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Many Upsizers gaining nothing from crash....
HAMISH_MCTAVISH
Posts: 28,592 Forumite
http://property.timesonline.co.uk/tol/life_and_style/property/article6718312.eceFor once, luck is on the side of the first-time buyer — the annual average house price paid by people getting their foot on the ladder was 14% lower in May 2009 than a year ago, according to government figures.
The sellers of those properties have not done as well: the average price they paid on their next house went down by only 11.6%. So, unless their new homes are much bigger, many upsizers have lost out.
We all know that a crash impacts different segments in different ways. Downsizers and those approaching retirement or looking to leave an inheritance to children are clear losers, as are the many millions of people in or close to negative equity, and the many more millions being penalised through higher rates on remortgage due to LTV brackets being changed through lower equity.
However we also know that FTB's should in theory benefit through lower prices, although in fact it's not that clear as higher bank margins are eating up most of the savings.
And finally the upsizers are also supposed to benefit. Except it now appears that many of them are gaining almost nothing, or even losing out.
The more these numbers come in, the more it becomes clear that the "bulls" were right all along. Very few people end up actually benefitting form a crash, the vast majority gain nothing or lose.
Upsizing Example from the actual percentages in the article:
Upsizer sells house previously valued at 150K for 129K to an FTB at a 14% discount.
Same Upsizer then buys a house previously valued at 190K for 169K at an 11% discount.
Upsizers cost to trade up at peak = 40K
Upsizers cost to trade up now = 40K
Upsizers gain from crash = Zero.
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
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Comments
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But it's immaterial though, because prices are rising aren't they Mctittish?
A couple of days ago, you posted that upsizers benefitted from falling prices. Now some article comes out claiming the opposite and you cling to it like the HPI cheerleading fool that you are.
You silly boy.
Ah, straight in with the abuse and childish name calling again.
Nice work, well done.:T
"When the facts change, I change my mind. What do you do Sir?"
John Maynard Keynes.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »clear that the "bulls" were right all along. Very few people end up actually benefitting form a crash, the vast majority gain nothing or lose.
Except the very life blood of a housing market chain, the FTB'r. We all know BTL is dead on any scale to prop up current prices, so it's all down to the FTB'r, which a crash is good for them, it prevents the people who already own a house from unloading all their debt onto someone else and turning it into a profit.
You get nothing for nothing in this life, the exception to this rule is if you were wise enough to unload your BTL portfollio in Summer 2007, after that time you are losing money everyday and will continue to do so for the next 5 years. Anyone who disbelieves that is kidding themselves.0 -
Except the very life blood of a housing market chain, the FTB'r. We all know BTL is dead on any scale to prop up current prices, so it's all down to the FTB'r, which a crash is good for them, it prevents the people who already own a house from unloading all their debt onto someone else and turning it into a profit.
To quote Mark Twain: The report of my death was an exaggeration.
http://www.thisismoney.co.uk/mortgages-and-homes/buy-to-let/article.html?in_article_id=488657&in_page_id=56&ct=5
Plenty of homeowners with more cash than potential FTB's.
If the property market bottoms up, who is going to be buying?Favourite hobbies: Watersports. Relaxing in Coffee Shop. Investing in stocks.
Personality type: Compassionate Male Armadillo. Sockies: None.0 -
To quote Mark Twain: The report of my death was an exaggeration.
http://www.thisismoney.co.uk/mortgages-and-homes/buy-to-let/article.html?in_article_id=488657&in_page_id=56&ct=5
Plenty of homeowners with more cash than potential FTB's.
If the property market bottoms up, who is going to be buying?
Excellent article. Yields of 8% to 10% readily available. And millions of people with enough cash or equity to take advantage.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
To quote Mark Twain: The report of my death was an exaggeration.
http://www.thisismoney.co.uk/mortgages-and-homes/buy-to-let/article.html?in_article_id=488657&in_page_id=56&ct=5
Plenty of homeowners with more cash than potential FTB's.
If the property market bottoms up, who is going to be buying?
Until we see mortgage approvals pushing through the 80k barrier these kind of stories are meaningless, just more rhetoric and spin from the die hard VI's in the media. Without securitization, mortgage approvals will never get anywhere near these levels without more falls in prices over the coming years.
The evidence is right here in front of us with what has happened over the past 20 months.
80-100k mortgage approvals + 190k average house price = bank meltdown.
80-100k mortgage approvals + 150k average house price = does not compute.
80-100k mortgage approvals + 100-120k average house price = sustainability.0 -
HAMISH_MCTAVISH wrote: »And [STRIKE]millions[/STRIKE] hundreds of people with enough cash or equity to take advantage.
Oh dear god, fixed it for ya Hamish, you did make a typo didn't you.:D0 -
Plenty of homeowners with more cash than potential FTB's.
If the property market bottoms up, who is going to be buying?
Plenty of homeowners who have liabilities (mortgage-debt) and challenging income circumstances. They may have equity, even own outright.. but in this economy, there may not be a significant appetite to trade-up. Risking their equity or taking on a bigger mortgage.
Even if they upsize, they leave a house behind for a buyer - unless they keep their old home and do the risky leverage for a second home... in this economy and with the property paradigm busted.
Jumbo-mortgages may be harder to get as well, with tougher qualifying criteria. Many a trophy home-owner could find values get hit the hardest..For older owners, housing has been a substitute for financial savings. Before these paper windfalls generated from the sixties onwards can be converted to cash, however, new buyers must be found. Most of these buyers will not have sufficient cash reserves to pay 50 percent down. Therefore mortgage lenders will have to absorb a growing share of the housing market risk for prices to remain stable.
They are unlikely to do this.
Losses on real estate loans will be the main cause of increasing losses in the banking system. Creditors normally react to rising losses by curtailing lending, imposing higher qualifications on borrowers, and raising loan rates higher than they would be otherwise.
As this trend becomes apparent, ageing homeowners, who are depending upon their homes to provide retirement security, will try to sell. This will push prices down further. Paul Hewitt estimates that "the predicted trade-up market may not materialise if growing numbers elect to remain in housing they consider adequate, rather than risk their equity in large luxury homes."0 -
Until we see mortgage approvals pushing through the 80k barrier these kind of stories are meaningless, just more rhetoric and spin from the die hard VI's in the media. Without securitization, mortgage approvals will never get anywhere near these levels without more falls in prices over the coming years.
The evidence is right here in front of us with what has happened over the past 20 months.
80-100k mortgage approvals + 190k average house price = bank meltdown.
80-100k mortgage approvals + 150k average house price = does not compute.
80-100k mortgage approvals + 100-120k average house price = sustainability.
Nonsense.
The number of mortgage approvals doesn't have to be that high at all if the number of houses for sale is also far lower than it was in the boom years.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
I love the way the spin has changed recently and now yield is everything.
If over the last few years, these "canny investors" had thought about yield instead of capital gains (which most BTL was sold on), prices would never have risen as much and we would now not be in such a mess.
Greed and stupidity is a wonderful combination."The problem with quotes on the internet is that you never know whether they are genuine or not" -
Albert Einstein0 -
HAMISH_MCTAVISH wrote: »Nonsense.
The number of mortgage approvals doesn't have to be that high at all if the number of houses for sale is also far lower than it was in the boom years.
There is over a million for sale on Rightmove, same as 2007.0
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