DM: Plight of 1.1m stuck in homes they can't sell

Procrastinator333

It is often suggested that if prices drop, people just take property off the market, supply goes down and prices stabilise.

The opposite also appears to be at work. If prices start to rise, these guys will flood the market, increase supply and stop the rises.

http://www.dailymail.co.uk/news/article-1304919/Plight-1-1m-stuck-homes-sell.html

Stagnation until either the buyer or seller gives in. We will see who blinks first!

pjread

A lot of people are proving stubborn, but very few people are genuinely "stuck in homes they can't sell"

I'm certain there's a price almost any of them could sell at, they just refuse to. which is their choice so they shouldn't complain about it...

Graham_Devon

The article states that many of those "stuck" are stuck because buyers will not give an acceptable offer.

It's one of those stand off situations. They are not stuck, per se, as they have had offers, just the seller turns them down. Buyers in general, especially FTB's which keeps the market going, cannot raise the amounts being asked.

The answer is either a return to lending seen in the boom, allowing the buyers to raise the cash, or a fall in property prices, allowing the buyers to afford the properties.

Thrugelmir

Procrastinator333 wrote: »

The opposite also appears to be at work. If prices start to rise, these guys will flood the market, increase supply and stop the rises.

As GD has pointed out. People aren't receiving acceptable offers.

So how can property prices rise further?

They could, but transaction volumes would fall further and further.

People need to increase the amount of equity held in their properties, i.e repay the capital debt owed. In order to be able to move home.

There's a generation of homeowners who've moved house on ever increasing house prices (equity). Not actually having saved money up. People will move house less often than in the past few years.

Davesnave

This time around, sellers are probably less inclined to believe there will be a major downshift in prices.

When we were selling in 2008, almost anything looked possible. Each week seemed to bring new revelations and worse news, so in that climate, we decided to drop our price substantially and get the hell out. Despite receiving less than we really wanted, the relief on exchange was palpable.

The scenario about to play out in the autumn & beyond may not seem so scary, but the end result may be similar and more lasting than the price corrections of two years ago.

Graham_Devon

Davesnave wrote: »

This time around, sellers are probably less inclined to believe there will be a major downshift in prices.

That's an extremely good point actually.

Might be many out there who simply believe if they fall again, everything will be pulled out of the hat to re-ignite the flame.

I was shocked to find out the other day that one of dads friends, who bought in the 80's looks to lose his house, and will take a very low offer. Apparently, he's remortgaged time after time and now owes something like 8x what he originally paid for the house, and is just coming up to 60.

Suddenly realised he needs to do something, and quick. It came as a major surprise as he always seemed content and sensible, but did like his holidays with his wife.

The point here is that I guess it's easy to fall into a trap whereby you see prices rising forever more and everything will be ok.

lemonjelly

Graham_Devon wrote: »

That's an extremely good point actually.

Might be many out there who simply believe if they fall again, everything will be pulled out of the hat to re-ignite the flame.

I was shocked to find out the other day that one of dads friends, who bought in the 80's looks to lose his house, and will take a very low offer. Apparently, he's remortgaged time after time and now owes something like 8x what he originally paid for the house, and is just coming up to 60.

Suddenly realised he needs to do something, and quick. It came as a major surprise as he always seemed content and sensible, but did like his holidays with his wife.

The point here is that I guess it's easy to fall into a trap whereby you see prices rising forever more and everything will be ok.

He's not alone. Whilst I was working for a housing association, we regularly were recieving applications from people who had repeatedly over-extended via repeated remortgaging. In horrible irony, many of them had exercised a right to buy, therefore bought a house ridiculously discounted, and then remortgaged time and time again.

In a way, part of the blame has to lie with the person borrowing the money. At the same time, lenders have to bear some responsibility for repeatedly lending these people money imo.

If I were cynical, I'd be wondering if they too were caught up in the HPI forever delusion, and were thinking it's all ok, as on death, the loan will be secured on the house...

Rochdale_Pioneers

I'm stuck. Yes I could sell if I slash the price to a lot less than the balance of my mortgage - maybe. Assuming the few punters still looking have the cash or can get a mortgage they can afford. But why would I sell and leave myself in debt?

The issue here is a dead market, not price. Our estate agent can't tell if our asking price is too high now or not - there are so few transactions he can't tell.

So I'm sitting tight. OK so the Stockton on Tees to Sheffield commute isn't ideal, but at least I have a fully expensed company Beemer as compensation. And its not just me - friends trying to sell across the north also faced with a stone dead market. Perhaps they are waiting until after October's job bonfire?

Graham_Devon

lemonjelly wrote: »

He's not alone. Whilst I was working for a housing association, we regularly were recieving applications from people who had repeatedly over-extended via repeated remortgaging. In horrible irony, many of them had exercised a right to buy, therefore bought a house ridiculously discounted, and then remortgaged time and time again.

In a way, part of the blame has to lie with the person borrowing the money. At the same time, lenders have to bear some responsibility for repeatedly lending these people money imo.

If I were cynical, I'd be wondering if they too were caught up in the HPI forever delusion, and were thinking it's all ok, as on death, the loan will be secured on the house...

Well I was shocked as I had this kinda naive I guess view of them having paid off their home at least 5 years ago and still having 2 incomes. Afterall, it looked that way, always two niceish cars, nothing over the top, but nice, up to date cars, 2-3 holidays a year. Not exaclty your Butlins do either. Long haul destinations etc. Nice new consvatories going on, nice new furniture all the time.

Like many of my parents friends, many I have known many many years, always considered them to be at a good point in their life. House paid off, still earning two nice wages, and enjoying a nice life.

Doesn't seem thats always the case though. Wasn't with my parents as they had an interest only mortgage with no way of paying the lump sum, but loads of equity - forced to sell and move. Wasn't for my dads lifelong friend. Looks to be forced to sell and move.

Both results of overextending and kicking the can.

Edit: My parents did win in the end I guess, mortgage free house from the equity. But the upheavel was stressful as neither wanted to leave the family home.

Thrugelmir

Rochdale_Pioneers wrote: »

I'm stuck. Yes I could sell if I slash the price to a lot less than the balance of my mortgage - maybe. Assuming the few punters still looking have the cash or can get a mortgage they can afford. But why would I sell and leave myself in debt?

Though if you wished you could are in a position to reduce your mortgage over the next couple of years. So in a far better position than many

Graham_Devon

Rochdale_Pioneers wrote: »

I'm stuck. Yes I could sell if I slash the price to a lot less than the balance of my mortgage - maybe. Assuming the few punters still looking have the cash or can get a mortgage they can afford. But why would I sell and leave myself in debt?

Well you are not really "stuck", as you have no need to sell.

The article talks of those needing to sell for reasons such as work, new life in the house etc.

You would maybe like to move, but are not going to unless you get what you want to get for the house. You can therefore sit it out. The same as a FTB, can't move on.