Wealthier? Or deeper in debt?

noyk

When you find one thats cheap to buy (are there any cheap houses anymore?) and once youve factored in renovation costs, including your time come back in a couple of years and let us know how simple it is and how much money you've made!
The statement "House price increases benefit nobody" was perhaps too broad, house price increases benefit EA's, banks and property developers but no one else (the vast majority).

manhattan

ddaimlerdan wrote:

House price increases benefit nobody?? I disagree. I think it is an incredible way to generate cash. My house cost £58000 in May 2001, sold for £135,000 in Aug 2006. Location Liversedge West Yorkshire. I have sold now because the market is stagnant and will remain so for about 3-5 years in my opinion. In the meantime I will invest the profit into a property that needs a renovating and is cheap to buy (Plenty about still) .........and then do it all over again...Simple. Wll it's not because it's actually been tough to pull off, but made it in the end.

good luck!

F_T_Buyer

ddaimlerdan wrote:

House price increases benefit nobody?? I disagree. I think it is an incredible way to generate cash. My house cost £58000 in May 2001, sold for £135,000 in Aug 2006. Location Liversedge West Yorkshire. I have sold now because the market is stagnant and will remain so for about 3-5 years in my opinion. In the meantime I will invest the profit into a property that needs a renovating and is cheap to buy (Plenty about still) .........and then do it all over again...Simple. Wll it's not because it's actually been tough to pull off, but made it in the end.

Yes, but you have benefitted at the cost of your buyer. Eventually this feeds down and it's the first time buyer that loses out as they have to pay more for the same thing.

For this to keep going you need more and more people coming in at the bottom, sure some people will win (those leaving the market), but that will be very few compared to those that will lose out. Sounds like a pyramid scheme.

http://en.wikipedia.org/wiki/Pyramid_schemes

RHemmings

ddaimlerdan wrote:

House price increases benefit nobody?? I disagree. I think it is an incredible way to generate cash. My house cost £58000 in May 2001, sold for £135,000 in Aug 2006. Location Liversedge West Yorkshire. I have sold now because the market is stagnant and will remain so for about 3-5 years in my opinion. In the meantime I will invest the profit into a property that needs a renovating and is cheap to buy (Plenty about still) .........and then do it all over again...Simple. Wll it's not because it's actually been tough to pull off, but made it in the end.

I didn't say that "house price increases benefit nobody". The whole point of my posting was that a person who had bought a single house, and had the value of it inflate by 200%, but who moved "up the ladder", was in reality just deeper in debt rather than richer.

If someone has multiple houses, and sells some extra houses, reducing their BTL portfolio, then they can benefit from HPI. If someone downsizes, moving from a big house to a smaller one, then they can benefit from HPI. If someone STR (sells to rent), then they can benefit from HPI.

But your average person who never owns more than one house, and who needs to move to a bigger house, perhaps for family reasons, just gets deeper in debt with any additional "wealth" being paper wealth that is difficult to access.

If you sold your house, where do you live now? Did you own another house? Did you buy another house after selling your first one?

RHemmings

ddaimlerdan wrote:

House price increases benefit nobody??

I have answered this post twice as I think answering this single sentence is important.

If you go back and read my post again, you'll see that I don't make any claim even remotely resembling "House price increases benefit nobody??". The whole post was built around one particular example where a person moved up the ladder, owning only one house at a time.

I am rather offended that you have mis-interpreted my post in that way. I don't know whether you simply failed to understand my original post, or whether you decided to deliberately mis-interpret my post as a "straw man" argument.

If we're to have a civil, productive, discussion, I feel that it is important that people read posts properly, and address the points raised. I certainly try to do this. I haven't been on this forum long, but I have been on many other forums discussing different subjects. If I think that I may not have understood a point properly, I ask for clarifications and/or further detail. Could you please have the decency to do the same.

epoman

F_T_Buyer wrote:

Yes, but you have benefitted at the cost of your buyer.

How so? Does the fact that the buyer will benefit from a newly renovated property count for nothing?

