House prices, emotions and 'pressure'

westernpromise

At current mortgage rates you'll pay off 15% of the loan within five years, so over that sort of horizon the day to day value is neither here nor there.

It is IMHO a huge, huge mistake to speculate in the roof over your head, whether by buying more house than you need or less (i.e. renting so as to buy later at what you expect to be a lower price). This place and HPC alike are full of angry, embittered renters who've done just that. To do so is in fact the polar opposite of the MSE ethos.

The way to think about house-buying and the concomitant mortgage debt is to consider that you either take that on, or you take on the unfunded future rents you face if you don't buy. The latter number is uncertain and indefinite, the former is not.

Out,_Vile_Jelly

OP, it's not clear if you're offering 10% below asking price because that's genuinely all you can afford, or if you feel that's part of the game you have to play.

If you've done your sums, can afford the repayment, swallow an interest rate rise, cover lack of income on maternity leave, like the area and plan to live there for a while, then the extra few grand seem irrelevant in the greater costs and lifestyle change of owning a family home.

Decent sized family homes, with garden, parking and in a good location for schools and transport will always be desirable. It's those buying new "luxury" flats for "executive living" that I think will struggle to sell further down the line.

Conrad

OP another thought - you indicate feelings of disappointment that your offers are not accepted in spite of your feeling they were reasonable an in line with your research on sold prices, but just to help you get things in perspective you need to recognise that when you come to sell one day, you too will be taking the highest offer you can get regardless of what some buyers apparent research dictates.


In other words don't feel aggrieved, be more sanguine, it all comes out in the wash, there will be times as a seller when you too could disappoint a hopeful buyer and take a higher offer from someone else, hey ho.

economic

westernpromise wrote: »

At current mortgage rates you'll pay off 15% of the loan within five years, so over that sort of horizon the day to day value is neither here nor there.

It is IMHO a huge, huge mistake to speculate in the roof over your head, whether by buying more house than you need or less (i.e. renting so as to buy later at what you expect to be a lower price). This place and HPC alike are full of angry, embittered renters who've done just that. To do so is in fact the polar opposite of the MSE ethos.

The way to think about house-buying and the concomitant mortgage debt is to consider that you either take that on, or you take on the unfunded future rents you face if you don't buy. The latter number is uncertain and indefinite, the former is not.

isnt it always a good idea to buy a bit more house then you need (as long as its affordable), given that at some point down the line you can downsize and have more tax free gains to be able to afford a smaller property more comfortably?

martinsurrey

Herzlos wrote: »

If you're expecting the market to dive (I didn't, and 10 years on my house is only worth 85% of what I paid) then hold off a bit, but the advice I was given was to just get on the ladder first.

Have you run the calc on if you would have been better off renting for the last 10 year?

Around my way the interest on a 75% resi mortgage on a property works out at about half the rent you would pay for the same place, over 10 years the difference is far more than 15% equity.

For example, a £200k 2 bed place was rented out for £800 10 years ago, and now £1,100 (average of £950), for a total 10 year rent of £114,000

a £150k mortgage at an average rate of 3% (two 5 year fixes) would give you £4.5k interest per year for a total interest of £45k

Difference, £69k or a 35% property price drop!

the_flying_pig

regarding low offers etc, patience is key.


housing is very, very illiquid. no-one knows the exact value of any particular house. various factors mean that the number of buyers going after any particular property at any particular time will vary quite a bit.


patience is key. this may of course easier said than done when life plans, emotions, etc are in play.


if you want to buy really cheaply you've got to be prepared to spend an awful lot of time looking, make an awful lot of bids, and then be ready to stump up the agreed price immediately as & when you reach agreement.


conversely, if you want to sell for really top dollar you've got to be prepared to turn down a lot of bids, waiting for someone who's not very price-sensitive to come along.

Herzlos

martinsurrey wrote: »

Have you run the calc on if you would have been better off renting for the last 10 year?

Nah that'd be way too depressing. Even if I'd only been able to put £100 into a house deposit fund, I'd have £12k of a deposit, which would mean I could buy my house as is and owe about £10k less than I do now.

But then my mortgage has cost less than equivalent rents would have been, and I haven't had to move every few years, and I've had total freedom to remodel.

Financially, I'd have been much better off waiting (if only I could tell the future, eh?), but in terms of stability I'm happy to have bought. At the time I bought prices were just going up and up, so it seemed foolish to wait to buy, and to be fair in another 30 years it'll make little difference - I'm only viewing it as rent that'll eventually become free.

economic wrote: »

isnt it always a good idea to buy a bit more house then you need (as long as its affordable), given that at some point down the line you can downsize and have more tax free gains to be able to afford a smaller property more comfortably?

I'd have thought so; you never know when you'd need a little bit more room (and having it there already will save a fortune over moving), and the price differential between the house you need and the bigger one is negligable (up here, 1-bed flats were going for about £90k and large 2-bed semis were going for about £110k, so you got more than double the house for an extra 22%)

martinsurrey

the_flying_pig wrote: »

if you want to buy really cheaply you've got to be prepared to spend an awful lot of time looking, make an awful lot of bids, and then be ready to stump up the agreed price immediately as & when you reach agreement.


conversely, if you want to sell for really top dollar you've got to be prepared to turn down a lot of bids, waiting for someone who's not very price-sensitive to come along.

Your buyer, and seller sides are conflicting.

If you are making lots of bids that are getting rejected you are offering on properties held by sellers who are wanting top dollar, and are willing to wait, so are wasting your time.

The best deals go to people who make fast, realistic offers on properties that are fresh to the market and realistically priced.

martinsurrey

Herzlos wrote: »

Nah that'd be way too depressing. Even if I'd only been able to put £100 into a house deposit fund, I'd have £12k of a deposit, which would mean I could buy my house as is and owe about £10k less than I do now.

You are ignoring the difference between the mortgage interest cost and the rent.

Really, run the calc (exclude capital paymetns on the mortgage), I'd be amazed if renting was better over 10 years.

westernpromise

Out,_Vile_Jelly wrote: »

It's those buying new "luxury" flats for "executive living" that I think will struggle to sell further down the line.

I tend to agree - the fact that you never see "bog-standard" flats for "peon living" for sale shows that these are marketing labels and not accurate descriptors of the property. If they were accurate there would be peon flats offered at prices and specs lower than the executive ones.

Probably the best guide to whether something will be easy to sell (when the times comes that you want to) is whether you like it now. Classic cars are a good example of this. In the past, people saw the values of TR4s, TR5s, and TR6s rising, and inferred that TR7s must be next. So some people bought TR7s not because they loved them but in anticipation of a speculative profit on them. As that was the only reason to buy one, no such profit ever came along, and hence a decent usable TR7 has been worth about £3 - 4,000 throughout the last 35 years. You'd pay 4, you'd get 3.

It would be a big mistake to buy anything you dislike or can't use, just because you think in the future, someone will pay up for it. The risk is that if you dislike or can't use it, others will be same, and hence it won't sell. A sounder strategy with both classic cars and houses is to ask yourself if you genuinely like it. Because if you do, so will somebody else one day, and so it's OK to buy it.