Some friends of mine desperately need to sell

Asheron

Blacklight wrote: »

Anecdotes... I don't usually, but this seems a true reflection of what's going on out there:

Bumped into a couple I know that I hadn't seen for a while in town. They're expecting their first child in about four months.

They have a small two up, two down and really need some more room. The house has been on the market for a few months and they keep getting offers from people that are "taking the !!!!" (around 15% lower than the asking price).

Desperate as they are they decided to take the place off the market rather than sell it cut price and let someone else get a cheap deal at their expense.

Therefore, since real estate buyers cannot get a mortgage loan, real estate sellers are forced to reduce their prices in a hyperinflationary episode—drastically.

Of course, there are fewer sellers in a hyperinflationary period: Many sellers will decide not to put their real estate assets on the market during such a period, precisely because they do not want to receive a lower price for their holdings. They’ll choose to ride out this rough patch, or hold out for the price they want for as long as they can.

But that doesn’t mean that there are no sellers—obviously. The ones who remain in the market during a hyperinflationary period—for whatever reason—will lower their prices in order to attract a buyer. And as buyers dry up, sellers will either exit the market—that is, take their property off the market—or else lower their prices even further.

http://gonzalolira.blogspot.com/2011/02/inflation-hyperinflation-and-real.html?showComment=1297751732770#c1946299287144308710

Asheron

Here is a Quote............

And when there is hyperinflation, real estate prices of all sorts—residential, commercial, industrial—go into a free-fall: Their prices crash and burn, completely and utterly.....

AD9898_2

Cleaver wrote: »

You always come across as very intelligent Ad, but do you really think this represents a high repossession rate? There are about 15 million homeowners in the UK, so 36,000 reposessions a year represents 1.15% of people. Or to put it another way, on average every month every 1 in 5,000 homeowners get repossessed. This seems tiny to me. If you said that 15 million people were going to buy the most expensive thing ever and have to keep up a monthly payment on it for years and years I would guess that way more than 1.15% of them would either fall on hard times or f*ck it up someway.

In summary, when you look around you at the hopeless way in which most people seem manage their personal finances I find it frankly shocking how low this figure is. Especially as most people won't have seen their actual interest rate fall in line with the base rate.

You're right mate, when it comes to numbers it is tiny, but I'm using these numbers comparatively. The housing market 'only' had 70k repossessions at peak in the early 90's with IR's well into double figures.

So considering base rate is over 20x lower, the fact that repo's are only 50% lower seems pretty bad to me. Let's not forget that there was 'only' 70k repo's per annum in the last downturn which was also a tiny percentage of the market back then, yet we know prices fell considerably.

Julieq's argument doesn't hold water either because many people have fell onto SVR's as they can't remortgage due to NE and lending restrictions. These households are generally the most vulnerable, yet stand to be first in the 'firing line' when rates rise.

vivatifosi

Ash, you need to do some work on understanding definitions. The fact that inflation is stubbornly sticking above the rate that the government wants to see does not make it particularly high in historical terms, nor does it make it hyperinflation. The article just isn't relevant to selling at the moment.

The market is down at the moment due to lack of buyer sentiment, driven by factors such as uncertainty over jobs and problems accessing mortgages. I can't think of anyone - maybe others will chip in if they do - who are saying they are worried about excessive inflation. In fact a few people I know who bought in the 70s did quite well out of it because they were able to inflate their way out of their mortgage to a certain extent, although the rates were significantly higher.

System

Graham_Devon wrote: »

I don't see how it's selling it on the cheap. It's selling it for what people are willing to pay.

That's not "selling it on the cheap". It's just selling it for what it's actually worth.

There seems to be this mentality that peak price is somehow the correct price, and anything else is a bargain, or selling it on the cheap.

sigh.

Ok, I wouldn't sell it for 15k less than I required to make my next purchase ergo leaving me with no where to live except rented.

Like everyone.

Hence so few distressed sellers.

This seems to be common sticking point for the financially lobotomised.

shortchanged_2

I hope Backlights imaginary friends aren't expecting triplets or quads. Then there maybe a problem.

lisyloo

You can't guarantee anything can you?

Sorry to come back a bit late.
But yes you can - it's called a chain.
They get an offer for their home and don't move until they've had an offer accepted for 15% off.
Everyone moves on the same day so their sale is conditional on their buy.
Of course it makes life difficult and they might not get an offer accepted, but that's what being in a chain means.