If a buyer pays more for such a property, compared to its derelict value, then there is no loss scenario whatsoever - he is paying for the benefit of living in a done up property rather than one that he needs to spend time, money and on.

F_T_Buyer wrote:

Eventually this feeds down and it's the first time buyer that loses out as they have to pay more for the same thing.

Sorry but I don't follow your reasoning here. Can you clarify please so I can understand.

Jay1b

RHemmings wrote:

It would be nicer, in some ways, if only people who wanted a property that is too large for them, would get burnt in a downturn. But there are a lot of people around with growing families who really need a bigger property to give their family a decent standard of life.

It depends why people want a property that is to big for them? I live in a 3 bedroom by myself, does that mean i should be 'burnt'? Perhaps i wanted a 3 bedroom place so in 5 years time when i may have children i dont need to go through the hassle of moving. Although I would disagree that its to big for just me really. It gives me a nice tidy lounge, a dining room, a kitchen, a computer room, a bedroom for me and a spare bedroom for junk. Oh and a garage if you can call it that.... Now builders that build garages which you cant fit cars in - they should be burnt!

F_T_Buyer

epoman wrote:

How so? Does the fact that the buyer will benefit from a newly renovated property count for nothing?

If a buyer pays more for such a property, compared to its derelict value, then there is no loss scenario whatsoever - he is paying for the benefit of living in a done up property rather than one that he needs to spend time, money and on.

Sorry but I don't follow your reasoning here. Can you clarify please so I can understand.

I'm specifically refering to this comment:

"House price increases benefit nobody?? I disagree." Not renovation work.

Rising house prices just transfer wealth from the younger generations to the older generations. But still, anyone who wants to move up the ladder will end up paying more. If your house rose by 10% the house you are buying will also rise by 10%, as the vast majority of people move into more expensive houses the nominal difference is great the more houses prices rise.

Ultimately, this is the worst for first time buyers as they have not built up any equity. That's why the ratio of FTBs has fallen from around 40-50% to around 10% (the gap being filled by property speculators/BTLers).

epoman

F_T_Buyer wrote:

I'm specifically refering to this comment:

"House price increases benefit nobody?? I disagree." Not renovation work.

Rising house prices just transfer wealth from the younger generations to the older generations. But still, anyone who wants to move up the ladder will end up paying more. If your house rose by 10% the house you are buying will also rise by 10%, as the vast majority of people move into more expensive houses the nominal difference is great the more houses prices rise.

Ultimately, this is the worst for first time buyers as they have not built up any equity. That's why the ratio of FTBs has fallen from around 40-50% to around 10% (the gap being filled by property speculators/BTLers).

Aah. Sorry but I obviously misinterpreted what you were trying to say in your first post.

There is a clear difference between adding value by renovating and value that is added by a rising market. The former I have no issue with. The latter I agree creates difficulties for FTB's and indeed anyone looking to move up the ladder.

RHemmings

Jay1b wrote:

It depends why people want a property that is to big for them? I live in a 3 bedroom by myself, does that mean i should be 'burnt'? Perhaps i wanted a 3 bedroom place so in 5 years time when i may have children i dont need to go through the hassle of moving. Although I would disagree that its to big for just me really. It gives me a nice tidy lounge, a dining room, a kitchen, a computer room, a bedroom for me and a spare bedroom for junk. Oh and a garage if you can call it that.... Now builders that build garages which you cant fit cars in - they should be burnt!

No. It's a good point, and I have to modify my comment to account for it. I'll change it to "it would be good if only people who were greedy were burnt in a downturn, but that's not how it works". I don't think a single person living in a three bed house is necessarily greedy. If that's the lifestyle they want, and they can pay for it, that's OK. Someone who buys a holiday home in an area where FTBs are unable to get on the ladder and have decent lives is starting to fit my definition of "greedy" a bit better. And someone who buys a house in an area where prices are appreciating and sits there laughing at the television while priced out FTBs are interviewed, while the person watching says "bawahahahahah!!!! I'm going to make money out of you!!!" would be an extreme good fit to my definition.