So who played the housing market and Lost?

um7y1h83ge06nx

It's been a bit of a rollercoaster for me.

In 2006 I bought a semi-D in Limerick for 282K, 215K mortgage and 67K deposit. About 160K outstanding on it now and it is on an ECB + 1.25% tracker which is a good thing. Could possibly get 210K for it now.

Last year I bought a house with my fiancee in rural Co. Limerick. Was on the market for 395K, got it for 380K. House was finished to a very high standard around 2009 and owners were trying to flog it off the plans just before the crash. They were (from speaking to people that knew about the house back then) looking for 600K at the time which is way more than what we could afford or want to spend now (although using boom criteria we could have probably gotten a mortgage on it).

The house purchase in 2006 made me wary the second time around. During the depths of the recession I was very aware of how stuck I was to the house - at it's lowest it was probably just worth around 160K.

It was all madness, but I can see it happening again.

Negative_G

intheclouds wrote: »

Why not? Why do banks bother having stress testing if it doesnt, you know, stress test?



They did contingency plan, they kept a few bob saved to cover lack of work. Same as anyone taking out a mortgage at any time - Im not sure what point you are trying to make here? Neither of them lost their jobs?



They didnt see it coming. Most people didnt.

Of course the burden of lending lies with the lender - are you trying to tell me that the ordinary punter who applies for a bank loan is expected to be a financial analyst?



Arent you great? You were only a teenager, you probably didnt have decisions to make about fertility, raising children near good schools, rental uncertainty, you had time to be a junior economist because you werent working 60 hour weeks to feed the kids.

It really was not about keeping "the good times rolling" for most ordinary people - and if thats how you remember it you clearly did not see the bigger picture. The "good times rolling" attitude was coming from the government, developers, banks and plenty of "speculators" but for most ordinary people who were just trying to put a roof over themselves or their kids heads there was nothing about keeping good times rolling.

Your analysis of it seems naive to me, possibly because you were a teenager then so you really didnt understand the many reasons why people want to own their own property and why it seemed grand if the bank said it was ok. Banks were literally pushing people into higher loans and when a man in a suit stood in front of you saying the higher loan made MORE sense - why would you expect most people to argue that it didnt?

I would expect the individual to have even a basic working understanding of the economy and how it works along with the current state of affairs. Anyone who's willing to take on 30 years of debt should do the same.

Again, you are almost arguing that people couldn't say no to all this money. The simple reality was they could. The easy option in this instance was to say yes.

This isn't a simple topic and I have acknowledged some of the major players but you have yet to acknowledge any wrong doing by a mortgage holder. It is always the 'big bad bank' and the man in the suit.

You're right about one thing though. I didn't have to think about any of those things in my early 20s. If I had, there probably would have been an even smaller chance of me being getting burnt by entering a contract I was unable to meet because I would have taken the due diligence to examine my current and future circumstances.

This topic is clearly sore for you and that's fine. You can blame the banks and the man in the suit all you wish but at least accept that the mortgage applicant has some level of responsibility in the whole affair. They signed the dotted line.

Negative_G

meeeeh wrote: »

Abd luckily as a teenager you didn't need to make any decisions about anything so it was easy to see things clearly.

Perhaps I didnt make myself clear.

I had finished college and was working full time before the crash in 2008. I had several years up to the crash living in 'the boom' and seeing the the effect on the general populace. I experienced crippling rent and rising cost of living. I thought about buying a house but when I really thought about it, it wasn't viable in the long term. It turned out to be a prudent decision for me. Others made different decisions.

I was very aware of what was occuring for the 7/8 years leading up to the crash, I had friends and peers who got caught up in it as well.

This isn't a 'I told you so' crusade. I simply fail to believe that so many people thought that the train wouldn't come off the tracks at some point.

The blinkers were most definitely engaged by an awful lot of people who unfortunately paid the price.

SarahMollie

Negative_G wrote: »

I would expect the individual to have even a basic working understanding of the economy and how it works along with the current state of affairs. Anyone who's willing to take on 30 years of debt should do the same.

Again, you are almost arguing that people couldn't say no to all this money. The simple reality was they could. The easy option in this instance was to say yes.

This isn't a simple topic and I have acknowledged some of the major players but you have yet to acknowledge any wrong doing by a mortgage holder. It is always the 'big bad bank' and the man in the suit.

You're right about one thing though. I didn't have to think about any of those things in my early 20s. If I had, there probably would have been an even smaller chance of me being getting burnt by entering a contract I was unable to meet because I would have taken the due diligence to examine my current and future circumstances.

