Will the next generation be able to buy their own house?

Malthusian

GreatApe wrote: »

In fact one of my earliest posts on hpc was to explain to the crash cheerleaders that if they took on a 95% mortgage there was really no downside for them. Buy with 5% down and if prices are higher in two years time great you made a wise decision. Buy with 5% down and if the 50% Armageddon crash really does happen just hand the keys back you have only lost 5%

None listed

Unsurprising as you can't just "hand the keys back" in this country. We don't have no-recourse mortgages as they do in some US states. If house prices crash and you "hand the keys back" and the mortgage company is out of pocket, you have to hand them the rest of the money you owe as well.

If I buy a house for £100,000 with 5% down and a £95,000 mortgage and houses crash 50%, and I hand the key back and the mortgage lender sells it for £50,000, I have to find £45,000 to pay them out of my own pocket.

It was good advice but for the wrong reason. The correct reasons it was good advice is a) a 50% house price crash is extremely unlikely b) if houses crash 50% I can always just carry on paying the mortgage.

AG47

andrewf75 wrote: »

Why do you think that?

Because market distortions always correct.

andrewf75

AG47 wrote: »

Because market distortions always correct.

but maybe the distortion period was when so many people could afford to buy their own homes.

AG47

andrewf75 wrote: »

but maybe the distortion period was when so many people could afford to buy their own homes.

So 99% of recorded history was a distortion and the last decade or so was correct? Something does ring true with your theory;)

AG47

Malthusian wrote: »

Unsurprising as you can't just "hand the keys back" in this country. We don't have no-recourse mortgages as they do in some US states. If house prices crash and you "hand the keys back" and the mortgage company is out of pocket, you have to hand them the rest of the money you owe as well.

If I buy a house for £100,000 with 5% down and a £95,000 mortgage and houses crash 50%, and I hand the key back and the mortgage lender sells it for £50,000, I have to find £45,000 to pay them out of my own pocket.
.

Wrong, most people will laugh at the bank for the £45K when the crash comes.

The banks will be chasing so many people that they repossessed they just won't be able to keep up with the sheer numbers.

westernpromise

AG47 wrote: »

Wrong, most people will laugh at the bank for the £45K when the crash comes.

The banks will be chasing so many people that they repossessed they just won't be able to keep up with the sheer numbers.

How did that work out for you last time? They seem to have plenty of time to chase you.

p00hsticks

AG47 wrote: »

So 99% of recorded history was a distortion and the last decade or so was correct? Something does ring true with your theory;)

The ' owning your own home' thing is a lot more recent than some people seem to think.

At the end of the first world war less than a quarter of the housing stock was owner-occupied, the majority of people rented. By the end of the second world war this had risen to about a third, and it was the 1960's-70s before it started climbing further to the high of around 70% at the millenium, since when it has started falling back.

westernpromise

p00hsticks wrote: »

The ' owning your own home' thing is a lot more recent than some people seem to think.

At the end of the first world war less than a quarter of the housing stock was owner-occupied, the majority of people rented. By the end of the second world war this had risen to about a third, and it was the 1960's-70s before it started climbing further to the high of around 70% at the millenium, since when it has started falling back.

And despite that massive sell-off of property from let to owner-occupied, its price didn't crash.

AG47

The perma prob bulls are getting desperate lately.

You can’t deny the market distortions and say this is actually correct and the rest of the time was distorted.

The simple fact is when the correction comes the next generation will be able to buy their own home just as they have been able to before the distortion we are still currently in.

PasturesNew

If so many of them are so poor, how come when I look at houses above what I can afford ... they are suggesting they'd make great FTB houses?

There's money out there in some pockets... and, from the look of adverts, enough/quite a lot of pockets.