House prices..

[jamief]

In regards to JamieF

My house was valued by two seperate surveyors at a cost of £125k

I had several offers ranging from £90k to £110k which I finally accepted.

Please tell me how that means the value of my house has not gone down?

How long between valuation and selling.

Was it a surveyor or an estate agent that valued your house? Because both will give you vastly different prices - Estate Agents give you a guess (in effect), based on what similar properties have sold for. Surveyors give you a value for mortgage purposes, which is what they believe the house is worth.

And of course this is all by the by, because of course it's possible for localised areas (or individual houses) to lose money - just as a whole the housing market is not going downwards.

 

[Bar]

I think his argument is that the value of your house is being artificially inflated, and as such your house is actually worth more along the lines of £110k.

Worth is simply what anyone is willing to pay for something.

The classic analogy is a dehydrated man in the desert - whats worth more his weight in water or his weight in diamonds?

House prices are worth what people are willing to pay for them not what someone thinks the value is.

Three months ago people were buying houses identical to mine and paying £125k. The simple fact is that house prices have fallen. My personal opinion is we will not see a recovery until Q3 2008.

 

[Bar]

How long between valuation and selling.

Was it a surveyor or an estate agent that valued your house? Because both will give you vastly different prices - Estate Agents give you a guess (in effect), based on what similar properties have sold for. Surveyors give you a value for mortgage purposes, which is what they believe the house is worth.

And of course this is all by the by, because of course it's possible for localised areas (or individual houses) to lose money - just as a whole the housing market is not going downwards.

Time was 2 months between valuation and selling.

With repossessions on the increase, mortgage approval rates dropping, lenders increasing lending criteria and less people buying houses - how can this result in anything other than a drop in house prices.

 

[The Mad Rapper]

House prices will fall and they will fall significantly. It's no secret housing is massively overvalued in the UK, and as lending has tightened significantly, people will simply be unable to obtain a mortgage large enough to buy the house they'd like.

Houses are staying on the books longer than ever and vendors will be forced to reduce their asking prices in order to complete the sale.

The credit crunch is just beginning, it hasn't ended. The days of cheap mortgages are gone. As the impact of this sinks in and starts to worsen, so fewer people will be able to raise the mortgage to buy and fewer homes will sell, leading to a more severe price drop.

IMHO of course

 

[div0]

How long between valuation and selling.

Was it a surveyor or an estate agent that valued your house? Because both will give you vastly different prices - Estate Agents give you a guess (in effect), based on what similar properties have sold for. Surveyors give you a value for mortgage purposes, which is what they believe the house is worth.

And of course this is all by the by, because of course it's possible for localised areas (or individual houses) to lose money - just as a whole the housing market is not going downwards.

Your assumption seems to be that what a surveyor 'values' at house at, is the same thing as what the house is worth.

The house is only worth what people are prepared to pay, it doesn't matter whether God himself 'values' the house at a certain price.

Surveyors can carry on 'valuing' houses at higher and higher prices all they want, but if it gets to the point where the best offer you can get for a house is 3 beans and a loaf of bread, then I think even you would have to accept that the market is in decline!

Oh and I'm not trying to say that the housing market is currently in decline. Just that your arguments, for why it isn't, are completely flawed.

 

[HEADRAT]

people will simply be unable to obtain a mortgage large enough to buy the house they'd like.

So where are they going to live, under a rock? They will have to rent meaning that the buy-to-let market will be strong and hold up house values, it's about supply and demand.

There simply aren't enough houses built in this country to supply the demand for housing either rented or residential.

HEADRAT

 

[Haircut]

So where are they going to live, under a rock? They will have to rent meaning that the buy-to-let market will be strong and hold up house values, it's about supply and demand.

There simply aren't enough houses built in this country to supply the demand for housing either rented or residential.

HEADRAT

Why do you say that?
What if BTL landlord can't get the mortgages either?

How is it that rents have not risen anything like as much as house prices if we have such a shortage of houses?

Also, why did the USA experience a massive price rise when they built more than enough houses to meet demand?

 

[div0]

So where are they going to live, under a rock? They will have to rent meaning that the buy-to-let market will be strong and hold up house values, it's about supply and demand.

There simply aren't enough houses built in this country to supply the demand for housing either rented or residential.

HEADRAT

That assumes that there are enough BTL'ers to buy up every house that comes on the market, and then rent it back to someone.

I don't think this is likely to be enough to keep supply such that you could avoid a crash.

 

[HEADRAT]

Well if the demand for rented accommodation spikes from all of the people losing their houses and not being able to buy etc. I'd expect the rental market to be very healty indeed.

