FTB, Good time to buy?
Discussion
There are a few threads running along a similar vein but to be honest they have reached the point where they are miles above my head and talking on a more investor level.
I have been looking for an opportunity to move out and buy my own place for a few years now. When I started looking property was still climbing, interest rates were high and I couldn’t afford anything I wanted. The properties I was looking at then were worse areas and overall quality and mostly needed completely gutting.
Now I find my 185k ish budget is getting me things I would have jumped at the chance of when I started looking. There are two properties I am interested in right now. One is asking 179k and the other 165k. Both are mid terrace with a garage and practically identical. I think the 179k house is nicer but overpriced by comparison. Those houses seem to be worth about 170k right now so would want the 179k house to move a fair bit. 165k seems to be champing at the bit to move and is pushing a new low for the area and would probably still negotiate.
In terms of mortgage I have spoken to a few independents and a few banks. They seem confident they can lend to me and I don’t mind what the monthly will result in. In fact it's less than a workmates rented flat. I think that could be down to getting over the magic 25% deposit upfront after some hard saving. The real beauty is they do some insurance that means in the case of redundancy you get 133% of the mortgage paid for 12 months so I don’t think fear of job security is really a reason not to do anything.
I have looked at previous sale prices and the data seems to omit 08 and 09 but looking back they are getting the sort of money they were in late 2003/4 and I would estimate down 30-40k from their peak.
On the one hand I think on a long enough time line I can't really lose and the money they are asking is pretty reasonable. On the other hand in the 'have we hit the bottom?' thread there was a prediction of another 55%. That sees a bit far to me as in real terms that means I could practically walk up and buy outright if that fall happens. I guess I just don’t want to buy now and find out I could have got something even better if I had waited.
I was really happy looking round thinking I could see myself here and it has everything I want, but the more I think the more I fuss and just can't decide what to do.
I have been looking for an opportunity to move out and buy my own place for a few years now. When I started looking property was still climbing, interest rates were high and I couldn’t afford anything I wanted. The properties I was looking at then were worse areas and overall quality and mostly needed completely gutting.
Now I find my 185k ish budget is getting me things I would have jumped at the chance of when I started looking. There are two properties I am interested in right now. One is asking 179k and the other 165k. Both are mid terrace with a garage and practically identical. I think the 179k house is nicer but overpriced by comparison. Those houses seem to be worth about 170k right now so would want the 179k house to move a fair bit. 165k seems to be champing at the bit to move and is pushing a new low for the area and would probably still negotiate.
In terms of mortgage I have spoken to a few independents and a few banks. They seem confident they can lend to me and I don’t mind what the monthly will result in. In fact it's less than a workmates rented flat. I think that could be down to getting over the magic 25% deposit upfront after some hard saving. The real beauty is they do some insurance that means in the case of redundancy you get 133% of the mortgage paid for 12 months so I don’t think fear of job security is really a reason not to do anything.
I have looked at previous sale prices and the data seems to omit 08 and 09 but looking back they are getting the sort of money they were in late 2003/4 and I would estimate down 30-40k from their peak.
On the one hand I think on a long enough time line I can't really lose and the money they are asking is pretty reasonable. On the other hand in the 'have we hit the bottom?' thread there was a prediction of another 55%. That sees a bit far to me as in real terms that means I could practically walk up and buy outright if that fall happens. I guess I just don’t want to buy now and find out I could have got something even better if I had waited.
I was really happy looking round thinking I could see myself here and it has everything I want, but the more I think the more I fuss and just can't decide what to do.
How will you feel if you buy the house and it halves in value?
If you would not care then buy it*
If you would care, then pay attention to the 'investor side' of the discussions as you are treating your house, at least partly, as an investment.
IMO.
*Make sure you can cope with 15% interest rates
If you would not care then buy it*
If you would care, then pay attention to the 'investor side' of the discussions as you are treating your house, at least partly, as an investment.
IMO.
*Make sure you can cope with 15% interest rates
We're probably not far off a turning point of the current lows as recent data is starting to show.
Whether this is a temporary reprieve before more falls later in the year (another round of write-downs similar to sub-prime), or a genuine recovery, quite simply nobody knows.
If you're looking to buy long term, what you pay doesn't matter all that much, if it falls by 20% in the next year, it will rise by 50% over the next 10 years anyway, so who cares. Prices only matter if you're buying or selling.
