What is is with old ladies and their houses?

dopester

Maisie11 wrote: »

There will be NO website that you will tell you what an individual house in our lane is worth. You almost have to test the market to get a relevant price.

I agree some of the statistics about prices being at 2004 levels are out.

You'll only get what someone is prepared to pay for it, and that might be at prices way below 2004 levels now - with ever changing unwinding circumstances, after so many years of a massive credit expansion and asset boom.

You really believe you can hold up prices for your house alone, that the market cares for all you've spent doing up your home? Unemployment, pay-cuts, deflation.. the boom is over. It is all unwinding. You will only get what price the market will pay.

And people HAVE to sell all the time. Divorce, unemployment, relocation, death. You will only get what the market will offer you - not the fancy peak prices you have in your minds, unless you find a buyer where money is no object.

http://www.dailymail.co.uk/femail/article-1146104/How-husbands-redundancy-figure-salary-banking-job-nearly-ruined-marriage.html

The boom is over - get it in to your heads.

dopester

Well imagine that.. using the extreme case here, but as property get sold, as just one seller accepts a lower price, then another, it constantly brings down the value of other properties - or at least brings in to line a new market level valuers will value at for mortgage purposes.

“Valuers are now putting low valuations on repossessed properties, which when sold, subsequently cause an unfair valuation on other standard properties for sale. To value properties for mortgage purposes, valuers want to look for comparables and they look to the past six to eight weeks when valuing properties. If there are more repossessions, the figures they work from goes down lower and lower.”

http://www.walesonline.co.uk/news/wales-news/2009/02/21/warning-of-more-home-repossessions-in-wales-91466-22975737/

The level of ignorance on this thread just astonishes me - with the fancy values and expectations people will hold out for whatever price they believe their property is worth.

The market moves without you. You can't lock down all sales in any area, as MyLastFiver suggested in this thread, as people always have to move. Even if you do, the next nice town along will have people selling, and your town will become preposterously over-priced holding out for old-world prices.

People always have to move. There will be sellers who own their homes outright may be much more willing to get real and sell for less than people with big mortgages. The market is more powerful than those holding out for a lot more than the market will pay.

Suzkin wrote: »

I love my lill house - despite its state of repair. If I ever sold it (and I wouldn't want to at all, really) I'd be charging a lot - cos I love it!).

Wait until your next-door neighbour or someone else on your street cuts their prices to an level which melts your mind on what you think such property should sell at.

mean_momma

harrup wrote: »

.... the older generation had no access to ....easy credit ( the odd loan shark aside............No, they aren't responsible for the current house prices. We are. And by "we" I primarily mean women. We wanted to work and suddenly families had twice - or at least a much larger - income as they used to. So, I suppose, our house prices are the result of feminism! And now we HAVE to work even if we'd rather raise a family because houseprices are tailored to two incomes. Some may say our intended plan misfired somewhat. .

Yes, double income mortgages would seem to have contributed greatly to the acceptance of higher and higher house prices. (not to mention the previously mentioned greed, but greed for better and better properties)
In the '70's, I think that most loans were based on a single breadwinner (although there was tax relief ). There were still mini booms plus there was a recession when you could not sell your house unless it was a bargain (sound familiar?). In the '80's boom, we had the group mortgages, many of which ended in tears. Then we had the '90's recession, when you once again could not sell your house unless it was a bargain . In the 00's, we had all sorts of joint mortgages including civil partnerships, plus all the advantages of looking up house prices on the computer. Boom, followed by 'can't sell your house unless it is a bargain'.
No wonder some older people just name a price and stick to it - what goes around comes around!

..

harrup

Geenie wrote: »

Who can we blame for the current mess?!! Everybody except ourselves it would seem.

That's an excellent question, actually.

My question is: do we NEED to blame anyone? Appointing blame may be satisfying, but ultimately futile.

Perhaps the question to ask should be: WHAT do we learn from this? How do we prevent this from happen again ? CAN we even prevent this from happening again?

Here's how I see it why HP rose very sharply:

2 incomes
people prepared to accept a 100% or 110% mortage
people were more mobile than on any other time previously
the internet

In case the last one seems a tad odd, I think the web and email made quite a contribution why HP rose so wildly in my area ( SW). WHY? I know dozens of people who moved here from the SE after finding their house on the net and now conduct their profession largely via their computer. Because they sold in an expensive area ( SE) and bought in a less expensive area (SW), they accepted any price without murmour. Plus, all those who bought properties as an investment without ever living in it. Demand & supply - Lots of demand, limited supply ....and the price increased and increased.

Several years ago, I recall an EA telling me proudly that he had sold a certain bungalow 3 times in an 18 month period. During which its PP had trebbled. None of the buyers had ever lived in the house. No one. It was just bought and sold. Went from something like £ 80 000 to £ 250 000. In less than 2 years. Same little place. Pretty ramshackle place at that. Which incidentally was last sold in 2007/2008 for just under 400 K.

