Property Market 2020

Bass Reeves

addaword wrote: »

Nobody wishes for a hard recession.
The government will not print money, the germans are rightly wary of inflation.

Yes the Germans are rightly wary. However present inflation is sub 2% even during present boom. I am not talking about uncontrolled inflation but rather getting inflation into the 4-8%range for 3-5years. There are risks involved but if we suffer a very hard recession it is an option. This creates an incentive to invest as money in banks is losing value if deposit rates are sub 1%. Rising deposit rates would happen late in the cycle as central banks reduced money supply.

This would only be considered by the German's and other super prudent countries if there was a really hard recession I do not envisage to this at present. But it could happen where deflation was a larger risk

MrMusician18

stayback wrote: »

But if we waited at the time we might not have got the property we wanted. It’s all relative . Yes If we waited we might have got a cheaper house but it might not have been the house we wanted. We bought what we wanted. If we waited then you have to ask yourself how long .. 12 months 18 months or never buy..

Say I have 500k to spend. I see the perfect house going for 500k now, but I decide to wait. Market falls and seller withdraws from the market because he thinks it won't achieve his desired price. So you are left with no house and the seller didn't get to sell.

What people don't realize is that there is nothing stopping anyone from coaxing someone back to market. Walk up to that front door and offer him the 500k that you were willing to pay 6 months ago even though it's only worth 450k now. He'll think you're mad, but he'd be mad not to bite your hand off!

Bass Reeves

Donald Trump wrote: »

People might not have their cash in Euro. Most will, but some won't.

In a world wide recession it is immaterial what currency you have your savings if all countries do/have to do this. I suspect that your name sake in the US will inflate that economy to get it rumbling before the November election

SozBbz

MrMusician18 wrote: »

Say I have 500k to spend. I see the perfect house going for 500k now, but I decide to wait. Market falls and seller withdraws from the market because he thinks it won't achieve his desired price. So you are left with no house and the seller didn't get to sell.

What people don't realize is that there is nothing stopping anyone from coaxing someone back to market. Walk up to that front door and offer him the 500k that you were willing to pay 6 months ago even though it's only worth 450k now. He'll think you're mad, but he'd be mad not to bite your hand off!

Well, yeah there is because you might not be able to finance that €500k in lesser economic conditions. Most people are buying with a mortgage, and banks wont let you overpay like that.

Also, youre talking about a scenario where people happen to just randomly know who wanted to sell their house at a certain price once all listings are removed from sites and EAs. You might remember a particular house and write a note to the owner, but thats very limited.

stayback

MrMusician18 wrote: »

Say I have 500k to spend. I see the perfect house going for 500k now, but I decide to wait. Market falls and seller withdraws from the market because he thinks it won't achieve his desired price. So you are left with no house and the seller didn't get to sell.

What people don't realize is that there is nothing stopping anyone from coaxing someone back to market. Walk up to that front door and offer him the 500k that you were willing to pay 6 months ago even though it's only worth 450k now. He'll think you're mad, but he'd be mad not to bite your hand off!

The only certainty in that situation is that the house is for sale. Everything else you are saying is a variable and can change. Who knows the market will drop who knows he might have sold it.
I’ll say it again your treating buying a house as if you were buying a car. Ah sure I missed this car another one will come along. Houses aren’t like that.
We seem to have 2 different attitudes in buying houses.

Villa05

Recessions are the product of poor management of the economy, the recession rebalances the economy

You might note that the stock market has built in trips when their is high falls in share prices

How come there are no trips when shares rise in price by a similar percentage

Allowing double digit rises in property without addressing the underlying causes is risky. Continous Failure to do so will lead to recessions.
More often than not its not the recession that is the root cause its what happened in the period before the recession that's the issue. The recession forces people to react






The ratio of cash buyers to mortgage buyers has remained the same since the bottom of the market in 2012/2013 to 2018 at close to a 50/50 split

SozBbz

Villa05 wrote: »

Recessions are the product of poor management of the economy, the recession rebalances the economy

Not this time. This has nothing to do with management of the economy, poor or otherwise.

MrMusician18

stayback wrote: »

How long do you wait and also are you buying because it’s cheap and not because it’s what you want..

