It's true - houses just aren't moving

carolt

EdInvestor wrote: »

But why should they?



Anyone who really is desperate to move can always rent out their home, and then rent anew where they move to.So genuine forced sellers look like a very small minority compared with last time, possible confined to bankrupts/repos ( I see the figures on this have declined) and those with 100%+ mortgages from Northern Rock.

On that basis, what credibility do the property price "crash" figures have? At 20% of normal sales and falling, you could argue we are rapidly approaching a false market.

Sorry - why should there be 'a very small minority' of forced sellers compared to the market as a whole??? If very few of the people who don't need to sell, sell, (as you claim), but all magically decide to stay put or rent instead, until prices return to previous levels, then surely the market will almost entirely be composed of forced sellers? So a very large MAJORITY. You can't have it both ways.

You could argue there will be few forced sales, but when even the banks (see Pastures New's interesting video thread on HBOS for example) are predicting falls of 20%, we know from figures released this week by S&P that that equates to 1 in 7 households in negative equity! Assuming some of them have to remortgage and can't, how long is it going to be before some of them struggle with repayments and are repossessed?

As vinegartits excellent thread points out, those who have less than 95% LTV are increasingly only being allowed a couple of months of missed payments before repossession kicks in.

(I do love this site - all the info handily at one's fingertips; thanks fellow posters.... )

Of course that is without taking into account rising unemployment, rising inflation eg this week's British Gas rises, and the huge debt mountain.

I'd much, much rather the housing market crisis could be resolved without repossessions, and innocent families losing their homes (no tears for the BTL crowd, I admit). It's sad, very sad....

EdInvestor

carolt wrote: »

Assuming some of them have to remortgage and can't, how long is it going to be before some of them struggle with repayments and are repossessed?

Other than recent borrowers from Northern Rock on 100%+ mortgages who cannot move and will be migrated onto a punitive SVR, nobody else is forced to remortgage.Everyone has the option of going onto the SVR and at most banks it is not much higher than the best deal, at some it is lower, because no fees.

mircea

!!!!!!? wrote: »

The fact that the housing market has virtually dried up in a matter of months as soon as no-questions-asked lending of eye-popping amounts of money was curtailed is proof positive that stratospheric prices were entirely a function of recklessly easy credit.

Now, we go through a staring contest until sellers have to blink.

As always the doom - mongers on this board are talking crepe. The housing market has stopped because the bank will not lend anymore. Not to people with good credit and big deposits, not to people with bad credit and no deposits. The banks are not lending money to anybody - as simple as. The rationale behind it, is that their money are safer in alternative investments. Unfortunately, this behaviour from the brainless people who invest billions on our behalf, has the consequence of devalueing their own assets: the houses that they already lent money out for. Yes, the bankers are so stupid that they are totally running down the value of their own assets! The more their assets go down, the less they will lend out. Guess what happens? House prices and their assets go down even more. A return to more sensible lending practices is surely welcomed however this should follow a certain strategy etc in order to lessen the impact on the economy, but I think that's a bit too much to ask from them. All they seem able to do is panic and shut the tap off to everybody. How long they will be able to sustain such a decline in activity I am not sure - loads of banks are now posting profit falls of 50 to 80%, and apparently the markets are shocked. Really, what happens when you lend out half the money you were last year? You will make half the profit! It is for sure easy to predict. Rant over.

carolt

EdInvestor wrote: »

Other than recent borrowers from Northern Rock on 100%+ mortgages who cannot move and will be migrated onto a punitive SVR, nobody else is forced to remortgage.Everyone has the option of going onto the SVR and at most banks it is not much higher than the best deal, at some it is lower, because no fees.

It is not much higher than the best deal! What about sub-prime borrowers? 10%+ is not uncommon - see this story of a family forced to live in their car after rates hit 10.9% for example:

http://www.thisislondon.co.uk/news/article-23524951-details/Credit+crunch+forces+evicted+family+of+four+to+live+in+a+car/article.do

And that's really rather missing the point, isn't it, EdInvestor? The SVR may not be much higher than the best deals, for some, but that misses how much worse the SVR's are than the rates many are remortgaging from. People coming off 2-3 year fixes can see jumps from 4-5% up to 7-8%, that's 40-100% rises in interest payments.

You're an intelligent guy, EdInvestor. Why don't you just give up trying to argue the unarguable and win an argument you cannot possibly win?

Do you really, honestly, in your heart imagine that house prices are going to stop falling down the ski slope and just sit there, waiting patiently until money returns to the market?