This topic is clearly sore for you and that's fine. You can blame the banks and the man in the suit all you wish but at least accept that the mortgage applicant has some level of responsibility in the whole affair. They signed the dotted line.

I have a degree in Economics (and Politics, but I majored in Economics). I also saw this coming years before it happened, when I was thankfully too young to have bought anyway. I studied economics in school from age 16, and I could see that it was madness and unsustainable. I distinctly remember trying to explain what "negative equity" was to my then boyfriend - and he couldnt understand it because "houses always go up in price". He couldnt get his head around your loan being greater than the value of your house, because he'd never seen house prices drop in his lifetime.

You're just glossing over the prevailing mood at the time. As a teenager you wouldnt have been that exposed to it.

You're really coming across as "Captain Hindsight" however, and thats extremely easy to do now. And also, its helpful to no one. You might understand that markets are cyclical, but your understanding of human behaviour means that your economic knowledge is fundamentally flawed. Economics is a social science after all.

I understand economics but I don't expect everyone to. And most people shouldn't really have to, to any great degree. Blaming the ordinary punter is not seeing the whole picture. Ireland fell victim to the perfect storm. Some of it was our own making (culture of wanting to own property rather than rent, regulartion that was lax beyond a joke, etc) and some of it was down to international factors, like interest rates in the Eurozone being low to suit the larger economies, and basically adding fuel to the fire in Ireland.

Negative_G

SarahMollie wrote: »

I have a degree in Economics (and Politics, but I majored in Economics). I also saw this coming years before it happened, when I was thankfully too young to have bought anyway. I studied economics in school from age 16, and I could see that it was madness and unsustainable. I distinctly remember trying to explain what "negative equity" was to my then boyfriend - and he couldnt understand it because "houses always go up in price". He couldnt get his head around your loan being greater than the value of your house, because he'd never seen house prices drop in his lifetime.

You're just glossing over the prevailing mood at the time. As a teenager you wouldnt have been that exposed to it.

You're really coming across as "Captain Hindsight" however, and thats extremely easy to do now. And also, its helpful to no one. You might understand that markets are cyclical, but your understanding of human behaviour means that your economic knowledge is fundamentally flawed. Economics is a social science after all.

I understand economics but I don't expect everyone to. And most people shouldn't really have to, to any great degree. Blaming the ordinary punter is not seeing the whole picture. Ireland fell victim to the perfect storm. Some of it was our own making (culture of wanting to own property rather than rent, regulartion that was lax beyond a joke, etc) and some of it was down to international factors, like interest rates in the Eurozone being low to suit the larger economies, and basically adding fuel to the fire in Ireland.

I accept the majority of what you have said.

I'm not blaming the punter.

It has already been displayed in thread the attitude that the 'punter' was the victim and that they were lead by the hand by a man in a suit offering them lots of money with no ability to resist.

What prompted me to post initially was my continued surprise that people didn't see an issue with the situation they were getting themselves into.

meeeeh

All I can say if the I told you so' brigade was as loud then as they are no there would not be such housing boom or crash.

And no we didn't get burned, we actually managed to get out of it very well. It was just not due to any great skill of ours.

HensVassal

Zascar wrote: »

As per the other thread about who won, lets see who lost. I'm sure most peoples stories are way way worse than mine - but I bought a very small apartment in 2004 for €130k - like everyone I was just trying to get a foot on the ladder. 12 years later and it's still only worth €60k. At the start I was making a decent profit on it, but since 2008 when the rents fell, it's been costing me several hundred a month to top up the mortgage, with all the fees, charges and taxes on top of it. What's annoying is that I know people who bought in 2007/2008, went massively negative equity but are back above water now - but I've got a long way to go as I bought in one of the worse hit places.

So who else lost?

Only worth 60k.....surely it must be worth more than that. Is that what a valuer told you?

SarahMollie

Negative_G wrote: »

I accept the majority of what you have said.

I'm not blaming the punter.

It has already been displayed in thread the attitude that the 'punter' was the victim and that they were lead by the hand by a man in a suit offering them lots of money with no ability to resist.

What prompted me to post initially was my continued surprise that people didn't see an issue with the situation they were getting themselves into.

Its hard to do but you really have to transplant yourself back into that time pre 2007 - it actually feels like another world.

People had never known an economic event on this scale. It was simply incomprehensible to most. And then it happened.

