does buying at the top or bottom of a market really matter?

pickles110564

boinging wrote: »

I'd say they are the one group of people it doesn't help.

20% off £1m is a lot more than 20% off £300,000.

But if when you bought the now valued £1m home at £250k and the £300k home was bought at £275k with a 125% mortgage, who is really worse off?

WTF?_2

pickles110564 wrote: »

But if when you bought the now valued £1m home at £250k and the £300k home was bought at £275k with a 125% mortgage, who is really worse off?

The point is you'd still have been better off buying at 175k instead of 250k back at the start.

You might be able to do OK if you can hold on to property in the longer term but it still is a dumb financial move to buy in at the peak.

boinging_2

!!!!!!? wrote: »

The point is you'd still have been better off buying at 175k instead of 250k back at the start.

You might be able to do OK if you can hold on to property in the longer term but it still is a dumb financial move to buy in at the peak.

Why do people find this concept so hard to understand.

Buy August 07 cost - £200K
Buy December 07 cost - £195K
Buy March 08 cost - £185K
Buy May 08 cost - £180K

Saving money must be a crazy idea to some people.

Reds-on-Sea

There are other things to take into account when buying a house apart from basic house price though.

Admittedly nobody's going to be spending 20k a year on rent, but
- cost of rent
- mortgage affordability at the time, i mentioned earlier that a 1% rise in mortgage rates is roughly equivalent (monthly paymentwise) to a £20k drop in house price. if interest rates were rising faster than house prices dropping, then...
- Also, mortgage availability. With mortgages being pulled here, there and everywhere, people who want to buy soon, are going to want to secure a deal while they still can.
- living requirements - personally, I wanted to live in a nice 3 bed house, to get on with my life, instead of being stuck in a flat for the next 2 or 3 years. It was just TOO long to wait (for me). I want to start thinking about kids/future/etc. All very well waiting for prices to go down, but we only get 1 life to live and I want to live it happy. I could pay £800-900 rent to live in an equivalent house, or £1100 on a mortgage.... there wouldn't be any chance for changing the house/decorating/improving - I was just a bit sick of renting etc etc.

But of course, it's just one of those things... i would have been overjoyed if I'd have not been ready to move for another 2 or 3 years and bought an equivalent house for £160k, or however much everyone says prices will drop.. as it happens though, I was ready to move now...

LillyJ

boinging wrote: »

Quite this has to do with the OP is not clear to me, but thanks for letting me know about your familys future housing plans.

I can't believe that anyone would argue though, that buying at either side of the peak is not a much better idea than buying at the top.

OP - "Does buying at the top or bottom of the market really matter" Answer, "not in all cases".

Sorry if you don't find my posts of any value, maybe cos they don't agree with some other people on here.

WTF?_2

LillyJ wrote: »

OP - "Does buying at the top or bottom of the market really matter" Answer, "not in all cases".

Sorry if you don't find my posts of any value, maybe cos they don't agree with some other people on here.

Well, I guess your answer is "It doesn't really matter' if you are very well off and don't mind spending tens of thousands of pounds more than you have to".

boinging_2

LillyJ wrote: »

OP - "Does buying at the top or bottom of the market really matter" Answer, "not in all cases".

Sorry if you don't find my posts of any value, maybe cos they don't agree with some other people on here.

I'm sorry, maybe it's me, maybe I'm simple.

I just can't see at all, in any way shape or form how buying a house cheaper in the first place doesn't save money.

Yes over 25 years the price will no doubt rise again but you can't ever get back the initial over priced purchase amount regardless of how high the prices go.

LillyJ

Yes it is cheaper to buy at the bottom of the market. Obviously. What I was trying to say is that it doesn't automatically lead to some sort of hideous life from that point on if you buy at the top.

Some people seem to be under the impression that you instantly self destruct if you go in to negative equity.

boinging_2

LillyJ wrote: »

Yes it is cheaper to buy at the bottom of the market. Obviously. What I was trying to say is that it doesn't automatically lead to some sort of hideous life from that point on if you buy at the top.

Some people seem to be under the impression that you instantly self destruct if you go in to negative equity.

Not sure I've seen that being said and I agree with you that negative equity is not a definate if you bought recently to a certain extent, but why risk it?

The more expensive the house the more you'll save and the less stretched you'll be by waiting at the moment.

LillyJ

boinging wrote: »

Not sure I've seen that being said and I agree with you that negative equity is not a definate if you bought recently to a certain extent, but why risk it?

The more expensive the house the more you'll save and the less stretched you'll be by waiting at the moment.

I wasn't quoting for goodness sake!

People think negative equity is financial suicide. It isn't ALWAYS but is in other cases.
If you aren't over stretching yourself, and you buy now, you may have saved money by waiting (but for some personal circumstances mean waiting isn't the best option) but you aren't automatically going to become homeless or suddenly be unable to pay the mortgage just because prices drop.

So yes, if you can wait, you might save money, and for a lot of people, especially in the South East, and where rents are very much lower than mortgage repayments this will be the sensible option.

If you can't wait (or don't think it is right for you) and you have a deposit, secure jobs, and are getting a sensible multiple and are planning to stay for 5-10 years then you can buy if you want to! (which is the category I fall in to at the moment.) If the payments are the same as your rent you aren't going to have to cut back on spending either (in fact as we rent at this price AND have been saving for a deposit, we are going to overpay quite considerably).

I am just trying to put things in to perspective that there are worse things that can happen in life than your house being worth less on paper than it was when you bought it if you are comfortable with your payments.

As people CONTINUOUSLY point out, your house doesn't have an actual value until you sell it.