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Debate House Prices
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My dream house...
Comments
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I know exactly where you're coming from, but that doesn't matter does it? Take the famous tulip bubble from the 17th Century. They all knew what a tulip bulb was actually intrinsically 'worth' anything, in terms of what they were. But they came more and more desirable and more and more people wanted them, hence the price going up. A bulb in 1636 would have cost you a few florins, but for the first few months of 1637 a bulb was costing around 150 to 250 florins. Looking back, it's obvious that bulbs could never sustain this price. But what was the value of a bulb in January 1637? It was around 150 to 250 florins. It doesn't matter that the people buying and selling were 'bonkers', that was simply the market price.
Agreed
So if someone comes along and buys Sibley's house for £1.3 million, then that's what that house is worth at that particular moment.
Not agreed, but I think that we are just arguing about the treatment of outliers. In fact, I think that it is just a semantic argument, ie how do you define market value? I think of it in terms of a stochastic distribution, and whilst most people would not use that term they agree with me. However, I firmly believe that semantic arguments are not worth pursuing. So, I won't.
Obviously you could look at average house prices for similar houses in the area and work out that most houses sell for much less, but that doesn't mean that that one data point should be ignored because it seems high.
I don't think it should be ignore, but I don't think that it defines the market value.
There's a simpler way of looking at this, which is that the market sets the market price for an asset. It really is that simple. Obviously the housing market is a difficult example, as it's such a slow moving market, but it's still a market. By all means apply averages, or your own research as to what you perceieve as the 'correct value' for a house. But that's irrelevant really, as the market value is the one agreed between buyer and seller for an asset.
I do understand your point. I just don't agree about the definition. In particular, I don't think that market process always results in what I define as the market price.
Take Lloyds shares, of which over 100 million sell every day. In fact, 114 million sold today. So how much is a Lloyds share worth? Well, at 8.08am people were willing to pay 54.06p, as that was a price agreed between buyer and seller. An exact same share sold for 54.93p just 40 minutes later. So was Lloyds bank worth 1.6%, or £718m more at 8.48am today than it was at 8.08am? Well, technically, yes. The value of a Lloyds is worth what people are paying for shares, it's just that that value fluctuates every single second. It's the same with the housing market really, just over much longer and with much lower volume. But we tend not to care that much about these fluctations and individual data points, we pick a moment in time (like once a month) and look at the averages to give us trends and overall pictures of what a market is doing.
I have no problem with market values changing.
They are two different things to me. If the average house price down my street sells for £150k then that gives you an average value for a typical house down that street. So it would be accurate to say that a typical house down my street is worth £150k.
However, let's say I put my house up for sale (and let's say that there's nothing different about my house to all the others) for £150k but four people all love it and start bidding up and it sells for £200, then my house is worth £200k. You can, by all means, theorise that these buyers were all deluded and were idiots for paying so much for a house that is down a street with similar houses selling for £150k and you may well be right. But that doesn't matter. The fact is that something in the market meant that four people bid up the value of my home and deemed it worth £200k. So my house is worth £200k. The average street price is around £150k, so those types of houses could be thought to be worth £150k. The two statements are both valid in my opinion.
This is just a semantic argument about the precise meaning of words like 'worth'. I don't think there's anything profound here at all.No reliance should be placed on the above! Absolutely none, do you hear?0 -
But the fact is that if a house tomorrow sells for £200k, it's current market price is £200k. The fact that Jimmy wouldn't only be willing to pay £140k for it doesn't mean it's 'overpriced', it means that Jimmy is not willing to pay market price for an asset. That may obviously be a very smart move, because the market price for that asset could possibly be £140k within a few years. It could be £220k in a few years. No one knows for sure with markets as there are too many factors to try and second guess.
Jimmy is just arguing that the market is in a bubble, and many people think he's right.
Then we seem to be hung up about the meaning of 'market price' and 'market value'. I think we can resolve that by saying that, within the market as we find it today, there is an average "expected" market value for a property but that individual transactions will go through at a price which differs from that by a margin. That's why I say it's a stochastic distribution.
