And what is you opinion based on? You are making out like it isn't an opinion so I assume you have facts to back this up?
I don't know anyone that didn't buy a more expensive house than they could have got in the area. I'm sure some people buy at the very limit of their budget which just coincides with the cheapest housing in an area but thats uncommon from what I have seen. They bought the house because it was what they wanted and they thought they could afford it. Not because it was the cheapest house available. These were all first time buyers as well.
The cheapest houses are always in the ghetto/slum regions or don't suit people's needs (i.e they are poor value). When looking to buy people first eliminate houses that don't meet their essential requirements (driveway, nr bedrooms, area etc) and then choose out of what is left and then added value is evaluated alongside this. When you look at the price of houses it doesn't take much to estimate what salary would be needed to buy it and thus it is fairly easy to estimate that not many first time buyers can go above the range of the cheaper houses in an area in the first place.
I guess your view that people could buy cheaper could be applied to a home mover rather than a first time buyer. Home movers will have built up some equity so they could decide to buy cheaper but mostly they don't because they want to upgrade from the house they already have which is the whole point of moving in the first place otherwise they'd just stay put.
I agree, I cannot think of a single person I know that could not have purchased a cheaper property.
Yes it might have been a flat as opposed to a small house, or a 2 bed instead of a 3, or a semi instead of a detached etc.
But we're not talking about sacrificing your essential needs to buy a place that isn't suitable, that would be a stupid decision. Yeah I could have bought a flat in a ghetto for half the money but its not suitable. Its reasonable to expect some compromise, and first time buyers normally have to compromise (most are not loaded), but its very unfair of existing homeowners, I think, to expect people to buy crapholes which is what you seem to be suggesting they do to save money.
I use myself primarily as the example in this. If you accept that I couldn't move area (reasons for this that don't need to be stated here for brevity), and you accept that a certain minimum standard of house was required (again, for reasons), then I bought the cheapest house I could, which was at the max of my budget and I earn a decent wage which is above average. The only way I could have bought cheaper was to accept sub-standard and that in my opinion is not a fair expectation on people. There is a major difference between expecting something gold plated or accepting something fundamentally sub-standard (which many many houses are). Just to add we're not talking a +/- a few percent here, most people will search within a budget range. If we're talking making a fundamental difference to financial outlay then we're talking at least +/- 10-20% difference from maximum. I bought a house at £250k - there is barely anything for sale that isn't a craphole for £200k or less. The house I bought was on for £230k and I had to overbid to get it, having previously being outbid on houses in the £220-230k range by other people bidding £10k over or more. Unless you're in the market lately you really don't know what its been like.
There are Im sure people who could have bought cheaper, who had more money available and I guess do buy at their maximum, but I would say from my own experiences that a lot of people also have little choice but to spend up to their max budget getting a
suitable place.
Im focussed on FTB here because existing homeowners generally have much more of a choice. They already have security, already have equity and a lower mortgage than would be the case for an FTB. Its FTB that are forced into the buy expensive or rent expensive impossible decision and its them that are going to suffer first when rates go up.