People bought because for a long time it was almost as cheap as renting and it became much easier to borrow, for those people the party is over, they couldn't really afford to buy and weren't really credit worthy so their bubble has burst.

 

[The Mad Rapper]

So where are they going to live, under a rock? They will have to rent meaning that the buy-to-let market will be strong and hold up house values, it's about supply and demand.

There simply aren't enough houses built in this country to supply the demand for housing either rented or residential.

HEADRAT

Clearly they shall either have to stay in their current mortgaged home, rent or move in with friends/family.

The BTL market is not strong and will only weaken. Rental income is less then mortgage outlay, this will get worse when the current BTL landlords try to get another fixed rate deal, as the majority of the BTL mortgage providers have now left the market.

There are one million homes sat empty now, so please stop wheeling out the same tired arguments. There is no problem with supply, there are plenty of homes sat empty and there are plenty for sale, the issue is that those for sale are massively overvalued.

 

[The Mad Rapper]

Well if the demand for rented accommodation spikes from all of the people losing their houses and not being able to buy etc. I'd expect the rental market to be very healty indeed.

People bought because for a long time it was almost as cheap as renting and it became much easier to borrow, for those people the party is over, they couldn't really afford to buy and weren't really credit worthy so their bubble has burst.

Well you're wrong - sorry.

The evidence is everywhere, spend some time and do some research. BTL landlords will not continue to stay in the game if their rental yields do not cover their mortgage!

They will sell and try and realise any capital appreciation in their portfolio, but the paradox is that this will simply provide a glut of housing on an already surpressed market forcing prices down even further.

 

[The Mad Rapper]

Why do you say that?
What if BTL landlord can't get the mortgages either?

How is it that rents have not risen anything like as much as house prices if we have such a shortage of houses?

Also, why did the USA experience a massive price rise when they built more than enough houses to meet demand?

At last, a man who can see the true situation.

 

[Haircut]

At last, a man who can see the true situation.

Well I used to be pretty positive about things, even posting a thread on here a while ago stating how house prices weren't overvalued and they would keep on going up.

The more research I do into things the more this looks like a vast, unsustainable bubble though.

 

[HEADRAT]

If a BTL landlord has a decent portfolio they will have no problem getting credit.

The large increases in price in the US are only in certain areas, large City's such as San Francisco and Seattle have seen massive price rises, you can buy a house in Utah for next to nothing!

HEADRAT

 

[carpmaster]

According to the information coming from pretty much all the sources available that I can find, the BTL mortgage sector has pretty much dried up now. It used to be possible to obtain a BTL mortgage for the whole cost of the property (or a large part of), move in some tenants, pay the mortgage with their rent and pocket a few quid every month while watching the market value of the house increase every month.

At the moment the yield is so poor that capital appreciation is the only thing left. Now it's clear that this has come to an end with prices actually falling, many BTL people are quietly selling up (auctions are currently booming).

Many BTL are yielding less than 4% and that's without any voids, upkeep costs etc. Quite clearly with such a low yield it's only worthwhile when the market is surging upwards. Now even the banks are saying houses will fall significantly, it's a no brainer for most BTL people to sell up and take whatever equity is left.

Some will be able to ride the storm, if they have been in the BTL game for many years and bought the property for a good price.

Headrat - Having a large portfolio doesn't make a difference to whether you are going to get credit. It's how leveraged they are that's the key. if they can stump up a large part of the property price in cash, sure they will be fine getting a BTL mortgage on the rest. Most though are highly leveraged and it's just far too risky for the banks now.

 

[HEADRAT]

That's why I said "a decent portfolio", if you're leveraged upto the eyeballs and have little or no equity then you're stuffed.

 

[carpmaster]

That's why I said "a decent portfolio", if you're leveraged upto the eyeballs and have little or no equity then you're stuffed.

Portfolio isn't really the word you're looking for then. A decent portfolio doesn't give any indication of how leveraged that person is!

 

[aardvark]

If a BTL landlord has a decent portfolio they will have no problem getting credit.

northern rock couldn't get credit - a very large number of banks are having difficulty getting credit - BTLers are totally screwed, they are so stupid they don't realise yet.

 

[borichnuke]

Speaking as a town planner most of the flats in my borough are being brought by Btl,but there are so many of these there just is'nt the tenants to fill them and this is going to cause landlords a serious problem in the future.

Borich

 

[HEADRAT]

Portfolio isn't really the word you're looking for then.

So what should I have used then?