The few of us who could see that the writing was on the wall were in the minority, and even those who dared to speak up, were shouted down and told not to be so negative. It was like the biggest, most crazy case of group think imaginable.

Yes ideally people would have seen it coming, but most people don't understand how markets work, factors effecting the cost of money, factors influencing the availability of credit etc. Yes there was maybe some willful ignorance, but I believe the majority just wanted to get a foot on the ladder so as not to be left behind. Those are the people I have sympathy for. They were mislead by every institution in the land and bore the brunt of the consequences.

As for those who gambled on a 2nd home in Bulgaira? Well thats another story.

macnug

bigpink wrote:

Yes but 20 and 22

I was given twice that in 2005, I was 23 partner was 21, 100% mortgage, crazy when you think about it.

MeatTwoVeg

SarahMollie wrote:

I distinctly remember trying to explain what "negative equity" was to my then boyfriend - and he couldnt understand it because "houses always go up in price".

Well, I hope he had looks at least.

MeatTwoVeg

intheclouds wrote:

They went to the bank and showed their earnings and savings and the bank stress tested them and said they passed the criteria. Where would you have expected them to do something differently?

Anyone who hands over responsibility for such a potentially life-changing decision to a 20-something bank employee, who's probably working off a commission, is quite frankly, a moron.

When we bought a property in the early noughties, we worked out what we were comfortably borrowing, we didn't ask the bank the maximum they'd lend us.

My sympathies are limited for such people.

intheclouds

MeatTwoVeg wrote: »

Anyone who hands over responsibility for such a potentially life-changing decision to a 20-something bank employee, who's probably working off a commission, is quite frankly, a moron.

When we bought a property in the early noughties, we worked out what we were comfortably borrowing, we didn't ask the bank the maximum they'd lend us.

My sympathies are limited for such people.

My bank contact was a woman in her 50s.

We also worked out what we were comfortably borrowing and did so, I actually, I bought alone. I never asked the bank for the max, in fact they tried to press twice the amount on me.

I'm not really sure what your point is? Even borrowing comfortably I was hit with massive negative equity. It was worse for those who borrowed more of course, but I'm still stuck with the original property even though I did exactly as you laid out above.

Captain Hindsight, great term. Applies to a few on this thread.

I find it difficult to believe that people could be so naive as to think that everyone who goes for a mortgage does do with a grounding in economics and financial know how. People just reach a stage where they want to buy a home and they do so. Prices, markets etc at the time aren't really relevant. It's a matter of luck for the majority whether it works out well or they end up stung.

intheclouds

Negative_G wrote: »

I accept the majority of what you have said.

I'm not blaming the punter.

It has already been displayed in thread the attitude that the 'punter' was the victim and that they were lead by the hand by a man in a suit offering them lots of money with no ability to resist.

What prompted me to post initially was my continued surprise that people didn't see an issue with the situation they were getting themselves into.

If the punter wasn't the victim, who was?

You seem to think that people should have borrowed less but you ignore the fact that people asked for what they needed to buy a home. Prices were crazy. Had they asked for less they wouldn't have been able to buy anything.

I'm not sure what bit of it you don't understand. It was a complex situation alright.

See my above post re not borrowing mad amounts. Didn't matter, people still got stung.

No one is saying that you have to accept what a man in a suit tells you, but at that time no one knew you actually couldn't trust banks and they were treated as some kind of impartial authority. It's a simple fact. It happened. Why else do you think that people continued to borrow right up to the point of the crash?

Why do you think that people complain now about the central bank rules being too restrictive?

Villa05

SarahMollie wrote:

I understand economics but I don't expect everyone to. And most people shouldn't really have to, to any great degree. Blaming the ordinary punter is not seeing the whole picture. Ireland fell victim to the perfect storm. Some of it was our own making (culture of wanting to own property rather than rent, regulartion that was lax beyond a joke, etc) and some of it was down to international factors, like interest rates in the Eurozone being low to suit the larger economies, and basically adding fuel to the fire in Ireland.

Good post Sarah, but blaming the Eurozone is a red herring. We have 0 interest rates now, but a simple solution is in place to help prevent overheating and runaway prices, that is the Central Bank rules on mortgage lending.

Such a solution could have been implemented in the noughties but was not as the Government wanted to the bubble to continue. Incompetent yes men were appointed to the CB by government to carry out Government wishes, when as you say a junior cert economics student could see the catastrophe that was coming

Our crash was 99% irish government made

athtrasna

So as per the thread title...who played the property market and lost? Getting a little distracted with economic analysis here.

