Prices to bounce back ... in 2023

WTF?_2

The speed and scale of the housing crash is unprecedented.

Some seem to feel that the speed of the decline might mean a speedier recovery.

However, with the monumental debt burdens being held by individuals and the state (which is now piling on additional 'bailout' debt at a frightening pace) I doubt that the economy is going to have much scope to recover quickly. Debt repayment (either personal repayment or through increased taxation) will take a huge chunk of spending power out of the peoples' pockets. That state is going to find it hard to increase borrowing even more to stimulate growth too.

If anything, the recession could well last longer and the recovery when it happens, be slower.

The 'good' thing is that the sooner we hit bottom, the sooner the process of recovery can begin.

Chris2685

Lotus-eater wrote: »

However as a nation we still want to own a house, we still aspire to it, unless that changes there are alot of people like yourself waiting in the wings, that will drive prices up earlier, IMHO of course.

I would say that peoples views on home ownership ARE changing. Last year you would not have caught me saying I would rather rent than buy. Now that I have looked into it a bit more, I know that rent is not dead money and buying and owning your own home is not the be all and end all. If house prices rise at a regular rate, say the rate of inflation (once things have settled a bit) I would say that you're not really any better off mortgaging yourself up to your eyeballs than you would be renting and saving the difference each month in order to buy outright in the future, or just carry on renting.

WTF?_2

Lotus-eater wrote: »

If you bothered to write properly, you would have put it down better.

What carol wrote :

So anyone waiting for prices to recover before selling, might like to consider whether they really fancy staying put for another 15 years..... whilst prices continue falling.

I happen to not disagree with the article, I was putting you right. You can thank me later.

I read that as "If you want to hold out for last years prices to return, prepare to wait a very long time and in the meantime prices will continue to fall even more" not "prices will fall continually for the next 15 years".

Lotus-eater

!!!!!!? wrote: »

I read that as "If you want to hold out for last years prices to return, prepare to wait a very long time and in the meantime prices will continue to fall even more"

Sometimes I get a bit fed up with the constant dire warnings from some people.

I reserve the right to read things the way I want to

WTF?_2

Chris2685 wrote: »

I would say that peoples views on home ownership ARE changing. Last year you would not have caught me saying I would rather rent than buy. Now that I have looked into it a bit more, I know that rent is not dead money and buying and owning your own home is not the be all and end all. If house prices rise at a regular rate, say the rate of inflation (once things have settled a bit) I would say that you're not really any better off mortgaging yourself up to your eyeballs than you would be renting and saving the difference each month in order to buy outright in the future, or just carry on renting.

Buying makes sense in the longer term but only if you buy at the right time. I intend to buy in once prices are close to bottom.

Buying in (and borrowing to do it) at bubble prices is madness and very detrimental to your state of mind if not actual financial wellbeing, as people are about to find out for themselves as the recession bites.

StevieJ

Clare said his survey was "very bad news" for anyone who bought a house last summer and predicted negative equity would be a big feature of "our economic landscape for years to come"

Wrong, bad news for anyone who takes this seriously, futures contract are subject to the same variability as anything else, look at forward Libor rates I can assure you that is going to change.

carolt

Oh come in Stevie, you don't really believe that any more than I do.

boyse7en

In contrast...

David Miles, chief UK economist at Morgan Stanley, said that if mortgage rates stayed at present levels, an educated guess from sophisticated economic estimates was that house prices would fall by another 5 to 10 per cent and wipe a further £17,000 off the value of an average home before the market bottomed out next year

Link to article

So choose which leading academic you listen to with care, they can't all be right.

Realy

!!!!!!? wrote: »

I read that as "If you want to hold out for last years prices to return, prepare to wait a very long time and in the meantime prices will continue to fall even more" not "prices will fall continually for the next 15 years".

Ah but a home owner looks as a house in nominal terms not inflation adjusted as inflation does not affect their mortgage.
So they would look for the nominal return of price not inflation adjusted.
If it was adjusted equivalent of 2007 a home owner would see an increase in the value of the house based on the article by 2023.

Say a house is worth £100K in 07
To be same in 2023 it as to be £150K say

Even on an interest only mortgage and no repayment plan the owner still owes £100K and has £50K equity in the house.

carolt

Maybe I'm missing your point here, realy? but the article was about nominal figures. Not inflated adjusted.

So anyone owing 100K on an interest only mortgage, as per your example and the article, would still owe 100K.

So better to sell now, if prices are going to fall substantially between now and 2023, if you think you're going to hit problems paying it at some point, or if you go below a certain LTV.