That's a trade off most buyers have to make at the moment.
Has anyone ever dreamed of living in a timber framed house on the wrong side of Celbridge?

In a suppressed market you get more of what you want for the same money. How long you wait is indeed a guessing game if you want the absolute bottom - most though will be happy with the price paid when the market stabilises. I.e. shows subdued price growth.

SozBbz

Villa05 wrote: »

The ratio of cash buyers to mortgage buyers has remained the same since the bottom of the market in 2012/2013 to 2018 at close to a 50/50 split

The post I was replying to specifically mentioned a mortgage scenario, so I don't see what point you're making here.

SozBbz

MrMusician18 wrote: »

That's a trade off most buyers have to make at the moment.
Has anyone ever dreamed of living in a timber framed house on the wrong side of Celbridge?

In a suppressed market you get more of what you want for the same money. How long you wait is indeed a guessing game if you want the absolute bottom - most though will be happy with the price paid when the market stabilises. I.e. shows subdued price growth.

So you're still thinking you'll have the same money to spend if things go sideways?

You've clearly not read the replies to your last post.

MrMusician18

stayback wrote: »

The only certainty in that situation is that the house is for sale. Everything else you are saying is a variable and can change. Who knows the market will drop who knows he might have sold it.
I’ll say it again your treating buying a house as if you were buying a car. Ah sure I missed this car another one will come along. Houses aren’t like that.
We seem to have 2 different attitudes in buying houses.

Sorry, houses are like that. Due to our penchant for developing cookie cutters houses there will most likely be a very similar property down the road if you miss out on one. The major difference being the number on the front door.

It's only in the top end of the market where true one-offs exist and if you miss one you might not ever get one like it again. I would suspect most people participating in the conversation here are notin the €1m+ market.

MrMusician18

SozBbz wrote: »

Well, yeah there is because you might not be able to finance that €500k in lesser economic conditions. Most people are buying with a mortgage, and banks wont let you overpay like that.

Also, youre talking about a scenario where people happen to just randomly know who wanted to sell their house at a certain price once all listings are removed from sites and EAs. You might remember a particular house and write a note to the owner, but thats very limited.

So you're saying that you should take on excess debt now because when the economy tanks you won't be able to afford it. Great advice there pal.

God forbid an EA might have to work to make a sale and try to match a buyer with a seller.

If only they all just walked in the door, and handed me money like they used to.

GreeBo

schmittel wrote: »

This idea is all fine in theory.

The problem is in practice it often goes tits up, and you lose the job that looked so secure when you were buying the house.

Now you have a house with mortgage repayments that you cannot afford, and potentially owe more money on the mortgage than the house is worth.

If the people in this situation are prepared to take the responsibility for the situation, sell the house, and take the loss and move on then that's fine.

But what will happen is they will say, "Poor me, it's not my fault, the bank should not have lent me the money, everybody said it was good time to buy, somebody has to pay for this, I don't care who, anybody but me."

And anybody who dares to say "Well actually, perhaps you should have been a bit more prudent under the circumstances" will be demonised: "Oh I see, I'm all right Jack, it's fine for you, you don't know the stress involved in being stuck in negative equity and not being able to pay your mortgage, and worried about losing your home."

And none of the it's always a good time to buy gang will stop to think why the maybe now is not a good time to buy gang are not in negative equity, unable to pay the mortgage.

But if you stop to think about it, it's pretty bloody obvious.

The reason I think this will happen is because it has happened before. And this time it will be worse.

Whereas if you wait and buy in 6 months, then when you lose your job everything is still gravy because the house was maybe 50K cheaper?

Your argument applies to both cases equally but the crux of it is that people need to be willing to "take responsibility, sell the house".
I dont see why this changes based on the house being in negative equity or not. Thats the banks problem when you hand them the keys.

SozBbz

MrMusician18 wrote: »

Sorry, houses are like that. Due to our penchant for developing cookie cutters houses there will most likely be a very similar property down the road if you miss out on one. The major difference being the number on the front door.

It's only in the top end of the market where true one-offs exist and if you miss one you might not ever get one like it again. I would suspect most people participating in the conversation here are in the €1m+ market.

This is actually one of the most ridicuous posts I've seen on here in a while and that takes some doing.

