a lower mortgage (or paid less of of a deposit) and can then use the extra money elsewhere.

Ray Palmer

Arbiter of Good Taste wrote: »

That is not true. The mortgage will just be for a shorter term.

Yes that is how finance works. You just shorten the term of your mortgage and you can afford it then. Well say if you can't afford a higher mortgage over a shorter period. You are boned

kennyb3 wrote: »

What about the opportunity cost of the money being used to fund a higher mortgage?

If you'd bought at the lower price you'd have a lower mortgage (or paid less of of a deposit) and can then use the extra money elsewhere.

Have you thought that out? How much extra will it cost a month? 100,000 over 25-30 years. How much will that be worth then? It is a financed deal where it won't reap massive of expense for the extra amount. Trying reducing your mortgage by 40k and see how much time it will save you.

A mortgage and house purchase is a marathon not a short sprint.

kennyb3

Ray Palmer wrote: »

Have you thought that out? How much extra will it cost a month? 100,000 over 25-30 years. How much will that be worth then? It is a financed deal where it won't reap massive of expense for the extra amount. Trying reducing your mortgage by 40k and see how much time it will save you.

A mortgage and house purchase is a marathon not a short sprint.

2 people buy identical houses on the same street - one in 2009 for 330k, with a 10% deposit. The other in 2012 at 190k with a 10% deposit. Both have identical earning and savings.

Who is left with more cash? Who has a lower mortgage?

Both will be worth the same in 25 - 30 years as they are identical (nice attempt at a red herring).

dinnyirwin

I would question thinking of the family home as an investment.

Bepolite

kennyb3 wrote: »

2 people buy identical houses on the same street - one in 2009 for 330k, with a 10% deposit. The other in 2012 at 190k with a 10% deposit. Both have identical earning and savings.

Who is left with more cash? Who has a lower mortgage?

Both will be worth the same in 25 - 30 years as they are identical (nice attempt at a red herring).

The one with the tracker

gaius c

Bepolite wrote: »

The one with the tracker

How about the one named John of the Clan Murphy who claimed maritime law jurisdiction and didn't bother with number plates on his car and didn't pay his mortgage because the bank didn't have a banking license?

Bepolite

gaius c wrote: »

How about the one named John of the Clan Murphy who claimed maritime law jurisdiction and didn't bother with number plates on his car and didn't pay his mortgage because the bank didn't have a banking license?

Mortgages are funny things. I didn't realise most mortgages are only 6 months long! (Have a look at your mortgage document if you don't believe me) - the entire remaining period only exists because of the of Equity. Just an amusing (or not) aside to lessen our depression!

Gasherbraun

Bepolite wrote: »

Mortgages are funny things. I didn't realise most mortgages are only 6 months long! (Have a look at your mortgage document if you don't believe me) - the entire remaining period only exists because of the of Equity. Just an amusing (or not) aside to lessen our depression!

Yet the very meaning of the word mortgage implies a much longer term; it is term from French law that translates to 'death pledge' ie a commitment to the death or full discharge of the debt.

Cannot see Irish banks rebranding their loan products anytime soon however :-)

kennyb3

Bepolite wrote: »

The one with the tracker

Despite trying to be funny - you are of course wrong.

Trackers were gone by 2009 but even if they weren't;

The €190k person will have a €171k mortgage - this over 25 years at 5% gives a mortgage of €999 per month.

The €330k person will have a €297k mortgage, even at 1% their mortgage would be €1,119pm.

Even if the €190k persons interest rate went to 6% the monthly repayment would be lower.

Also remember they've more cash left over from the deposit.

Ray Palmer

kennyb3 wrote: »

2 people buy identical houses on the same street - one in 2009 for 330k, with a 10% deposit. The other in 2012 at 190k with a 10% deposit. Both have identical earning and savings.

Who is left with more cash? Who has a lower mortgage?

Both will be worth the same in 25 - 30 years as they are identical (nice attempt at a red herring).

If they buy 4 years apart in the past. What you are missing is in the term of the mortgage the value of money decreases. The person with the first mortgage has 4 years where they didn't pay rent which you forgot to mention.

Nobody will deny the price reduction was extraordinary in those years. The other think is while house prices did drop large amount the sales quantities reduced especially by 2009. So there were houses on my road looking for 650k which never sold at that price. The most one went for was 575k and that was one with a huge side garden and they got an extra house built.

We bought at 330k they now actually selling for about 360k without any extensions and going up. The lowest one was sold at was 290k. So your example to somebody not paying attention would seem valid but it isn't.

In order to match your values there would need to be over a ten year gap. Your example is way too extreme to actually be an issue for most people. Not saying it doesn't happen just extremely rare. People mix up asking and selling prices along with the most extreme % drops they have heard and mix it together. A tracker does offset a fair amount of the buying price.

I was not trying to trick anybody and I assume you aren't either.

The_Conductor

Just to reiterate to folks- if you disagree with what someone posts- refute the post *without* attacking the poster. Its entirely normal to disagree with one another- but keep it civil. I'm not going to warn people individually- if people step out of line, they will receive a little posting holiday.

Have a nice day.

The_Conductor

DebDynamite

dinnyirwin wrote: »

Yeah remember the ads that said Dunshaughlin was 20 mins from Dublin.