I don't think that we are arguing about how the market works, just about the words we use, which is rather a fruitless argument.No reliance should be placed on the above! Absolutely none, do you hear?0 -
Jimmy is just arguing that the market is in a bubble, and many people think he's right.
Then we seem to be hung up about the meaning of 'market price' and 'market value'. I think we can resolve that by saying that, within the market as we find it today, there is an average "expected" market value for a property but that individual transactions will go through at a price which differs from that by a margin. That's why I say it's a stochastic distribution.
I don't think that we are arguing about how the market works, just about the words we use, which is rather a fruitless argument.
I think you and I are GDB, and you are probably discussing it in a much more articulate and concise way than me. I don't think Jimmy really understands it though.0 -
neverdespairgirl wrote: »these are rather nice, too, not far from Sibley's place:
http://www.rightmove.co.uk/property-for-sale/property-18457410.html
http://www.rightmove.co.uk/property-for-sale/property-17480343.html
It's worth downloading the EPC for that second one. :rotfl:No reliance should be placed on the above! Absolutely none, do you hear?0 -
Well, we don't actually know that until it sells. It might sell for £800k of course, in which case you could argue that the current valuation of £750,000 that's been put on the house is lower than the actual market value. I personally woudn't be willing to pay anywhere near £750,000 for that house, but that's just me.
I'm sitting here watching Forest vs Swansea on the TV Jimmy until picking up my missus from town, so I'm happy to keep this up if you are?
(sigh)
We could do but it seems that you are not grasping what i am saying, you have said its ok for you to have an opinion that something is overpriced, but when i express my opinion that something is overpriced you just repeat the same old examples.
Those are two different things. For example, I could say that I would only be willing to buy Lloyds shares for 30p, as that represents value for me. That's fine, as it's my opinion, but 100 million Lloyds shares were traded today all at around 54p. So Lloyds shares are 'worth', or have a market value of 54p. That fact that I think they are overpriced at 54p and have an opinion that they're only worth 30p to me is a completely different thing.
You have stated right there that it is fine for you to think the shares are overpriced.
In my opinion sibleys dream house is overpriced and i also find it very hard to believe you managed to get a missus, unless she fell for the old tulip line of course.0 -
I think you and I are GDB, and you are probably discussing it in a much more articulate and concise way than me. I don't think Jimmy really understands it though.
The way i understand it is, i said sibleys dream house was overpriced and then you said a whole host of things to try and make me feel stupid and make you feel superior, and it turns out you were just nit picking.
And then you said to another poster...........I think you and I are GDB, and you are probably discussing it in a much more articulate and concise way than me. I don't think Jimmy really understands it though.
Whats that all about, get them onside with compliments (oh you are very articulate and im not) so you dont look like a tool for banging on about me having my opinion on the price of a house.0 -
But the fact is that if a house tomorrow sells for £200k, it's current market price is £200k..
You left out the word "fair" when speaking about market price.
If the housing market was a free market economy then it's fair market price would be 200K. It is however, subject to various types of economic intervention. Coercion for example, is a huge form of inefficiency in the market. If the market is inefficient then you can't make a fair market valuation.0 -
The first was is overdressed and the second is only half dressed.
I was referring to the houses, rather than the furniture - you are right in both cases, though....much enquiry having been made concerning a gentleman, who had quitted a company where Johnson was, and no information being obtained; at last Johnson observed, that 'he did not care to speak ill of any man behind his back, but he believed the gentleman was an attorney'.0 -
It's worth downloading the EPC for that second one. :rotfl:
wow, buy extra jumpers as well as the house, I suppose!...much enquiry having been made concerning a gentleman, who had quitted a company where Johnson was, and no information being obtained; at last Johnson observed, that 'he did not care to speak ill of any man behind his back, but he believed the gentleman was an attorney'.0 -
Oh well.
My dream house sold recently. Achieved full £750,000 asking price.
Prices in good areas have not dropped a penny. I can back up what I say with facts. Some of you don't like it but it's true.
Why did it make full asking price then? I thought there was a crash??? No money available3??? No buyers???:rotfl:We love Sarah O Grady0
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