I take it you've never actually gone house hunting?

Houses vary far much more than cars, unless youre talking buying brand new/offplan, which is tougher economic times will dry up pretty quickly.

If I want a second hand VW Golf, I can search online and find probably a few thousand available. Refine by colour, engine size, fuel type, year etc and maybe a hundred or so are available, and I genuinely have choice. I can buy a car from anywhere in the country and bring it to my home.

Similarly, I can search for a particular type of house, but I can't find one in Galway and decide that I'll move it to a vacant site in Dublin, even if such a thing existed.

Equally, I might like a house on X road and for whatever reason, I miss out. 6 months later, another house on the same street becomes available, but the aspect is different, and its an estate sale so its in poor nick. They might be similar in certain respects, but the reality of buying one versus the other would be very different.

I was house hunting back in 2013-2015 and new builds basically didnt exist. I had actually really broad parameters of what I wanted, and it was still really hard to find one that met my requirements at he right price and that 10 other people werent also extremely interested in. This scenario just doesnt happen with cars.

SozBbz

MrMusician18 wrote: »

So you're saying that you should take on excess debt now because when the economy tanks you won't be able to afford it. Great advice there pal.

God forbid an EA might have to work to make a sale and try to match a buyer with a seller.

If only they all just walked in the door, and handed me money like they used to.

Define excess? No one is talking about a scenario where people can't afford their repayments. Do you need reminding of the Central Bank rules?

Tell me again how a bank is going to let you pay more than a house is valued at by one of their approved list of valuers? Hint, they 100% won't, pal.

MrMusician18

GreeBo wrote: »

Whereas if you wait and buy in 6 months, then when you lose your job everything is still gravy because the house was maybe 50K cheaper?

Your argument applies to both cases equally but the crux of it is that people need to be willing to "take responsibility, sell the house".
I dont see why this changes based on the house being in negative equity or not. Thats the banks problem when you hand them the keys.

I've seen some astonishing posting in my time but are you really suggesting people should take on debt now because they can get it and they might lose their jobs later? That is completely wreckless, how are they meant to afford repayment in such a situation?

Whatever about waiting on price falls, you absolutely should wait if they're is a clearly foreseeable threat to your employment.

Madness.

GreeBo

Villa05 wrote: »

How many people would share with others that they regret buying their most expensive possession. The day you buy is the day your a seller as they say








In a properly funtioning market your argument makes sense, but Irish property is far from that and has been dysfunctional for quarter of a century now.

A. We were in an affordability crisis before covid, I would imagine that the vast majority buying at that point were not buying a property that ticked all the boxes. Sacrifices were made in some aspect of the property

B Highly uncertain times in relation to job losses, extra taxes, potential pay cuts.

C Post Covid could be a very different world, Clusters of infection are highly concentrated amongst working poor living in cramped accommodation. This could lead to change in market driven house prices to the state intervening to provide housing to balance the supply demand issue. I have posted here on numerous occasions on how this can be done at a profit for the state. Housing a major issue in the last election. Those that ignore it will risk loosing power.
Affordable housing close to places of employment would go a long way to help the green agenda, who may hold the balance of power

D. I think it is generally accepted that both price and rents will fall in the near term

E people here keep posting that this is different to 08, it is but the elephant in the room is that we haven't started paying back for the cost of 08 yet

F commercial property was in a boom over the last 5 years, concerns eminating from the US and here about its sustainability. A downturn will affect lending

OK, so when should people buy? 6 months? 12 months? never?
What's the criteria for you telling someone that now is an ok time to buy?

You are telling me its been dysfunctional for the last 25 years, what makes you think Covid-19 will change it

Your elephant is also paying back bank bailouts from 2008, are you expecting bank bailouts due to Covid-19? It also ignores the fact that our economy has been pretty good for the last few years, despite the recession of 08?

SozBbz

MrMusician18 wrote: »

I've seen some astonishing posting in my time but are you really suggesting people should take on debt now because they can get it and they might lose their jobs later? That is completely wreckless, how are they meant to afford repayment in such a situation?

Whatever about waiting on price falls, you absolutely should wait if they're is a clearly foreseeable threat to your employment.

Madness.