No, our parents and grandparents aren't responsible for THAT. And, no, I don't begrudge the investors for making a killing on that bungalow, either. It was a shrewd investment, well done. I can't see how the last buyers will evert recoup their investment, though. But what do I know.....if I had any sense at all I would have invested every nickel in buying up properties a while back. Intergalactic stupidity on my part thought houses were first & foremost homes. Go figure.

Oh, and Greenie, ...actually, I would NOT bite the hand off anyone who offers me a healthy profit on my home. It makes zero difference to me what it's market price is as a) I fully own it and b) if I buy in the same market if my house goes down so does the price of everyone elses. If I get more than I paid for - groovy. If not - what have I lost?

dopester

harrup wrote: »

But what do I know.....if I had any sense at all I would have invested every nickel in buying up properties a while back. Intergalactic stupidity on my part thought houses were first & foremost homes. Go figure.

How far back is a while back? Would you have continued buying in to the boom?

I know people who've leveraged up, releasing equity from each of their purchases, from 2002, to buy again, again and again, right in to 2007.

So many people in their mid 50s I know... should have been heading in to retirement with little debt and their homes paid off, but now I suspect they will lose everything, as they bought 1, 2, 3 and 4 BTLs in the last few years.

xiox

SingleSue wrote: »

Just spoken to my parents....their house cost £3,900 in 1969, they laid down a £400 deposit and their annual pay (or my dads anyway) was £1,200.

Huge? That loan was only an income multiple of 3.25. The average house price versus median wage is more like a factor of 10 now. That's why house prices need to come down.

seven-day-weekend

dopester wrote: »

Let them stick out for whatever price they believe it is worth. They can't stop their next-door-neighbour, or guy up the street, from reducing their price. Give it a year, two-years, three-years... and if you've "stuck it out" on some peak valuation, then it will get you nowhere.

Say in 3 years if similar houses to yours are selling on your street for £200,000 ... then you stick-it-out peak-2007 valuation of £500,000 is just going to be stupid.

You might as well "stick it out" to get £5 million, or £50 million - as your valuation will be ludicrous to what is happening in the real world. Ever more ludicrous as those who have to get real, have to sell at market value, keep reducing their prices.

You can't magically keep peak price for your property as rest of the market falls.

"Stick it out" for peak price if you must, but market-forces win out against fantasy-world self-valuations.

I agree, but they may not be all that bothered whether they sell their house or not....so stick it on the market for a silly price and see what happens. You may be pleasantly surprised.

We once did it the other way round, we stuck a stupidly low offer in on an investment property, which was initially rejected, we left the offer there as we were not all that bothered whether we got the place or not, and three months later the guy came back and accepted it as his buyers had pulled out at the last minute.

seven-day-weekend

dopester wrote: »

Also, please explain how you have benefited from a rise in equity. Unless you planned to sell-up and rent as house prices crash, a house is a home.

Except for rising to the extent of the improvements you've made, and in line with wages over the years, I don't see how you've really benefited.

I agree we won't profit from it unless we sell.

However, although we still own it, we don't actually live in it any more, we live in Spain and our son lives in the UK house at the moment.

But we have 100% equity in it and could benefit from that if we so chose.

SingleSue

xiox wrote: »

Huge? That loan was only an income multiple of 3.25. The average house price versus median wage is more like a factor of 10 now. That's why house prices need to come down.

I said it was a huge amount to them and is possibly why they think it has all gone completely out of proportion now. Interest rates were higher then and it took approx half of their incoming each month when they were at their highest.

By the way, I agree with you.....and so do they.

mustrum_ridcully

You just don't get it, do you?

Elderly people who have not moved for donkeys years might appear to have paid very little for their home in comparison to todays prices, but it was not very little by the wages of that time and in terms of what other things cost at the time such as furniture and household goods. You are looking at only one element of an exceedingly complex picture.

My parents on a factory worker's salary managed to buy a their first home a typical 3 bed semi in the mid-late 60's with a fairly small mortgage. After about another 10 or so years, still on a factory worker's salary (plus some money from my mum working part time), they'd saved up enough to help my grandparents get out of LA housing and get their own place (80-90% of the price, GPs made up the rest).

A person doing the same job as he did in the same factory now would not be able to buy that house without a 2nd income and would still need a big deposit (25% assuming 2nd income was national average salary) with a 3x mortgage. As for buying a 2nd house and needing only a 20% mortgage...

Yes they were LUCKY as they seemed to be buying outside of one of the boom periods. As were plenty of others, some of whom are demanding these really prices today. Yes I admit others weren't lucky and bought during a boom suffered and found things harder going.