People who planned for the crash, what happened in the end?

Ray Palmer

When the property prices kept on rising there were many people who declared their plans for the crash. Many said they would wait a year or two after the crash then buy at rock bottom prices. Some said they put money into shares that would make more returns and they would buy with the profits.

So what happened? Did they actually get cheaper costing houses?Were they able to get loans when they wanted to buy? Did they pick shares that didn't get effected by the share crash?

TheBody

For me, I waited for prices to fall and saved a little more in the mean time. Now that prices have dropped, I have gone sale agreed on several houses but none of them have panned out as the vendors can't get freedom to sell from their bank due to the negative equity.

I am sick to death of wasting money on engineers reports and not getting a house at the end of what seems like endless phonecalls to incompetent estate agents.

Ray Palmer

Will your mortgage be less or more and how much cheaper is the house? Trackers have a big impact monthly payments

Peregrinus

I know one guy - an academic - who sold his house about a year before the crash because he thought the market was massively overinflated. He cleared his mortgage, banked the (considerable) surplus and moved himself and his family into rented accommodation. (And very nice rented accommodation it was, too - well-located, and much more spacious than the house he had sold.)

Then the crash came.

He remained in his rented accommodation for several years, demanding (and getting) annual rent reductions. Then he moved to other rented accommodation (again, very nice) which was more conveniently located for the kids' schools.

It was his intention to buy a house when he felt that prices had reached a rational level. However in 2011 he took a job in the UK. Since then he's been commuting back and forth - his wife still works in Dublin - and, while he still hasn't bought a house, I can't say to what extent that's due to thinking that the market is still overpriced and to what extent it's due to the fact that they really don't know where their long-term future lies.

Ursus Horribilis

I didn't have any grand plans but I just didn't buy in those years. I kept on saving and bought my first home last year. It was 80-90k cheaper than it would have been at the height of the bubble. Also during this era my take home pay got cut by around 10% so that would've made things tight. I've not sat down with a pen and paper to do the maths (would rather not do so!) but I've got a mortgage that's perfectly manageable.

davo10

Sold properties in 2007, bought apartments in Dublin, Galway and Cork in 2011/2012, hopefully kids will go to third level in one of those. I held on to one property for sentimental reasons (thought we might live in it ourselves but didn't) which I will take a huge hit on when I sell it. I know nothing about stocks and shares so never got into them.

Incidentally, in around 2005 I got advice from a well known (at the time, now gone and sued by clients) wealth management company who pretty much told me I was an idiot and should be remortgaging everything and buying more (which of course they would arrange for me), I didn't have the balls to do it, thank God.

Aye Bosun

Yeah I bought in Aug 2011, crapped my pants at the time as it was a very uncertain market. I had the savings and took the risk, glad I did now. Managed to get myself a lovely 3 bed in the location I wanted, I would never of had a chance in this area if not for the crash.
4 years down the line, houses on my road are going for double what I paid in 2011, not that I plan on sell tho as the house is perfect for expansion should i have a family, right area etc.
Delighted with my purchase. Did the basics on the place first, rewired and new heating system but instead of saddling myself with more debt for refurbishing the place I decided to have a 5 year plan to rent 2 of the rooms and out and do the place up as it hadn't been touched since the 60's, 4 years into the 5 year plan now and I'm ahead of schedule and will be lodger free by the new year.

Desmonddoyle

Peregrinus wrote: »

I know one guy - an academic - who sold his house about a year before the crash because he thought the market was massively overinflated. He cleared his mortgage, banked the (considerable) surplus and moved himself and his family into rented accommodation. (And very nice rented accommodation it was, too - well-located, and much more spacious than the house he had sold.)

Then the crash came.

While I wouldn't doubt for a second the veracity of any internet anecdote, I do find it incredulous that a married person with kids would sell the family home and move them into expensive, rented accommodation on a hunch that a crash was imminent. An investment property, holiday home, I could understand. I just don't think it's a risk any rational person would take, and would have thought the stability of the family unit would take priority over a speculative, money-making bet on the property market.

