Sticking Their Head In The Sand

divadee

At work we were chatting about recession and house price crash scenarios over the next few years.

My bosses (husband and wife team) were adament that the only reason property prices were falling is because we are talking ourselves into a recession and its all rubbish and that house prices will always stay at this level. What also transpired from this conversation is that they are hoping to downsize for retirement in a few years (they live in a 5 bed home and its only the 2 of them). I think personally they want to think that they are going to get ££££££s for there house, and hate to think of prices crashing.

When I countered that people cant afford houses anymore, esp first time buyers etc.. and every market needs first time buyers. I also countered that banks are not giving mortgages out like they used to so people cant get the finance.

There arguments were well they should only give 90% mortgages anyway, to again which i countered by saying, how can someone earning average wage of £20k get a house round here for £66k (mortgage + 10% deposit) (you cant even get a studio for that).

I also argued that i dont know why they are worrying, if downsizing the house they want to downsize to would be cheaper as well so they wouldnt be losing much anyway!!

They just ummed and ahhed and concluded that we are talking ourselves into a recession.

Why are people sticking there head in the sand, is it greed, stupidity or are they just scared?

lonestar1

Bit of all 3 I imagine

snarffie

Downsizers are one of the groups that may be hit hardest in their pockets.

Say their house is worth £300k and it drops by 10%, the house would be sold for £270k.

If the smaller house that they intend to buy is worth £150k and it drops by 10%, the house would be bought for £135k

So they lose £30k on the sale, and only gain £15k on the next house, a net loss of £15k.

WTF?_2

Downsizers are people who will lose out if prices fall.

The 'rungs of the ladder' get closer together so when you trade down you don't get to pocket as much cash.

I can certainly understand a couple nearing retirement in a big house not being too happy about price falls

thriftybabe

Definitely lots of people burying their head in the sand! We had a meeting a few weeks ago talking about lay offs and most of the people looked bored as if it is not going to happen and it was a bit of scaremongering. My OH and i are now looking to pay off one of those people who was at the meeting. Again though a lot of people do not take notice until it actually comes up and slaps them on the face i.e hitting them in the pocket!

luvpump

There are loads in denial about the very stormy waters we are entering, clutching at any straw in order to avoid the reality, kind of sad really but understandable I guess.. Inflation surging ahead, Commodities going through the roof with no sign of an end, Credit becoming difficult if not impossible to get .... Wake up to reality not some kind of Brownesque fantasy !! ..

jamtart6

they've obviously heard that sentence "we're talking ourselves into a recession" somewhere and are now happy to go with this. I'll be honest I haven't got deep roots in the housing market so anything I do say/post is purely my own thoughts and I do try and stay away from whats being blasted in the media as different sources have different reasons for publishing what they do.

On a similar note but different topic, its kind of like the people who are adamant climate change isn't happening (its the area I work in, and I'm not about to bring this post onto a discussion about climate change its just an example)...because they read a newspaper report about the fact we're due for a glaciation and 'climates have always changed' I refer to this as I now just smile and think "oh dear, I wish the media would do their jobs properly" ...its similar to what you were saying, conflicting reviews in the media will make half the people overreact, half the people bury their head and the other half (third?! lol!) wonder whats going on but don't really know what to do about it!

As for my own view..I'm scared ! I want to buy a house but I'm scared of losing loads if the houses do crash...so I'm hanging fire!!...but if I hang fire too long...will I still be able to get a mortgage?? who knows!!

dannyboycey

jamtart6 wrote: »

its kind of like the people who are adamant climate change isn't happening

It's happening... but have we caused it? I've yet to see hard evidence.

.....but that's well off topic!

jamtart6

dannyboycey wrote: »

It's happening... but have we caused it? I've yet to see hard evidence.

.....but that's well off topic!

:rotfl:Haha! stand back from the climate change discussion. Feel free to PM me about that!


Divadee and others - thank you for pointing out about downsizers losing money, I really didn't think of it like that. I'm learning lots on this board!

dopester

!!!!!!? wrote: »

I can certainly understand a couple nearing retirement in a big house not being too happy about price falls

Yeah but those close to retirement should, if having been prudent, be amongst the best insulated against the carnage - and get no sympathy from me if in a mess or if having relied on their house to give them a pension.

mkbean

I'm very gloomy about the economy, its a bit depressing although i feel i'm as prepared as i can be for a downturn.

Sometimes i wish i had my head in the sand though, "ignorance is bliss", it'd be a lot less stressful!