Everything's changed - what would you do?

Prudent

Firstly apologises because I haven't had time to read through all the posts.

Having been in a very similar situations (although with less to deposit) I bought a house in and area I liked an took a mortgage. I looked at properties I could buy outright, but never regret not buying them. My compromise was to buy a house in an area I liked that need work. That way I have been able to do the work gradually and been able to clear the mortgage as the house was cheap for the area. It has meant a fair bit of compromise in terms of living in a house that house needed a lot of work (and I have no DIY skills!).

Seven years down the line, the small mortgage is paid off and the big jobs like double glazing, doors a new kitchen and bathroom are all done. Some way still to go, but have never regretted the decision. The house has also doubled in value including costs.

dopester

Prudent wrote: »

Seven years down the line, the small mortgage is paid off and the big jobs like double glazing, doors a new kitchen and bathroom are all done. Some way still to go, but have never regretted the decision. The house has also doubled in value including costs.

No offence but I can't see how that really applies to Lydia. House prices don't always go up. There are times to buy and times not to buy.

I personally very much doubt that 7 years from now any house Lydia were to buy late 2009 or early 2010 will have doubled in value. I do expect deflationary pressures on wages, a lot of the supports currently rigging the market to be removed, maybe Conservatives to start slashing at Labour's big-friendly-nanny policies of supporting failing sectors and individuals - and for house prices to fall significantly.

We'll see how much market-rigging "mortgage rescue schemes are vote winners" proves to be - cause they aren't popular amongst anyone I know waiting to buy.

I'm hoping another bear will come along to this thread and offer some more alternative arguments for Lydia to consider.

the_ash_and_the_oak

my pov is more bearish than bullish but for me its kinda like if you can have what you want right now its a risk not to take it, prices fall you've still got the house you wanted and most likely you won't be realizing any potential losses because no intention to move

but if you're having to compromise then the risk is in doing it, prices fall you might be stuck with something you don't actually like

as a (mostly) cash buyer not really seeing any reason to rush though, if the ideal place not available

lostinrates

Dopester

I think for you and me, no children etc, the wait it out, especially now, could be different. Around all the house price and economy stuff...on goes life.

Now, if Lydiaj were syaing she had oppertunity to buy now with 95% mortgage and nothing at all to fall back on I'd be saying something different, but as it is, though I think it highly probably prices will fall back over winter, people have life going on which means somethings are worth paying a little exra for.


An interesting story reached me today. A local stud farm (way, wy out of my budget) has been on the market a while and the business of initiating receivership was really imminant. I was told any (reasonable) offer...of a sum considerably less than advertised would secure the property...a super property, from the horses mouth, so to speak, I know the figures. Over the weekend the place went under offer, I asked how that put them, and they told me the price. It will save their necks, and then some. The buyers are obviously fever pitched in their bid. Whether over the course of the sale this will be reducedI don't know, but if people are bidding so high I can see why there has been a flurry of activity. Its a shame really, because several hundred thousand less on this would have allowed the seller to walk away with no less than they put in, and the buyer a beautiful property, everybody would still have been winners.

dopester

Yet another bear who has lost their nerve, imo, in the first category* (*explanation given in this thread) - buying circa £175K (upto stamp duty threshold).

http://www.housepricecrash.co.uk/forum/index.php?showtopic=131688&st=0

Ok, well I've finally buckled after many years on here and bought a 3 bedroom detached house with garage on a 23 year mortgage.
House is sold for 169K and I have bought it on my salary alone with mortgage just below 3 times my gross salary.

If we had waited another year or two, could we get an even better deal? Very likely. But that, weighed up against not having another 2 years paying rent, and not being at the whim of a landlord when we've got a baby on the way in January, we feel that it's the best decision for us at this time. Everyone's situation is different.

Good luck to those who decide to buy now, I don't think it's as insane to do so in some cases as it has been in recent years. And equally good luck to those that continue to wait, I hope you get an outstanding bargain in a couple of years.

My expectation is some areas with homes valued upto £175K will be hit much harder on market-value and rental-value than many a person expects, in time soon enough to come. (Of course this is only my expectation - if I'm wrong then I get financially punished). £175K is still a lot of money. £175K to me in 18-36 months, regardless of QE, will be considered by many more people as being a serious amount of money (imo).

My argument being people looking to buy a home currently with a value of upto £175K are more inclined to more easily fall into the trap of why it looks reasonable to buy now. A 10%/20% fall over say 18 months on a £175K home purchase is max they could save on purchase by waiting = £35K. They are more likely to conclude that 18-36 months of rent (say £650pm x 18months = £11,700 "wasted on rent") is a saving as now paying down a mortgage, and they've finally got peace of mind security and what-not, rather than waiting and perhaps for something (20% fall) they have doubts on ever happening.

Whereas those bears who've saved, have higher incomes, or are STR ect, and are looking to buy a more expensive home may feel a tense about the economy and the security of their savings in the banks.... but there is more clear logic for having patience and continuing to rent. A 10/15/20/25% or more further crash off a home currently valued between £350,000 - £500,000 pays for a lot of months in rent - (eg 20% off £500K = £100,000).

If you're expecting to save £100K (maybe more) by delaying purchasing now, that covers many a month/year of rent, even in you choose to rent a home whilst you wait which market value of around £500K, and not cutting back on a smaller place as you rent/wait.

dopester

lostinrates wrote: »

Dopester

I think for you and me, no children etc, the wait it out, especially now, could be different. Around all the house price and economy stuff...on goes life.

Now, if Lydiaj were syaing she had oppertunity to buy now with 95% mortgage and nothing at all to fall back on I'd be saying something different, but as it is, though I think it highly probably prices will fall back over winter, people have life going on which means somethings are worth paying a little exra for.

LIR and I discussed this via PM. Lydia will have some new capital coming her way to put towards purchase. I agreed with Lir, that if on balance Lydia feels it's best for her to buy, it could well be. I'm not claiming she is fully wrong to do so, especially if she wouldn't be particularly bothered about values of homes falling much further.. as she'd still have a home, for her and her children (with little mortgage debt.)

nollag2006

Hi Lydia

What did you decide in the end?

LydiaJ

Thanks for taking an interest, nollag.

I'm looking to buy, but I'm not in a hurry. I've been to see lots of agents and told them exactly what I'm looking for. I've explained what happened and where all my sudden extra money has come from, and made sure they know I'm chain-free and mortgage-free too. (Bank of mum and dad are offering to make up any shortfall.) I've said I'm very flexible about timing, but rather fussy about the house, and that in these sluggish market conditions I'd rather wait for the right house even if it takes a while, rather than settle quickly for something that's not quite what I want. I hope to stay in what I buy for the foreseeable future.

The owners of my "dream house" have decided not to sell after all, so now I'm looking at other possibilities. I've been to view a few, but there's nothing on the market at the moment that meets my criteria in my chosen school catchment area, so I'm waiting to see who is going to decide to sell this spring. I'm also writing to the owners of a house that was up for sale last year but was taken back off the market without ever selling, to see if they're interested. My life is frantically busy just at the moment, but I'll probably do a bit more looking around streets when/if I get a bit of time, and do some leaflets once I've decided where to deliver them.

If anything happens, I'll try to remember to come and update this thread.

nollag2006

Sounds like you are in an ideal position to move, as and when your dream house comes up !!! Don't worry about the old dream house - like buses, another will come along eventually

Best of luck in finding something over the next few months

LydiaJ

The owners of the house with the extension have phoned me!!
They say they may be interested and have invited me to view it.
I have fixed up to see it on Tuesday.
Any advice for what to look for?