He may well have been one of the academics who's research led him to believe that all the ingredients of a global crash were there (there were many), and he may well have even been one of the very few academics (there were very, very few) that was able to forecast the timing of the crash perfectly. It's still a massive call that I doubt many parents would make.

Maybe it was more to do with him planning to work in England than him being an oracle, genius and successful high risk gambler, and with hindsight he can claim perfect foresight ?
P.S I'm not doubting he considered the Irish property market over inflated, a lot did, but predicting the timing of the catalyst to the extent that he was willing to sell his family home - .

Peregrinus

Desmonddoyle wrote: »

While I wouldn't doubt for a second the veracity of any internet anecdote, I do find it incredulous that a married person with kids would sell the family home and move them into expensive, rented accommodation on a hunch that a crash was imminent . . .

I found it incredible too. But it happened just as I have said.

Desmonddoyle wrote: »

. An investment property, holiday home, I could understand. I just don't think it's a risk any rational person would take, and would have thought the stability of the family unit would take priority over a speculative, money-making bet on the property market.

Well, as he would have pointed out, not selling the house would equally have been a bet (in that case, a bet that the house would hold it's value better than cash. And it wasn't really about money; he was motivated by the fact that the house he owned was far to small for his family. He needed to move, and he wasn't prepared to increase his investment in what he say as a massively over-inflated Irish property market.

Desmonddoyle wrote: »

He may well have been one of the academics who's research led him to believe that all the ingredients of a global crash were there (there were many), and he may well have even been one of the very few academics (there were very, very few) that was able to forecast the timing of the crash perfectly. It's still a massive call that I doubt many parents would make.

He didn't (SFAIK) forecast a global crash; just a crash in the Irish property market (which, yes, would mean a crash in Ireland generally). As for the risk to his family, he has lived in several countries and doesn't share the Irish faith that buying a house is the only way to house a family. He was confident that he would always be able to rent a suitable house for his family, and he always has been.

Desmonddoyle wrote: »

Maybe it was more to do with him planning to work in England . . .

No, he sold the house four years before being headhunted for a specific job in England, an event which he could not have forseen at the time.

Desmonddoyle wrote: »

. . . than him being an oracle, genius and successful high risk gambler, and with hindsight he can claim perfect foresight ?

Well, I don't know that he would claim oracle, genius or perfect foresight, bu he would indigantly deny being a high-risk gambler. He would point out that holding or increasing your investments in a bubble market is much higher risk that selling them and exiting the market. He did what he did precisely because he was risk-averse.

Desmonddoyle wrote: »

P.S I'm not doubting he considered the Irish property market over inflated, a lot did, but predicting the timing of the catalyst to the extent that he was willing to sell his family home - .

He knew a fall was coming; he didn't know when. The timing of his sale (from memory, about 15 months before the crash) was driven by the fact that he needed a bigger house.

Tiddlypeeps

Desmonddoyle wrote: »

While I wouldn't doubt for a second the veracity of any internet anecdote, I do find it incredulous that a married person with kids would sell the family home and move them into expensive, rented accommodation on a hunch that a crash was imminent. An investment property, holiday home, I could understand. I just don't think it's a risk any rational person would take, and would have thought the stability of the family unit would take priority over a speculative, money-making bet on the property market.

He may well have been one of the academics who's research led him to believe that all the ingredients of a global crash were there (there were many), and he may well have even been one of the very few academics (there were very, very few) that was able to forecast the timing of the crash perfectly. It's still a massive call that I doubt many parents would make.

Maybe it was more to do with him planning to work in England than him being an oracle, genius and successful high risk gambler, and with hindsight he can claim perfect foresight ?
P.S I'm not doubting he considered the Irish property market over inflated, a lot did, but predicting the timing of the catalyst to the extent that he was willing to sell his family home - .