Explain how an unemployed person gets a mortgage?

Everyone in the private sector *might* lose their jobs at some point, theres no such thing as a job for life anymore and the banks factor this in.

Banks will work with people who experience short term financial difficulties, far more so than a landlord would with someone who suddenly couldnt pay the agreed rent. A bank won't spend tens of thousands trying to repossess a house unless you're really refused to engage. You are far better off in a home you own with a mortgage than being a tenant in this country. Weird, possibly, that thats the way it is in Ireland.

GreeBo

MrMusician18 wrote: »

I've seen some astonishing posting in my time but are you really suggesting people should take on debt now because they can get it and they might lose their jobs later? That is completely wreckless, how are they meant to afford repayment in such a situation?

Whatever about waiting on price falls, you absolutely should wait if they're is a clearly foreseeable threat to your employment.

Madness.

Thats not what I said at all!?
I have said several times that you should only buy now if you are comfortable to buy now. Its the same as every other time, you dont buy unless you are comfortable with financial stress testing, covid-19 doesnt change that.

I'm saying that losing your job is a bad thing, but your house being in negative equity or not doesnt really come into it. Either you can afford your mortgage or you cant. If you cant then the house goes back to the bank, either way. In fact I would argue that people are much more likely to walk about from a house thats in negative equity than otherwise.

GreeBo

Cyrus wrote: »

again if what you are suggesting comes to pass it means, building regs go away, cost of raw materials plummets, trades people will be on minimum wage.

building regs go away?

MrMusician18

SozBbz wrote: »

Explain how an unemployed person gets a mortgage?

Everyone in the private sector *might* lose their jobs at some point, theres no such thing as a job for life anymore and the banks factor this in.

Banks will work with people who experience short term financial difficulties, far more so than a landlord would with someone who suddenly couldnt pay the agreed rent. A bank won't spend tens of thousands trying to repossess a house unless you're really refused to engage. You are far better off in a home you own with a mortgage than being a tenant in this country. Weird, possibly, that thats the way it is in Ireland.

There is no reasoning with some people. It is completely imprudent to take on mortgage debt when there is a foreseeable threat to your employment. Explain how an unemployed person pays a mortgage?

People get laid off all the time but it's usually not within touching distance of a house purchase thankfully, and which they may know that it is very possible in the near future.

GreeBo

MrMusician18 wrote: »

Explain how an unemployed person pays a mortgage?

By financial planning.

People get laid off all the time but it's usually not within touching distance of a house purchase thankfully, and which they may know that it is very possible in the near future.

How does these people who get laid off pay for their mortgage?

SozBbz

MrMusician18 wrote: »

There is no reasoning with some people. It is completely imprudent to take on mortgage debt when there is a foreseeable threat to your employment. Explain how an unemployed person pays a mortgage?

People get laid off all the time but it's usually not within touching distance of a house purchase thankfully, and which they may know that it is very possible in the near future.

No, no, stop trying to back up, you first justify your previous statements that people will have the "same money" to buy houses once prices drop.

Then again answer the point about how you think banks will let you pay more than than its valuation says a house is worth? You've ignored that too.

I've already said that banks will work with people who face short term difficulty. Lots of people will lose jobs of the term of a mortgage, and for some that trouble comes in the early days. It happens, but it the vast majority of cases people get on top of it when they work with their lender.

You're full of hot air, and are resorting to extrapalating things that people are not saying so you can feign outrage, its ridiculous and fooling no one.

And again, no one said that someone who knows they're going to lose their job should take on debt. We're discussing the merits having bought should the worst actually happen.

Bass Reeves

SozBbz wrote: »

Well, yeah there is because you might not be able to finance that €500k in lesser economic conditions. Most people are buying with a mortgage, and banks wont let you overpay like that.

Also, youre talking about a scenario where people happen to just randomly know who wanted to sell their house at a certain price once all listings are removed from sites and EAs. You might remember a particular house and write a note to the owner, but thats very limited.

Banks will let you over pay if you have enough equity and you income is large enough to sustain the mortgage.

In general banks do not give a fiddler's what you pay for a house, as long as there equity is secure and that you have the means to pay down the loan.

