Many Upsizers gaining nothing from crash....

LizzieS_2

HAMISH_MCTAVISH wrote: »

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.

OK, assuming your mortgage was 100K before moving:

1) Before the crash your mortgage would have increased to £140K (190 - 150 + 100)
2) After the crash your mortgage would have increased to £140K (160 - 129 + 100)

But what you are missing is the fact that recessions happen every so many years (I remember the last 3). Assuming over the next 10 years properties increase again by 20%

1) Had you remained your house would have increased from £129K to £154800. An increase of £25800.
2) Had you moved your house would have increased from £169K to £202.80. An increase of £33800.

A house is a long-term investment for many and upsizers will still gain in the long-term (assuming of course they stick to amounts they can afford).

PS. above is assuming the move would have happened anyway, as opposed to looking at making an easy profit.

LilacPixie

My area must be a bit strange (actually it is strange) flats and 2 bed terraces seem to actually be holding value reasonably well and are selling quickly if realistically priced. On the other hand the 4-5 bed larger properties are taking a hit. I think its because the nexbuilds around here are usually 4 bedrooms and they have literally flooded the market.

I posted around a year ago that there was a 4 bed detatched home, around 5 years old I was looking at O/O 170k which at the time seemed very very reasonable and appeared to be priced to generate interest and get a quick sale when similar properties same stret were sitting at fixed 190k. That property only went under offer 2-3 weeks ago but only once price was dropped to Fixed at 156k. In contrast a 2 bed 60's terrace in a neighbouring street was around 115k then but are now selling at 110k.

Certainly in this area it seems a good time to upsize if you have the money.

Archlever

Hi,

Very interesting thread. We decided to upsize in the current market and are currently conveyancing (nearing contracts). We are moving up from a three bed semi to a 5 bed detached house. In my view this would have been impossible without the current recession. Though we sold our house at a "loss" we got a good deal from the property we are currently buying. In the meantime (the past 5 years) we have been able to save up a 25% deposit (which would have been more like 15% had prices continued rising). We would certainly not have been able to afford this property five years ago and not even now had prices kept going upwards.

I take everyone's point about the risk / bottom of the market, but it will a lovely home to us....and if eventually prices begin to rise we would "make" more money on a more expensive property.

JayScottGreenspan

HAMISH_MCTAVISH wrote: »

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.

The bulls who ramped the market, stoking the bubble, made the bust inevitable. Without them there wouldn't have bee a bubble to pop.

They are much more to blame for the crash than those bears who sat at the sidelines tutting and waiting for the inevitable.

Graham_Devon

HAMISH_MCTAVISH wrote: »

You're looking in the wrong place.

Rightmove doesn't get a lot of business up here.

Try this instead.

www.aspc.co.uk

But then I can't use property bee and watch the dillusional.

Cissi

Archlever wrote: »

Hi,

Very interesting thread. We decided to upsize in the current market and are currently conveyancing (nearing contracts). We are moving up from a three bed semi to a 5 bed detached house. In my view this would have been impossible without the current recession. Though we sold our house at a "loss" we got a good deal from the property we are currently buying. In the meantime (the past 5 years) we have been able to save up a 25% deposit (which would have been more like 15% had prices continued rising). We would certainly not have been able to afford this property five years ago and not even now had prices kept going upwards.

I take everyone's point about the risk / bottom of the market, but it will a lovely home to us....and if eventually prices begin to rise we would "make" more money on a more expensive property.

I haven't read through this whole thread and am not really interested in the "BTL" debate, but personally my family has definitely benefited from the crash. Similar to Archlever, we've upsized from a 3-bed mid-terraced to a 5-bed detached house - in our case with a 4-year period of renting a 4-bed detached in between the two. Until last autumn, the interest on our capital paid for our rent so renting was a far cheaper option for us than buying at the time. During this time we've also built up our capital. Due to our position as cash buyers ready to move quickly we managed to get 25% off the initial asking price of the house we're buying, which brought it just within our range. We plan to stay in this house for a long time, so even though we think that prices in general have a lot further to fall, this was the right time for us to buy. We exchanged a couple of weeks ago and are completing next week

dopester

From The Sunday Times
August 30, 2009

The downsize dilemma

I spent 30 years moving up the ladder. Now I want to climb back down — but don’t tell the neighbours

http://property.timesonline.co.uk/tol/life_and_style/property/buying_and_selling/article6812841.ece

It is the older homeowners (baby-boomers) who are on the middle to upper parts of the wobbly 'ladder' who I have my focus on for the next stage of the crash. The hopeful downsizers.

They might get a shock to find there is less appetite from the market to trade up - not at the asking prices so many of the downsizers would like to achieve.

Appetite and the ability to finance, if these baby-boomer downsizers really begin coming to market in significant numbers.

This is where I believe a lot of carnage in values will hit hardest. The market is top-heavy. When the rotten rungs on the upper levels break, I wouldn't want to be holding on below.

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."

chucknorris

nearlynew wrote: »

In that case, why did we continually hear the phrase "in it for the long term"?

This suggests that people did not plan to sell. Yet they never mentioned yields at the time.
The recent trends in BTL was all about capital gains. But now there is none the reasoning changes.

Sorry. It is indeed spin.

If the yield wasn't there I wouldn't waste another second considering a property! I am not buying any more properties but when I was, 3 things had to be right before I would even read the details closely:

1. What yield will it produce
2. Are all the bedrooms doubles (smallest has to be at least 100 sq foot)
3. Location

Harry_Powell

bluey890 wrote: »

Only if purchasing outright. If purchasing with a mortgage and the drop in HP is due to interest rates, over the lifetime of the mortgage, it may not be cheaper.

But the recent house price crash wasn't caused by high interest rates, so I'm not sure how valid your point is.

michaels

I'm trying to upsize - on Saturday I looked at a property that had come on to the market on Friday. Spoke to the agent yesterday, there are 3 offers and another 7 seriously interested and they are going for sealed bid best and final offers today - no lack of attempting upsizers round here...