I was only 19 when the crash hit so it didn't really effect me with regards to property, but I remember hearing people talk in various places about a possible future crash. I think I even remember a documentary on RTE (or some other Irish channel) forecasting the crash about a year before it happened. I don't think anyone could have accurately predicted exactly when it was going to happen, but when you start hearing people say things like "I need to buy now because soon the prices will be so high that nobody can afford to buy" you know the writing is on the wall. Towards the end it was clearly a bubble, so I wouldn't call anyone who sells at that point irrational. Even if nobody can say for sure if it'll crash tomorrow or in 2 years time, if it's obvious it's going to happen fairly soon then selling up is at the very least not irrational.

I think a lot of people who got stung with negative equity want to convince themselves the signs weren't there so they can absolve themselves of any responsibility for the position they wound up in.

healthy_cynic

i remember a lot of sneering at those who bought in 2011 and 2012 , those cranks over at the property pin were predicting that the average house in dublin would drop to 100 k

McGrath5

I didn't exactly plan it, but I purchased my first home about 2 years ago. Delighted with it.
The vendor who had bought it in 2007, took a €250k hit on it. :eek:

healthy_cynic

McGrath5 wrote: »

I didn't exactly plan it, but I purchased my first home about 2 years ago. Delighted with it.
The vendor who had bought it in 2007, took a €250k hit on it. :eek:

you dont buy a house without some kind of planning , you obviously assessed the market at the time to some degree , two years ago , stuff was about 20% off the very bottom , you still up around 30% at least

Riskymove

Desmonddoyle wrote: »

I just don't think it's a risk any rational person would take, and would have thought the stability of the family unit would take priority over a speculative, money-making bet on the property market.

if you are banking a considerable profit as part of the sale it isn't really that much of a risk

dubrov

It's a high risk move alright.
I heard a story in 2001 of a guy who did the same thing sensing there was a bubble.
Prices had stalled a bit after large gains

Of course things were only just starting then.
The property market ran away from him and he wasn't able to rebuy.

You'd have to be pretty certain to gamble with your family's future like that.

healthy_cynic

dubrov wrote: »

It's a high risk move alright.
I heard a story in 2001 of a guy who did the same thing sensing there was a bubble.
Prices had stalled a bit after large gains

Of course things were only just starting then.
The property market ran away from him and he wasn't able to rebuy.

You'd have to be pretty certain to gamble with your family's future like that.

in 2001 , we were only five years into the property bull market , by 2007 , we were eleven years into it , no market keeps going up and you dont need the kind of banking crash we had to enter a serious correction , the uk saw a serious property correction at the beginning of the nineties in housing and only really entered a new bull market around the time new labour came to power

these things are really very cyclical even without black swan events , 2001 was all about 9-11 , there was a very brief global recession which only lasted a number of months really but the doomsdayers were out in force

dubrov

Sure, the bull market had to end at some point. The problem is timing it.
There are no set rules how long bull markets can run for.

healthy_cynic

dubrov wrote: »

Sure, the bull market had to end at some point. The problem is timing it.
There are no set rules how long bull markets can run for.

none lasted as long as the one we had from 1996 - early 2007 , not in any country i can think of anyway and besides , it wasnt just the length , that four bedroom bungalows in rural ireland were going for 300 k and sites for 120 k , told us that things had gone mad , you will never time an exit or entry to perfection but even you got out in 2005 and got back in around early 2011 ( a year before the peak and a year before the trough ) , you done well

HerrKuehn

We started looking end of 2012. I had moved job previously and had to wait until I was there 6 months. We had saved ~200k by the time we started looking. It took quite a while to find the right house. There was not a huge amount available at the time, some great deals were turning up on the property register, but there was definitely an increase in interest at that time. In the end we bought a house in SCD in mid 2013. We paid 440k, it would have been over 1m during the boom. With our large deposit (all savings, no "gifts" or inheritance) it means we have a small mortgage which wont take too long to clear, maybe another 10-12 years. I will be 45-47 at that point.

iguana

Sold in the UK in 2007 and had a large sum after clearing the mortgage. Needed to spend a chunk of it in 2009-2010 due to a very serious illness my husband suffered which left us without an income for quite some time. After this we moved back and forth between the UK and Ireland for a few years, leaving the money in savings. Then through pure luck as we decided to settle in Limerick and buy a house, what so far appears to be the bottom of the market in here coincided with a favourable Euro/Sterling exchange rate. Bought a lovely detached house on a large plot for cash from NAMA and still have a decent nest egg in savings.

