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Debate House Prices
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OH MY GOODNESS - the house price crash hits home!
Comments
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the property was sold for £270 in 2007 - it lost 10% in value so would have been worth around £250k now in good condition. it's now on the market at £240k needing £20k of work to it - so we're more or less at the same price now within 10%...Well that wreck is being marketed at 12% less than it actually achieved when sold in 2007.
Not many sold in that road all together. Only two houses sold in 2008, both at way more than any others, so assuming that they were different in some way, prices are now down 10% on achieved prices in 2007. If you want to take 2008 as the high point then prices have dropped nearly 30% compared to the average of those two 2008 houses, though I suspect those two houses must be special in some way.
is paying 3 years rent better than watching property go down then upwards again and just being able to get less than10% off now when you could be chipping away at that mortgage instead of using that rent to pay that mortgage in your own home.
is having to shift your children about in rented accommodation a better option than not really making a saving that you thought that you would make?0 -
Well that wreck is being marketed at 12% less than it actually achieved when sold in 2007.
.
And wrecking a house to the point where it is "unrecognisable", not to mention unmortgagable, will take far more than 12% off it's value.
So the entire story, presented as a "lucky escape", and as proof that the "crash is still happening" is completely bogus.“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 hope you're not a maths teacher Carol.
If you wait until 2011 until buying, all you are doing is timeshifting 25 years of payments to start in 2011 rather than 2006.
Up until that time you are paying rent, and that is a cost.
Your total lifetime costs are years of rental x annual rent + 25 * annual mortgage costs
It is irrelevant that there is a difference between annual mortgage costs and annual rental during the rental, because until you start paying off the loan you are paying a landlord your money.
You may be able to save from the differential between what you might pay on mortgage less rent, but you're still paying money out of your account into his. You have lost that rental money, you can't say that mortgage payments would be £1000, rental is £750, therefore I'm up £250". You're down £750 with the £1000 to come at the time at which you buy, if ever.
The only ways of reducing this outflow are to reduce "years of rental". Or to reduce "annual rent", but that isn't likely over time. In fact it's more likely that rental will compound with inflation.
The only way you come out ahead of this is if the capital drop in value of the house you're buying is more than the total of "years of rental x annual rent". Which as the STR crew are discovering is impossibly difficult as "years of rental" increases.
If you'd been fortunate enough to be on a variable rate about now, your savings would have been massive, but that's more a question of luck than judgement.0 -
so if that is such a revalation then why not complete it the work??? or is it because they are not willing to sink money into a depreciating asset further still.
Glad you agree with the OP
Instead of paying interest only on a mortgage on an overvalued property which she doesn't (as the bank actually does own it) own, servicing debt, and being trapped in for a period she may not want to be?
Do you really think that people who have waited to buy will not appreciate being in a position to buy a better house now for less money, the fact is to pay down 35k capital value on a house in 2 years is not unheard of, but its hard work, and just as easy in that case to just save 35k as case in the bank, where it attracts interest, rather small yes ... but still.
sigh....
There's lots of reasons not to buy a house of which one good one is maintaining mobility. But Carol is suggesting (nay gloating) that she escaped financial loss by not buying, and that's not clear at all, for specific (house trashing) and general (cost of rental) reasons.
From a purely financial point of view, buying in 2006 or even 2007 is likely to have been a good decision from the 2011 context if you take all costs into account. Unless five years of rent are less than any decrease in value.
and [sigh] right back at you. Why do bears not understand that rental costs are not savings, they are overhead? Maybe I need a nearlynew style of sig.0 -
Why do bears not understand that rental costs are not savings, they are overhead? Maybe I need a nearlynew style of sig.
"I removed my fact about rental costs because it was scaring the bears"This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0 -
Was think more of something like "rental is THEFT"0
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and [sigh] right back at you. Why do bears not understand that rental costs are not savings, they are overhead? Maybe I need a nearlynew style of sig.
Indeed.
Every year of rent you pay is a straight addition to lifetime housing costs.
In order for that to pay off, you have to see prices fall by more than the cost of renting in the meantime.
So someone that has delayed purchasing from 2005 until 2010, would need to see 5 years of 5% (average) rent deducted from the 2005 house price for it to pay off for them.
The arguments about rent being the same as mortgage interest are spurious. You are not paying the mortgage interest, but you will have to at some point. You could be 5 years into a mortgage, and 5 years closer to being mortgage free. Rent is an additional cost. Plain and simple.“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 -
Was think more of something like "rental is THEFT"
"Paying your landlords mortgage is not wealth"?“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 hope you're not a maths teacher Carol.
If you wait until 2011 until buying, all you are doing is timeshifting 25 years of payments to start in 2011 rather than 2006.
Up until that time you are paying rent, and that is a cost.
Your total lifetime costs are years of rental x annual rent + 25 * annual mortgage costs
It is irrelevant that there is a difference between annual mortgage costs and annual rental during the rental, because until you start paying off the loan you are paying a landlord your money.
You may be able to save from the differential between what you might pay on mortgage less rent, but you're still paying money out of your account into his. You have lost that rental money, you can't say that mortgage payments would be £1000, rental is £750, therefore I'm up £250". You're down £750 with the £1000 to come at the time at which you buy, if ever.
The only ways of reducing this outflow are to reduce "years of rental". Or to reduce "annual rent", but that isn't likely over time. In fact it's more likely that rental will compound with inflation.
The only way you come out ahead of this is if the capital drop in value of the house you're buying is more than the total of "years of rental x annual rent". Which as the STR crew are discovering is impossibly difficult as "years of rental" increases.
If you'd been fortunate enough to be on a variable rate about now, your savings would have been massive, but that's more a question of luck than judgement.
Your theory is flawwed as you mention chipping away at a mortgage.
In an appreciating market, this idea works well.
the security is worth a lot for a family, but most families BUY, most people waiting are SINGLE, or couples who are flexible and WANT to be flexible.
Please explain to me what the difference is between paying a landlord RENT and paying a INTEREST only on a mortgage. Apart from the one fixes the VALUE of the property to YOU, and the other just doesn't matter. What renters are hoping for is falls in value, what the owners want are increases, the fact that 70% of the UK own their own home, means that the majority of people and the government WANT house prices to increase, but its only worth getting on board, when the PRICE IS right... no point buying at a bargain price if you STILL can't afford it. This is what people were doing throughout 2004 until 2008 because of the bank frivoulous lending behavour ie 100% mortgages.
And that is what has caused the correction in the market, it wasn't sustainable, and wont be in the future, there will be no return to NORMAL, as NORMAL is where we are at NOW... ie, not much money out their available to borrow.
FACT is they are described and spelt differently and one YOU have all the risk and reward, whereas in renting, you get what you pay for, with NO RISK.
IT was a lot easier to get a mortgage year ago, and is VERY difficult now, but, this will keep prices STABLE!!!!Plan
1) Get most competitive Lifetime Mortgage (Done)
2) Make healthy savings, spend wisely (Doing)
3) Ensure healthy pension fund - (Doing)
4) Ensure house is nice, suitable, safe, and located - (Done)
5) Keep everyone happy, healthy and entertained (Done, Doing, Going to do)0
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