In the case of where houses have not being sold on a locality for a while banks will assume that property is priced ok. If you have placed a bid of 500k and have 20%+equity bank and an income to sustain the loan repayment the bank will lend.

What banks have done at present is they have stopped exemptions. They will still lend to 3.5times income if you are still at work

Claw Hammer

Bass Reeves wrote: »

Banks will let you over pay if you have enough equity and you income is large enough to sustain the mortgage.

In general banks do not give a fiddler's what you pay for a house, as long as there equity is secure and that you have the means to pay down the loan.

In the case of where houses have not being sold on a locality for a while banks will assume that property is priced ok. If you have placed a bid of 500k and have 20%+equity bank and an income to sustain the loan repayment the bank will lend.

What banks have done at present is they have stopped exemptions. They will still lend to 3.5times income if you are still at work

The banks do not want default on mortgages whether there is equity or not. Where people have a lot of equity they ted to sacrifice more in order to keep the property but the banks don't want the hassle of dealing with arrears cases whether they are covered for the full loan or not. It costs money dealing with arrears and dealing with repossession cases and causes liquidity issues regulatory hassle.
Cash flow is far more important to the banks than a low LTV at present.

MrMusician18

SozBbz wrote: »

Define excess? No one is talking about a scenario where people can't afford their repayments. Do you need reminding of the Central Bank rules?

Tell me again how a bank is going to let you pay more than a house is valued at by one of their approved list of valuers? Hint, they 100% won't, pal.

Banks couldn't give a stuff what you pay for a property. They care about your capacity to repay and if you can't, the value of the underlying assets used to secure the loan.

Padre_Pio

MrMusician18 wrote: »

Banks couldn't give a stuff what you pay for a property. They care about your capacity to repay and if you can't, the value of the underlying assets used to secure the loan.

Exactly this.
The bank only cares that the value of the house covers the mortgage.

You can overpay as much as you want, so long as you're doing it with your own money.

SozBbz

MrMusician18 wrote: »

Banks couldn't give a stuff what you pay for a property. They care about your capacity to repay and if you can't, the value of the underlying assets used to secure the loan.

The ridiculousness continues - why not just admit you don't know what you're talking about?

They absolutely care how much you pay for the property. They won't give you the money if the valuation doesnt stack up. They care about capacity to repay AND the value of the asset.

In an earlier post you suggested they'd let you pay a peak price for a house once prices had fallen - this is just not true no matter how much bluster you come out with.

MrMusician18

SozBbz wrote: »

The ridiculousness continues - why not just admit you don't know what you're talking about?

They absolutely care how much you pay for the property. They won't give you the money if the valuation doesnt stack up. They care about capacity to repay AND the value of the asset.

In an earlier post you suggested they'd let you pay a peak price for a house once prices had fallen - this is just not true no matter how much bluster you come out with.

Based on current rules, they'll give you 80% LTV assuming you meet other conditions.

So if they value a house at 500k they'll give you a mortgage for 400k. If you want to pay 600k for the same property, you'll need to find an additional 100k above the 20% deposit the bank look for.

You can pay whatever you want as long as it's with your own money, not theirs.

SozBbz

Bass Reeves wrote: »

Banks will let you over pay if you have enough equity and you income is large enough to sustain the mortgage.

In general banks do not give a fiddler's what you pay for a house, as long as there equity is secure and that you have the means to pay down the loan.

In the case of where houses have not being sold on a locality for a while banks will assume that property is priced ok. If you have placed a bid of 500k and have 20%+equity bank and an income to sustain the loan repayment the bank will lend.

What banks have done at present is they have stopped exemptions. They will still lend to 3.5times income if you are still at work

Not in practice in my experience. I bought for the 2nd time last year, only borrowing 60% and my bank were very particular about the valuation. There was no question that the property was worth the value of the loan, not even close, but they were very pedantic about the valuation. The property has development potential (large site) which we don't plan to exploit but theres no question that the the banks money was safe (KBC by the way).

A close friend ended up negotiating a lower sale price on their house in 2018 as their lender said the valuation didnt support the purchase price. They had a 20% deposit so as above, it wasnt a case that the banks money was ever in real danger, they just didnt want to be involved in something they felt was over valued. The seller took €15k less to meet the banks requirements.