It was actially 20 mins from Grafton Street!! Yeah, in a chopper

Ray Palmer

Negative equity has no cost until you sell remains.
Prove how common your example is as I see it as rare.
I tried to explain that while house prices fell sales fell. 100s of house could sell at 300k and one at 600k 5 years later then 350k a few years later. That would show as 58% drop. How many does it effect? 1.
Your example is possible and probable just not likely to encompass many people.
I tried to explain that to you with an example from the real world. You seemed to have failed to understand that by thinking I was contradicting myself. There had to be a 10 year gap to get the difference you are talking about in my area in Dublin not 4-5 years. How that isn't relevant is a mystery to me.
The market is a lot more segregated then you are allowing for. Lots of houses were removed from the market when prices dropped. Other houses couldn't be as the new developments. A big hint to what house prices dropped and what were sold.
People often miss the supply part of supply and demand. House supply constricted and it was the supply that couldn't constrict that actually sold at the lower prices. That does include 2nd hand houses but to a lesser extent. The difference between new and 2nd houses was a huge element of the market in the boom years that people have forgotten about as stamp duty isn't in play as much. It still remains a divide in the market namely because so few new houses have been built lately.

Bepolite

People have to be having a laugh! Went to see this today -

http://www.myhome.ie/residential/brochure/28-reuben-street-south-circular-road-rialto-dublin-8/2716497

nice house, right by the Fatima Luas stop so not the best area fair few interesting characters around. Really like the house so thought we might go as high as 225K which I though was high but frankly it's worth it for the convenience of it being bang on what we want decor-wise. €246K already, been on less than two weeks. People are mental!

handlemaster

Bepolite wrote: »

People have to be having a laugh! Went to see this today -

http://www.myhome.ie/residential/brochure/28-reuben-street-south-circular-road-rialto-dublin-8/2716497

nice house, right by the Fatima Luas stop so not the best area fair few interesting characters around. Really like the house so thought we might go as high as 225K which I though was high but frankly it's worth it for the convenience of it being bang on what we want decor-wise. €246K already, been on less than two weeks. People are mental!

Lovely decor . House vendors have presented this perfectly. Not surprised it has offers so quick. I wouldn't like the area myself.

Bepolite

handlemaster wrote: »

Lovely decor . House vendors have presented this perfectly. Not surprised it has offers so quick. I wouldn't like the area myself.

I agree but you can go around the corner and buy one for 165K. 60K would surely give you a good total renovation?

I'm also not surprised by the offers but the guts of quarter of a million for a two bed in Rialto seems nuts.

handlemaster

Bepolite wrote: »

I agree but you can go around the corner and buy one for 165K. 60K would surely give you a good total renovation?

I'm also not surprised by the offers but the guts of quarter of a million for a two bed in Rialto seems nuts.

Well someone thinks differently and further more will put the cash down for that opinion.

johnnyskeleton

Bepolite wrote: »

I agree but you can go around the corner and buy one for 165K. 60K would surely give you a good total renovation?

I'm also not surprised by the offers but the guts of quarter of a million for a two bed in Rialto seems nuts.

I think the prinicple of "the market can stay irrational longer than I can stay homeless" applies.

People talk about south county dublin as though that's the only place that's in demand these days. Dublin city centre is absolutely insane these days. So much so that people will comfortably pay 6-7 times the average industrial wage to live in Fatima mansions area

seb65

Bepolite wrote: »

I agree but you can go around the corner and buy one for 165K. 60K would surely give you a good total renovation?

I'm also not surprised by the offers but the guts of quarter of a million for a two bed in Rialto seems nuts.

Wouldn't be too fussy on living in Rialto, but the house is lovely.

I think it's a good sign. Looks like city centre might start to gentrify and it's about time. There's lots of nice, large houses that decent people stay away from because they're in Crumlin, near Dolphin's Barn, etc. Not saying that great people aren't there now, but there are a lot of the anti-social crowd that ruin it for everyone.

The lack of supply might start to make the city centre available for the people who actually work in the city centre, to live in.

Bepolite

seb65 wrote: »

Wouldn't be too fussy on living in Rialto, but the house is lovely.

I think it's a good sign. Looks like city centre might start to gentrify and it's about time. There's lots of nice, large houses that decent people stay away from because they're in Crumlin, near Dolphin's Barn, etc. Not saying that their aren't great people there now, but there are a lot of the anti-social crowd that ruin it for everyone.

The lack of supply might start to make the city centre available for the people who actually work in the city centre, to live in.

I've been look at some of those houses. I'm wondering if we're going to see some places turn from slums into nice areas, real gamble though. That said rental market is always strong.

moxin

Bepolite wrote: »

I've been look at some of those houses. I'm wondering if we're going to see some places turn from slums into nice areas, real gamble though. That said rental market is always strong.

Don't think it will happen In Maryland. Too much of a gamble.
Googling returns interesting comments by the Gardai. http://www.independent.ie/irish-news/five-injured-in-spate-of-stabbing-attacks-in-dublin-29504193.html

Arbiter of Good Taste

moxin wrote: »

Don't think it will happen In Maryland. Too much of a gamble.
Googling returns interesting comments by the Gardai. http://www.independent.ie/irish-news/five-injured-in-spate-of-stabbing-attacks-in-dublin-29504193.html

Jesus, that is grim :eek:

Ciaran_B

If I’ve rang an estate agent 10 times and e-mailed them 10 times about a particular house for sale. And heard nothing back, can I assume that house isn’t really for sale despite a sign in the garden and a listing on the main websites?

Bepolite

Ciaran_B wrote: »

If I’ve rang an estate agent 10 times and e-mailed them 10 times about a particular house for sale. And heard nothing back, can I assume that house isn’t really for sale despite a sign in the garden and a listing on the main websites?

Could be on hold for some reason, or going sale agreed shortly.