MeatTwoVeg

intheclouds wrote:

I find it difficult to believe that people could be so naive as to think that everyone who goes for a mortgage does do with a grounding in economics and financial know how. People just reach a stage where they want to buy a home and they do so. Prices, markets etc at the time aren't really relevant. It's a matter of luck for the majority whether it works out well or they end up stung.

Shouldn't be borrowing hundreds of thousands of euros without a bit of financial know how I'm afraid.

Senna

I've a different story, we definitely lost but also got lucky, we bought in 2009 after the bubble had well and truly bust and when everyone knew it.
At the time it was a huge risk and we knew that it was not an ideal time, but thankfully it worked out better than could be expected.

We live in a rural area, so prices were never as mad as in cities, after a long search we bought a 4 bed 2500sqft house on just over an acre for €205k, a very similar house in area by same builder was 275k about 2004.
My wages more than covered mortgage and about 6 months after we bought the house, the wife was made redundant, again it might seem like bad timing, but she opened up her own business straight away and it has been a huge success. Had we of looked for a mortgage in 2010-2013, I don't think we would have got one as the wife was a sole trader and my wages were all bonus based.
In 2014 I then left my job and went back to college, just starting in a new industry this year, and on graduate wages, so had we tried to time the market and buy at the lowest point, we wouldn't have got a mortgage and it would probably be another couple of years before we could realistically get a mortgage.

So I dont think anyone would agree that 2009 was a good time to buy, going by local market, i'd say we are still in NE but just barely (-/+20k tops) but had we not, we'd still be renting and possibly would be for another 2-3 years.

ted1

4ensic15 wrote: »

The biggest losers are developers who bought sites at massive prices and then couldn't develop them. They had borrowings on sites and no income at all coming in. Many ended up bankrupt with no earnings, a destroyed credit record and no way back.

No, they didnt do to bad . NAMA saw to that , massive write downs , bankruptcy, and now back in business

4ensic15

ted1 wrote: »

No, they didnt do to bad . NAMA saw to that , massive write downs , bankruptcy, and now back in business

A lot of them are not back in business and never will be. A small number managed to get going again.

josip

Bought an apartment in Dublin in 2003 for 242,000 + 10,000 stamp duty
Identical one sold a month ago for 190,000

Zascar

HensVassal wrote: »

Only worth 60k.....surely it must be worth more than that. Is that what a valuer told you?

The few that have gone on the market in the last while have been 55-60k and I called an estate/letting agent last week and he quoted 60k also.

ted1

josip wrote: »

Bought an apartment in Dublin in 2003 for 242,000 + 10,000 stamp duty
Identical one sold a month ago for 190,000

12 years of rent at 1,000 a month =144,000

I wouldn't say you did too bad

SarahMollie

MeatTwoVeg wrote: »

Well, I hope he had looks at least.

He did indeed

SarahMollie

Villa05 wrote: »

Good post Sarah, but blaming the Eurozone is a red herring. We have 0 interest rates now, but a simple solution is in place to help prevent overheating and runaway prices, that is the Central Bank rules on mortgage lending.

Such a solution could have been implemented in the noughties but was not as the Government wanted to the bubble to continue. Incompetent yes men were appointed to the CB by government to carry out Government wishes, when as you say a junior cert economics student could see the catastrophe that was coming

Our crash was 99% irish government made

To be clear I never said the Eurozone was to blame, it was just another factor (of many factors - majority of our own making) which lead to the aforementioned perfect storm of a property crash. Rates were set at a rate designed for growth in France and Germany who were a bit sluggish. Apply those same rates to Ireland which was flying anyway, and we credit became so cheap for our banks, they almost couldnt lead it out fast enough! Now if we'd had a government that knew what it was at and wasn't simply looking to keep the good times rolling (I might point out that the opposition were no better - FG proposed abolishing Stamp Duty altogether which would have actually made prices boom even further with no tax take). A responsible government would have taken steps to cool the market given that the rates in Europe were what they were. They didn't, as it wouldn't have played well for their prospects of getting reelected.

Yes rates are the lowest of the low, but thats because the Eurozone are still trying to stimulate economies that never fully recovered from 2008. I'm thankful that the Central Bank have finally stepped in because I'm convinced that banks would already be lending at dangerous rates had they not done so.

wicked_wytch

we lost big time, bought 2 bed apartment in 2006 off plans, moved in 2007, didn't borrow as much as we could have and were both on decent salaries working as proffesionals in the pharmaceutical industry. Even if the central bank rules were around back then we'd still be in this position as we didn't borrow a million miles away from the current requirements so I'm not conviced of how effective they will be with 'protecting' people against negative equity. Theyre effective in cooling the market alright as they make sure people like us can't move or trade up and free up starter homes.