Oh, come on......

carolt

mircea wrote: »

As always the doom - mongers on this board are talking crepe. The housing market has stopped because the bank will not lend anymore. Not to people with good credit and big deposits, not to people with bad credit and no deposits. The banks are not lending money to anybody - as simple as. The rationale behind it, is that their money are safer in alternative investments. Unfortunately, this behaviour from the brainless people who invest billions on our behalf, has the consequence of devalueing their own assets: the houses that they already lent money out for. Yes, the bankers are so stupid that they are totally running down the value of their own assets! The more their assets go down, the less they will lend out. Guess what happens? House prices and their assets go down even more. A return to more sensible lending practices is surely welcomed however this should follow a certain strategy etc in order to lessen the impact on the economy, but I think that's a bit too much to ask from them. All they seem able to do is panic and shut the tap off to everybody. How long they will be able to sustain such a decline in activity I am not sure - loads of banks are now posting profit falls of 50 to 80%, and apparently the markets are shocked. Really, what happens when you lend out half the money you were last year? You will make half the profit! It is for sure easy to predict. Rant over.

If the doom-mongers were talking crepe, (I prefer organza, myself ) so were you, mircea - as your post just agreed with !!!!!!'s entirely - that prices were falling because of the banks' shutting off credit.

mewbie_2

There are a couple of arguments here that keep being trotted out.

1. The lack of mortgages being the reason for the crash. It was an unsustainable bubble, due to pop at any stage. They may have been one of the triggers, but they are not the reason. Bubbles pop, this one's popping now.

2. Forced sellers. Er. !!!!!!. What about the under construction homes, and empty new builds scattered all around the country. D'ya think the builders need to sell them? Well d'ya..punk.

Jonesya

mircea wrote: »

As always the doom - mongers on this board are talking crepe. The housing market has stopped because the bank will not lend anymore. Not to people with good credit and big deposits, not to people with bad credit and no deposits. The banks are not lending money to anybody - as simple as. The rationale behind it, is that their money are safer in alternative investments. Unfortunately, this behaviour from the brainless people who invest billions on our behalf, has the consequence of devalueing their own assets: the houses that they already lent money out for. Yes, the bankers are so stupid that they are totally running down the value of their own assets!

The banks don't have any choice - around 50% of the money they were lending to customers was raised by packaging mortgages and loans and selling these debts onto other investors. Following the problems in the US the market for these debt products has collapsed so the banks cannot sell on the mortgages so struggle to raise the funds for further loans.

How long they will be able to sustain such a decline in activity I am not sure - loads of banks are now posting profit falls of 50 to 80%, and apparently the markets are shocked. Really, what happens when you lend out half the money you were last year? You will make half the profit! It is for sure easy to predict. Rant over.

Most of the really big falls in profits/huge losses are not due to the fall in activity but from write downs of assets - where the bank owns mortgage backed securities of some form or another (many dependent on the US housing market) which have fallen in valve and the bank is forced to reduce the value of these investments in its' accounts.

SouthCoast

It is different in Brighton as they are immune from any correction in the property market.

Forty-five jobs are being lost at a leading law firm.
The posts are being axed as a result of asb law’s decision to close its branches in Brighton and Horsham and consolidate its business in Maidstone and Crawley.
Last night the firm said 31 people would be made redundant, it had accepted voluntary redundancies from 11 and three members of staff had resigned.
The job losses have come from across all four offices, with the majority of those affected working in secretarial and support positions.
The other staff include lawyers working in residential property.
Of the 31 compulsory redundancies, 13 are in the Brighton office.
Andrew Clinton, managing partner at asb law, said: “The consultation process is ongoing but our best estimate is that 31 people will be made redundant. We have accepted 11 applications for voluntary redundancies and three resignations.”

http://www.theargus.co.uk/news/business/businessnewsbusiness/3560907.45_jobs_go_as_law_firm_shuts_offices/

Ma77hew

EdInvestor wrote: »

Anyone who really is desperate to move can always rent out their home, and then rent anew where they move to.

I know someone who is actually doing this. He can't sell his house despite dropping the price by around 10%, he's had 3 offers fall through, so has decided to rent it out and rent somewhere else. His view is if prices fall considerable he'll be able to buy in the area he wants to live in without having to sell his current home. If prices don't fall that far and the market improves then he'll sell and buy somewhere.

Not sure if I would do it.

neverdespairgirl

carolt wrote: »

I'd much, much rather the housing market crisis could be resolved without repossessions, and innocent families losing their homes (no tears for the BTL crowd, I admit). It's sad, very sad....

I'm going to be honest here, and say that I don't like the idea of anyone being evicted, even if they are a bling-to-the-max BTL landlord.