You might pay to give it another 6 months, prices are hardly going to rise by what they've fallen recently in such a short time. The recovery will be gradual when it comes, no doubt peaking to another boom in a few year's time. Being gradual, you should have plenty of time to play it prudently.
If you're mortgaging, it's definitely not the time to buy, money is expensive at the moment, and that has to change before the market recovers.
At some point in the future, money will be cheap, houses will be cheap, and if you catch it at the right time, you'll do well.
Whether this is a temporary reprieve before more falls later in the year (another round of write-downs similar to sub-prime), or a genuine recovery, quite simply nobody knows.
If you're looking to buy long term, what you pay doesn't matter all that much, if it falls by 20% in the next year, it will rise by 50% over the next 10 years anyway, so who cares. Prices only matter if you're buying or selling.
You might pay to give it another 6 months, prices are hardly going to rise by what they've fallen recently in such a short time. The recovery will be gradual when it comes, no doubt peaking to another boom in a few year's time. Being gradual, you should have plenty of time to play it prudently.
If you're mortgaging, it's definitely not the time to buy, money is expensive at the moment, and that has to change before the market recovers.
At some point in the future, money will be cheap, houses will be cheap, and if you catch it at the right time, you'll do well.
FTB houses are selling in DAYS here which suggests to me they've reached the point where people are happy to buy. If you don't then someone else will. If you are buying a home then go ahead, if it's an investement then i'd wait and see what happens for 12 months. Prices are unlikely to rise any time soon, whether that can be said for interest rates nobody knows......
I'm really pleased for you Buzz word. I hope you are indicative of other younger people, who are now getting into a position to buy at sensible prices. It is heartbreaking that so many first time buyers, bought into those crazy prices of the past several years. You are quite right to look at the price of renting vs. mortgage costs. It may well be that prices have further to fall and the venders will be aware of this also. Don't feel awkward about making a low-ball offer, to reflect the anticipated future price drop.
The potential for rates to increase does concern me. The trackers are still cheapest at ~4%+BOE. However the Fixed I can get at 4.19%. I favour the fixed. Something in the region of 5 yr fix at that point which would hopefully cover any brief high figures on the recovery.
In terms of would I be bothered if the house fell in value I guess I would be but only in the same way you would be if you bought a pair of shoes and the next day you see the same thing on sale. You would be annoyed you didnt get the best price but still happy with what you have.
In terms of would I be bothered if the house fell in value I guess I would be but only in the same way you would be if you bought a pair of shoes and the next day you see the same thing on sale. You would be annoyed you didnt get the best price but still happy with what you have.
Dave_ST220 said:
Fix for 10 years IMO, in 5 years rates are likely to be high(IMO of course). 55% drop? No chance, 12-15% more max i think.
I'm splitting that difference. I reckon there is another 35% to come off where we are today.£108K for the average, at its lowest point in the trough.
No, a lot further to fall in my view.
The economy is not going to be showing real signs of a recovery for a couple of years. I think there's a very real danger that those buying now will find themselves in negative equity within months and with potentially high interest rates in the next few years to curb inflation.
How would you feel with a £170k mortgage, on a house worth £100k, with interest rates at 10% (~£1,100 per month)
The economy is not going to be showing real signs of a recovery for a couple of years. I think there's a very real danger that those buying now will find themselves in negative equity within months and with potentially high interest rates in the next few years to curb inflation.
How would you feel with a £170k mortgage, on a house worth £100k, with interest rates at 10% (~£1,100 per month)
There is, of course, a huge difference between a fall in house prices in nominal terms and a fall in house prices in real terms. Houses could arguably be a great (but not as good as commodities) hedge against the 25% inflation we'll be having in a couple of years time...
Edited by Somewhatfoolish on Tuesday 24th March 13:35
Muncher said:
How would you feel with a £170k mortgage, on a house worth £100k, with interest rates at 10% (~£1,100 per month)
Yea that would be a problem. I would be looking at borrowing more like £120-130k. But a monthly rate that high could well be hard to weather. I think that much just on morgage would see me just about covering bills and that is all. At the moment its looking like £600-700 per month which is ~1/3 of my net.Gassing Station | Homes, Gardens and DIY | Top of Page | What's New | My Stuff