Desmonddoyle

dubrov wrote: »

It's a high risk move alright.
I heard a story in 2001 of a guy who did the same thing sensing there was a bubble.
Prices had stalled a bit after large gains

Of course things were only just starting then.
The property market ran away from him and he wasn't able to rebuy.

You'd have to be pretty certain to gamble with your family's future like that.

this

dubrov wrote: »

Sure, the bull market had to end at some point. The problem is timing it.
There are no set rules how long bull markets can run for.

And this

The irish economy is pretty open and the bubble could have easily chugged along for any number of years, shielded by a strong global economy. I was simply saying that I find it easy to see why loads of people held off buying houses, but selling your home with the hope of stealing a bargain and living in limbo in the meantime until the market bottomed out. The fantastic profit can disappear very quickly. I have a wife and kids, and I just can't imagine how that conversation would go when I announce I'm selling the house because I have hunch the market will collapse in the next six months.

healthy_cynic

iguana wrote: »

Sold in the UK in 2007 and had a large sum after clearing the mortgage. Needed to spend a chunk of it in 2009-2010 due to a very serious illness my husband suffered which left us without an income for quite some time. After this we moved back and forth between the UK and Ireland for a few years, leaving the money in savings. Then through pure luck as we decided to settle in Limerick and buy a house, what so far appears to be the bottom of the market in here coincided with a favourable Euro/Sterling exchange rate. Bought a lovely detached house on a large plot for cash from NAMA and still have a decent nest egg in savings.

limerick only got off the floor in the summer of 2014 , around two years after dublin and eighteen months after cork and galway

limerick is still for nothing today

lima

Saved over e120k during and after the boom. Rented/houseshared/traveled during this time. All the while building up tech expertise.

Bought an apt in a nice part of Dublin via a bank-forced sale. Got it for over 50% cheaper. Contributed a big deposit. Mortgage is almost half the potential rent. Massive potential to increase in value plus I have significant savings. Boom.

pwurple

We sold primary residence pre-crash, banked the deposit for next place, and rented for a few years while searching. We bought during 2013. Was that bottom of the market? Turns out it was... residential property price index was 68.9 according to CSO that year, but you can only ever tell in hindsight.

We found a place we would never have afforded if we had done a 'chain'. I know we got lucky, it was a risk to take with a family in tow, but we put in serious effort. It was all consuming for those years. Trawling the listings and building relationships with estate agents, doing engineer's reports, saving, bidding. Eventually I think it came down to the time we put in talking to the estate agents. They knew what we were looking for, knew our budget from our bids, and one day, after the years of legwork, it paid off. We got a phonecall that a house which met our criteria was coming on the market, and we saw it before it was advertised.

I do know people who sold at the same time as us, who are still renting, because they think it will fall further. Maybe it will and they will come out better, but I'm ok with where we are.

ted1

Rented for 7 years waiting for the crash , bought in 2012. Rent was 1250, mortgage is about 300 cheaper on the same house in a slightly better estate.
Rents have now gone to 1650.
The main advantage is that my Wife doesn't have to work, so she gets to mind the kids full time .

Stone Deaf 4evr

Wasn't as affected by the crash as much as some, I'm unbelievably cautious with money by nature and managed to not overborrow for my self build, instead we got what we could afford comfortably and took into account possible rate increases etc.
now, its take us the best part of 10 years to get the house 'finished' in that this summer we finally saved enough to put up the garden shed, bought a lawnmower and put tarmacadam down, but I'm 10 years into a 20 year mortgage, and my repayments are now less than what many in my circle of friends are paying in rent.

CelticRambler

Desmonddoyle wrote: »

While I wouldn't doubt for a second the veracity of any internet anecdote, I do find it incredulous that a married person with kids would sell the family home and move them into expensive, rented accommodation on a hunch that a crash was imminent.