We borrowed 4 times our salary, with a 10% deposit, not a million miles off the current requirements and we're still over 100k in negative equity

Now we're married two young kids family of 4 in a 2 bedroom apartment thats becoming more and more unsuitable and we can't move because of the huge amount of negative equity we have. We've been trying to save but its going to take years while we're paying morgage(granted on a tracker so not massive) and childcare for two kids in creche full time (this is a killer and costs more than our mortgage) add to that that we were unfortunate enough to need ivf to have our two beautiful kids which basically has sucked up all savings for the last couple of years and we're in a rightly crap situation where we're stuck in unsuitable accomodation with limited abillity to save large amounts and rapidly approaching 40 and the stage where we just won't get a mortgage if we can't buy a new place soon.

Our only hope is that over the next 2 years we can save a 10% deposit, not a chance of being able to save up 20%, whittle down the negative equity to a managable amount through house price increases and paying down the mortgage, and just hope that the bank will give us a negative equity mortgage that will allow us to buy a house within commuting distance in the country of our jobs in dublin. Makes me sick to see our property still only worth 48% of what we paid for it and to think of what we could get for that amount now!!

Its a truly crap situation to be in, but it is what it is, there are a lot of people out there like us who didn't borrow and spend recklessly, just wanted to get a home for a few years and hopefully trade up when the kids come along but are now stuck in unsuitable accomodation and unable to move despite being in good jobs with good salaries and saving our asses off, being sensible with money, its sickening.

manonboard

I would of lost a fair bit but the affordable housing scheme really saved me.
My 1 bed apartment was selling for 197k at boom time. On the scheme, I am not allowed sell for 10 years but i got the apartment at 127k.

Its worth about 120kish now so I am very lucky. I'm very grateful to the social people for running such a scheme. It really helped many of us who were just never going to be able to buy to do so.

It's small, However Im happy in it. its warm. Well built. and safe. I'll never be able to have a family in it so i do need to move sometime in the next 5 years, but im financially safe due to the housing scheme.

Anatom

On paper I've lost about €170,000 on the value of my home. We bought for €500,000 in 2007 carrying over mortgage from our first house and its now valued at around €330,000. The mortgage (one of the NIB trackers referred to above) is manageable and we have no plans to move, so its current value is of zero importance really.

Sebastian Dangerfield

L1011 wrote: »

I was offered a significant mortgage at 19 in 2006. Nearly everyone had gone insane, banks included.

Slightly off topic but I'd agree. In 2004, aged 20, I was given a €10k car loan by AIB when I was unemployed and not even claiming social welfare.

Back on topic, my parents got a mortgage on my grandmothers house at some exorbitant sub prime rather for her last few years. Two-fold - do it up for her to make her last few years comfortable, and then have an investment whenever she passed on.

5 years later they sold it at a loss of approx. 50k-ish. In hindsight they could probably never afford it in the first place.

um7y1h83ge06nx

Sebastian Dangerfield wrote: »

Slightly off topic but I'd agree. In 2004, aged 20, I was given a €10k car loan by AIB when I was unemployed and not even claiming social welfare.

That really says it all doesn't it.

I'm reading The Big Short at the moment, good book. Utterly madness in the US as well, examples of strippers and cleaners owning multiple properties using sub-prime mortgages with attractive initial 2 year fixed rates. Once they moved to a much higher variable rate after the 2 years it was carnage.

intheclouds

Myla Fast Sideburns wrote: »

That really says it all doesn't it.

I'm reading The Big Short at the moment, good book. Utterly madness in the US as well, examples of strippers and cleaners owning multiple properties using sub-prime mortgages with attractive initial 2 year fixed rates. Once they moved to a much higher variable rate after the 2 years it was carnage.

I remember going to a friends wedding in Greece. I only knew some of his other mates. It was 2004 and the conversation around the table was about peoples "property portfolios". I was still renting, hadnt a clue what was going on. These were all professionals, software engineers, nurses, teachers etc... One guy with 4 properties in Dublin and 1 in Bulgaria openly laughed when i said that the next year I might look into buying a small apartment.

Id love to know how those property portfolios are going for them now.