Why are higher house prices a good thing?

poppysarah

There seems to be a glut of "omg our house has been undervalued"

People of a certain age may never have been aware that house prices can go down as well as up.

So why are rising prices a good thing?

You don't jump up in the air with joy when the beans go up at the supermarket. And in every other aspect of life you want to save money and spend less. but when it comes to a house you think it's great cos it's dearer.

1echidna

Totally understandable if in a free market you think you have sold you house and a valuer says it is worth some ks less, particularly if it is tied to the mortgage the buyer can obtain. Rather the feeling the baked bean produlers would feel if they were told they had to sell them for a lower price than customers were willing to pay. The argument, in general terms, about whether high house prices are a good thing is much more complex but again depends on who you are. Falling house prices can't be too good when banks assets are decimated and the state has to borrow vaste sums to bail them out. Maybe though it is a necessary price for over indulgence in terms of an overheated market. A happy medium somewhere perhaps?

Fire_Fox

A higher valuation proves that the owner has good taste. I think a lot of people take it personally that the expensive 'improvements' they have made haven't added value.

david29dpo

If you think snobbery is dead, try buying a Bentley. (I haven't buy the way)

LittleMissAspie

I don't get it either. I can understand being upset about being in negative equity. But people who bought 10 or 20 years ago for peanuts and refuse to drop the price... I just don't get that. They aren't losing anything. And buyers who get a valuation that comes in under their offer, but try to get the valuation made higher! It's a perfect opportunity to barter the price down.

Turnbull2000

poppysarah wrote: »

There seems to be a glut of "omg our house has been undervalued"

That doesn't surprise me. But what does surprise me is frequently seeing "OMG THE HOUSE WE WANT TO BUY HAS BEEN UNDERVALUED!!" :doh:

charliee_3

I know it sounds ridiculous, but I think the glut of undervalued thing is less to do wth the 'value' of the house as to the banks new wariness. they are erring on the side of caution and have realised that the housing market may drop further, putting their investment at risk, plus the realisation that buying off plan 2 years ago for a shoddy new build was not the best idea in hindsight..

when your house purchase is going through at a price you have mutually agreed and seems reasonable to you, and you have paid out for surveys, etc. then the banks valuers come along and undervalue it, meaning you cant get a mortgage for the amount you need so you have to either fund the difference yourself, or renegotiate wth the seller. this has a knock on effect coz chance are the seller is buying somewhere else so has to find the extra money either out of their pocket or by renegotiating up the chain... and although the valuations are totally subjective and are just a guess by the surveyor, nobody wants to feel like they are paying more than something is 'worth'.

its not really like tins of beans being cheaper in the shop.. its more like you go to the shop to buy some beans, but you only have 10p and they cost 60p, but your friend says they will lend you the 50p to make up the money so its all good.
you are happy to pay 60p for them as that is pretty much the price they have been for the last few years (in fact a little while ago they were going for 65p so its a bit of a bargain), but somebody comes up you and tells you they think the beans are only worth 55p as tthe shop up the road will possibly have them on special offer tomorrow.. your friend hears this and says that in that case they will only give you 45p towards them as they are frugal and dont want to pay more than they are worth in the current market..

you really want these beans, but you dont have any cash, so finding 5p is out of the question, so you either have to put the beans back and go hungry, call your parents/ another friend and see if they will lend you 5p to make up the 60p so you can have your beans, or try and negotiate with the shop for a discount because the price may or may not drop tomorrow...

oh dear.. maybe i should get out more... lol

1echidna

Turnbull2000 wrote: »

That doesn't surprise me. But what does surprise me is frequently seeing "OMG THE HOUSE WE WANT TO BUY HAS BEEN UNDERVALUED!!" :doh:

Two problems I guess:

1. The feeling that one's judgement has been bad in offering more than a house is worth

2. The uncertainty regarding negotiation and whether the vendor will play ball. I know many would say walk away if the vendor will not reduce but this involves restarting what may have been a difficult search for another property.

charliee_3

also.. i think it depends on the lender and the property.. new builds are getting really hard to mortgage as people have realised they are 10 a penny, badly constucted shoeboxes made out of cardboard on the whole..

there is also a big difference in the situations of the people who have been undervalued. we were undervalued by our surveyor (the mortage valuer agreed with the higher price strangely enough) on our 2 bed semi and we agreed to meet the vendor half way, we could have walked away and only lost the survey fee, but we liked the house.
however the glut of people who are being undervalued on new builds may have put down thousands as holding deposits and are tied into contracts where they can be sued and have to declare bankrupcy if they cannot complete and developers seem unwilling to negotiate...