Sorry to burst your bubble but that's pretty much what we did. We were in the UK at the time, also "enjoying" ever-rising property prices which was crippling our plans to move to a bigger house (four children take up a lot of space) and also buy out my business lease. So we just sold up, paid off the mortgage, bought a motorhome (for cash), took the children out of school and went house-hunting, eventually buying (for cash) in France.

Before that, however, we spent the end of 2003 in Ireland, where I got a job offer with a high 5-figure salary and we looked at several houses in Dublin/Wicklow/Meath/Kildare. I did the sums and none of it added up. We were coming up to Christmas at that stage, and I still remember family and friends telling me that a 4x salary & 30-year mortgage was the new normal, and me telling them they (and the rest of Ireland) had gone mad. We left Ireland ten days before Christmas and moved into our mortgage-free 5-bed detached house at the end of March 2004, three months ahead of expectations, and getting an exchange rate of 1€55/£ (0.645£/€) On paper, due to a lot of TLC, the house is now worth about three times what we paid for it, but is probably unsellable in the current French market.

I'm still mortgage-free, the motorhome is still in regular use, and it still makes no sense for me to buy/live/work in Ireland. I've kept my eye on property prices for another reason, and there was a brief period during which I thought they were justifiable, but not any more. The job I turned down came up again, part-time and only 30% of the previous offer; similar full-time positions in Ireland are currently running at about 80%.

Gyalist

Desmonddoyle wrote: »

While I wouldn't doubt for a second the veracity of any internet anecdote, I do find it incredulous that a married person with kids would sell the family home and move them into expensive, rented accommodation on a hunch that a crash was imminent. An investment property, holiday home, I could understand. I just don't think it's a risk any rational person would take, and would have thought the stability of the family unit would take priority over a speculative, money-making bet on the property market.

A good friend of mine did exactly that - sold the family home and moved into rented accomodation. The kicker is that he put the proceeds into Northern Rock! When the run on deposits at Northern Rock took place he was featured prominently on RTE News queuing up outside the bank to withdraw his money.

A few years later he moved to D7 from D4 and bought a much larger period house that he could never have afforded had he stayed where he originally was.

handlemaster

CelticRambler wrote: »

Sorry to burst your bubble but that's pretty much what we did. We were in the UK at the time, also "enjoying" ever-rising property prices which was crippling our plans to move to a bigger house (four children take up a lot of space) and also buy out my business lease. So we just sold up, paid off the mortgage, bought a motorhome (for cash), took the children out of school and went house-hunting, eventually buying (for cash) in France.

Before that, however, we spent the end of 2003 in Ireland, where I got a job offer with a high 5-figure salary and we looked at several houses in Dublin/Wicklow/Meath/Kildare. I did the sums and none of it added up. We were coming up to Christmas at that stage, and I still remember family and friends telling me that a 4x salary & 30-year mortgage was the new normal, and me telling them they (and the rest of Ireland) had gone mad. We left Ireland ten days before Christmas and moved into our mortgage-free 5-bed detached house at the end of March 2004, three months ahead of expectations, and getting an exchange rate of 1€55/£ (0.645£/€) On paper, due to a lot of TLC, the house is now worth about three times what we paid for it, but is probably unsellable in the current French market.

I'm still mortgage-free, the motorhome is still in regular use, and it still makes no sense for me to buy/live/work in Ireland. I've kept my eye on property prices for another reason, and there was a brief period during which I thought they were justifiable, but not any more. The job I turned down came up again, part-time and only 30% of the previous offer; similar full-time positions in Ireland are currently running at about 80%.

If your home is unsellable at the moment then how could it be worth three times what you paid for it ? Its only worth what someone will pay for it now.

CelticRambler

handlemaster wrote: »

If your home is unsellable at the moment then how could it be worth three times what you paid for it ? Its only worth what someone will pay for it now.

Because the French property market is completely different to the Irish/UK model. That notion of "worth what someone will pay" doesn't apply in France! :pac:

(which was the main reason France was spared the worst of the 2008 crash; her economic problems today are for completely different reasons)

L1011

I spent money on travel etc and bought in 2012 with a <80% LTV. Not the most virtuous story.