How many people here have sold to rent (anticipating a crash)?

pioneer

zipwen1 wrote:

there is a thread on here somewhere that explains why the last house price crash happened. after reading everyones explanation i was left quite confident that a crash that would leave your property virtually worthless wont be happening anytime soon.

Its not about whats happening anytime soon, its about locking-in existing profits that would take you a lifetime to earn, regaining your life and hey you can be in a perfect position if/when it does crash "averaging down".

Quick change of location, result; nice life,house, loads of cash, no mortgage & if theres a crash; switch out of cash buy six flats and theres a mega pension for which you haven't had to get out of bed. Inevitable; a bit like waiting for a building society merger !

Common sense dictates that it can't go on exponentially, its already practically a no brainer, people will just buy a piece of land & build their own; after all bricks only cost so much !

It doesn't get any more money saving than that !!!

roswell

zipwen1 wrote:

there is a thread on here somewhere that explains why the last house price crash happened. after reading everyones explanation i was left quite confident that a crash that would leave your property virtually worthless wont be happening anytime soon.

First tip, dont believe everything you read

second, there are economic cycles like fashion trends, in the late 90`s it was Dot.COM the last 5 years have been houses, when the next crazy trend comes everyone will move to that.

Im not pro crash im not anti crash I am pro self research though.

ManAtHome

Main problem when/if prices start dropping is if you need to move. Quite a few houses in my road which went on the market on the early 90's only started to clear in the late 90's - only really affected the people who had to sell (we're not really into "do you know how much my house is worth" dinner parties round here...).

franklee

Alan_M wrote:

if there's a drop in value short term, it will be annoying but fundamentally it won't effect you as you're in for the long haul.

AlanM, I agree with most of what you say but the bit I struggle with as a money saver is that it's financially OK to buy at the top if you are in it for the long haul. OK say the OP has little chance of getting repossessed and can ride the falls but why does that make it OK to overpay when this will have an enormous knock on effect on the rest of their life. They will end up with a house of less value than they could buy after any falls, not as nice, worse location, smaller. This house probably won't increase as much as the better one over the subsequent years of rising prices. Or to get the better house now they will end up with larger debts. So for anyone who really thinks prices will fall then being "in it for the long haul" is no reason to buy now. Of course this doesn't apply to those who think there won't be falls, they have good financial reason to buy.

I am an STR, although I did want to move anyway. I am sitting it out!

Alan_M_2

franklee wrote:

AlanM, I agree with most of what you say but the bit I struggle with as a money saver is that it's financially OK to buy at the top if you are in it for the long haul. OK say the OP has little chance of getting repossessed and can ride the falls but why does that make it OK to overpay when this will have an enormous knock on effect on the rest of their life. They will end up with a house of less value than they could buy after any falls, not as nice, worse location, smaller. This house probably won't increase as much as the better one over the subsequent years of rising prices. Or to get the better house now they will end up with larger debts. So for anyone who really thinks prices will fall then being "in it for the long haul" is no reason to buy now. Of course this doesn't apply to those who think there won't be falls, they have good financial reason to buy.

I am an STR, although I did want to move anyway. I am sitting it out!

My point being it's far less relevant if you're buying a home that isn't primarily an investment.

And how do we know we're at the top? Sure a lot of things tell me we're there, but all the same things told me we were there two years ago.....

We could only be halfway up the slope in what could be the biggest bubble in history unlikely put not impossible.

franklee

Alan_M wrote:

My point being it's far less relevant if you're buying a home that isn't primarily an investment.

Wanting a home now and being prepared to pay over the odds for it is a perfectly good reason for buying now. It's the "it's OK if you are in it for the long haul" that I'm objecting to as that implies the buyer won't be losing financially when of course they will. That prices will recover after any drop makes no difference, buying low is still a financial advantage buying high a financial disadvantage.

Alan_M wrote:

And how do we know we're at the top? Sure a lot of things tell me we're there, but all the same things told me we were there two years ago.....

We could only be halfway up the slope in what could be the biggest bubble in history unlikely put not impossible.

Of course we don't *know* we are at the top. That's for each of us to make our own minds up about. I am willing to put my money down and say we are. If others aren't then that's fine. At least the "I want to buy now and am prepared to take the risk of paying over the odds" is being honest whereas the "it's OK to buy now if you are in it for the long haul" is just a way of disguising the issue. Just like the renting is dead money mantra is. Basically people use such things to delude themselves that it's safe and sensible to buy now without having to think it through and see the risks they are taking. And before you say STR is a risk, of course it is, and it doesn't have any silly mantras to disguise it!

roswell

franklee wrote:

It's the "it's OK if you are in it for the long haul" that I'm objecting to as that implies the buyer won't be losing financially when of course they will.

You only loose if you sell or get repossesed the value of everything is £0 until it is sold and even then its value is dictated by the price the new owner is willing to pay. its not a case of you cant loose but buying a house to live in means that the actual value to you is £0 as your not cashing out on it you are using it for its intended purpose.

Now if the Op said i want ti buy a house and move out in 2 years it would be very important what the short term possibilities are but that isnt what the op is asking.

franklee

roswell wrote:

You only loose if you sell or get repossesed the value of everything is £0 until it is sold and even then its value is dictated by the price the new owner is willing to pay. its not a case of you cant loose but buying a house to live in means that the actual value to you is £0 as your not cashing out on it you are using it for its intended purpose.

Thanks roswell, that illustrates the point I'm tyring to make perfectly.

By that argument you can pay anything you can afford for a given house! But it completely ignores the size of the debt and the size of the monthly repayments you need to make. Even though you can afford the payments their size makes a huge difference to your standard of living... As does the house itself... And the amount that house has risen after 25 years...

Ah well I obviously don't have the ability to explain it!

I'd rather pay less for a better house and be able to afford the nice holidays, and get a bigger long term gain

roswell

franklee wrote:

I'd rather pay less for a better house and be able to afford the nice holidays, and get a bigger long term gain

Pleasure but its horses for courses, you could then argue that someone paying more for a bigger house in a better location to yours and get a better long term gain in 25 years.

Either way you will only know the correct choice in the future. EG 6 years ago I should have bought Every house in my street not just the ONE I bought. But thats looking at investment terms not usage as a home.

franklee

roswell wrote:

Pleasure but its horses for courses, you could then argue that someone paying more for a bigger house in a better location to yours and get a better long term gain in 25 years.

Yes I think they would.

roswell wrote:

Either way you will only know the correct choice in the future. EG 6 years ago I should have bought Every house in my street not just the ONE I bought. But thats looking at investment terms not usage as a home.

I agree it's only with hindsight that we know for sure what the optimum thing to do was. All we can do now is be honest about the risks and balance them up as best we can based on our own finances and circumstances.

I am looking in terms of buying one property for usage as a home. For most of us buying a home is a compromise over what we would like vs what we can afford. By waiting and buying after any drops I'm hoping for less of a compromise. That will make a pretty large difference to my life and finances over the long term. Saying it's a long term home so price doesn't matter so long as you don't sell or get repossessed is just putting ones head in the sand.