Austin_Allegro

charliee wrote: »

I know it sounds ridiculous, but I think the glut of undervalued thing is less to do wth the 'value' of the house as to the banks new wariness. they are erring on the side of caution and have realised that the housing market may drop further, putting their investment at risk, plus the realisation that buying off plan 2 years ago for a shoddy new build was not the best idea in hindsight..

when your house purchase is going through at a price you have mutually agreed and seems reasonable to you, and you have paid out for surveys, etc. then the banks valuers come along and undervalue it, meaning you cant get a mortgage for the amount you need so you have to either fund the difference yourself, or renegotiate wth the seller. this has a knock on effect coz chance are the seller is buying somewhere else so has to find the extra money either out of their pocket or by renegotiating up the chain... and although the valuations are totally subjective and are just a guess by the surveyor, nobody wants to feel like they are paying more than something is 'worth'.

its not really like tins of beans being cheaper in the shop.. its more like you go to the shop to buy some beans, but you only have 10p and they cost 60p, but your friend says they will lend you the 50p to make up the money so its all good.
you are happy to pay 60p for them as that is pretty much the price they have been for the last few years (in fact a little while ago they were going for 65p so its a bit of a bargain), but somebody comes up you and tells you they think the beans are only worth 55p as tthe shop up the road will possibly have them on special offer tomorrow.. your friend hears this and says that in that case they will only give you 45p towards them as they are frugal and dont want to pay more than they are worth in the current market..

you really want these beans, but you dont have any cash, so finding 5p is out of the question, so you either have to put the beans back and go hungry, call your parents/ another friend and see if they will lend you 5p to make up the 60p so you can have your beans, or try and negotiate with the shop for a discount because the price may or may not drop tomorrow...

oh dear.. maybe i should get out more... lol

The trouble is it was your friend giving out 50ps (and charging a hefty interest as well) to anyone with a pulse that caused the beans to go up to 60p in the first place!

When a bunch of local tramps outside the shop couldn't pay back their 50p, the friend understandably got a bit miffed and decided not to lend anymore!

So beans prices started going lower, and some people with a tin of beans they'd paid 60p for got very annoyed when other people started charging less and less each week for a tin of beans. 'My tin is worth 60p' they cried. 'I've polished the tin and kept it nice, I've even glued the label back into place, so it should be worth more than 60p!'

Eventually the shopkeeper bought back all the tins for 5p each and hoarded them in the backroom, waiting until prices went up again. The bean-buyers lost everything, and the friend with all the 50p pieces turned out to have nicked them from his gas meter, but the police let him off and even lent him some money to help him out...

Etc

charliee_3

Austin_Allegro wrote: »

The trouble is it was your friend giving out 50ps (and charging a hefty interest as well) to anyone with a pulse that caused the beans to go up to 60p in the first place!

When a bunch of local tramps outside the shop couldn't pay back their 50p, the friend understandably got a bit miffed and decided not to lend anymore!

So beans prices started going lower, and some people with a tin of beans they'd paid 60p for got very annoyed when other people started charging less and less each week for a tin of beans. 'My tin is worth 60p' they cried. 'I've polished the tin and kept it nice, I've even glued the label back into place, so it should be worth more than 60p!'

Eventually the shopkeeper bought back all the tins for 5p each and hoarded them in the backroom, waiting until prices went up again. The bean-buyers lost everything, and the friend with all the 50p pieces turned out to have nicked them from his gas meter, but the police let him off and even lent him some money to help him out...

Etc

ROFL :rotfl:!!!

its not just me with too much time on their hands then.. (or maybe trying to put off doing the housework)