Current public sentiment towards the housing market?

[MadPad]

But the absolute increase is smaller.

100k @ 9% interest (charged annually) = 9k
100k @ 14% = 14k (5k per year increase in interest payments)

100k @ 2% = 2k
100k @ 4% = 4k (2k per year increase in interest payments)

The more you borrow the more pronounced that absolute differential will be (and the better off you are at lower absolute interest rates!).

nice difference of perspectives ... when buying something

Some people's gut instinct is to start by looking at the repayments often only at current interest rates.
Others look at the price and the size of the loan, the initial rate of interest is not the deciding factor

Either way houses arent cheap

 

[whathome]

But the absolute increase is smaller.

100k @ 9% interest (charged annually) = 9k
100k @ 14% = 14k (5k per year increase in interest payments)

100k @ 2% = 2k
100k @ 4% = 4k (2k per year increase in interest payments)

The more you borrow the more pronounced that absolute differential will be (and the better off you are at lower absolute interest rates!).

You also have to take the purchase price into consideration. If the starting point for interest rates was 9%, the purchase price of the property would be far less. So using a relative increase comparison as BigM did is more relevant.

This thread is supposed to be a Great Financial Debate contrarian posters (like andy) should be welcomed.

I think it's indicative of the change in sentiment over the past few months that someone with a bullish viewpoint on property could be described as "contrarian"

 

[Sidewinder]

I think we'd all agree there's no chance of continued double digit growth...but stagnation or small growth in preferable locations gets my Taurian vote!

Stagnant prices means no capital appreciation, with gross yields of 1-2%.

That's 40% of demand (the investors) up in smoke right there.

 

[Duplex]

Re: Could it happen here................??

If sales are falling too, you won't hear me complain at all.

Although, the evidence you presented in that link there is maybe not up to the usual standard!

Its a fair cop Remix.

Also worth noting that builders incentives are not ‘analyzed’ out of the sales price by the Census Bureau in arriving at these stats. And cancellations are not accounted for either.

Sales are reported when a contract is signed, not at the closing of the sale. Home builders have reported a large increase in cancellations in recent months.

The government cautions that its housing data are subject to large sampling and other statistical errors. Large revisions are common.
The standard error is so high, in fact, that the government cannot be sure sales increased at all in September. The 5.3% increase is statistically meaningless compared with the 15.6% confidence interval.
It can take up to six months for a trend in sales to emerge. New-home sales have averaged 1.10 million per month over the past six months, roughly unchanged over the past four months. The six-month sales average is now down 15% from December.

http://www.marketwatch.com/News/Sto...3D-4D5D-84D5-656D6733EE90}&siteid=google&dist=

 

[partisan]

It depends on a lot of other factors... if you borrowed at say 7 and were stress tested to 9 then the jump to 14 is tough
but werent we all told to stress a couple of percentage points increase so a 2 to 4 jump should be no worries...

I'm bearish and i think there were 2 really significant pieces of news today that means the slowdown is now public and will get worse.
But the smug certainty of the bears is annoying, not just this poster, the whole "everthing is sh__" mentality... the responses are so dogmatic its almost a religion to you guys...

still reckon the smart bulls will do much better whether prices go down or up, a positive outlook is always better than whinging

Sittting on the sidelines when everyone else is taking risks isn't a recipe for financial greatness - safety yes, untold wealth - no...

 

[Sarsfield]

So where are these 275,000 empty houses? I believe this has a very significant influence on whether the whole market takes a dive or whether it's the ill advised investor who's going to take the big hit.

If some crappy speculative developments in the back of beyond are finally recognised for what they are, but solid, well located properties maintain their attractiveness, does this count as a crash? The average price of houses may drop, but the 'crash' may be localised. Trophy houses in D4/D6 may suffer the same fate.

But the people in the middle, most ordinary Joes, may see little change?

 

[whathome]

Sittting on the sidelines when everyone else is taking risks isn't a recipe for financial greatness - safety yes, untold wealth - no...

Why do you think you have to take risks to build wealth?

I definitely don't sit on the sidelines. I definitely don't take risks.
untold wealth no, not yet anyway! .... we live quite comfortably and I don't have to "work"

Saying that you have to take risks to build wealth is rubbish. My most profitable investments were initiated where I had little or no risk.

 

[partisan]

Why do you think you have to take risks to build wealth?

I definitely don't sit on the sidelines. I definitely don't take risks.
untold wealth, not yet.... we live quite comfortably and I don't have to "work"

Saying that you have to take risks to build wealth is rubbish. My most profitable investments were initiated where I had little or no risk.

I agree, it is rubbish - which is why I didn't say it. You won't build "untold" wealth that way. Even deposit accounts have outperformed inflation over the long run...

 

[whathome]

I agree, it is rubbish - which is why I didn't say it. You won't build "untold" wealth that way. Even deposit accounts have outperformed inflation over the long run...

So what were you trying to say then?
Maybe you could also define "untold" for us?

 

[Open_Window]

So what were you trying to say then?
Maybe you could also define "untold" for us?

Well I believe that only the universe has untold wealth and it is the property of no one. Will that do?

 

[whathome]

Well I believe that only the universe has untold wealth and it is the property of no one. Will that do?

perfect

....still waiting on partisan to explain what he was on about, it sounds like he thinks that taking risks is a recipe for "financial greatness"?
With property in Ireland currently overvalued by any fundamental measure, taking a risk on purchasing an investment property is a recipe for financial disappointment IMO.

 

[zac]

Why do you think you have to take risks to build wealth?

I definitely don't sit on the sidelines. I definitely don't take risks.
untold wealth, not yet.... we live quite comfortably and I don't have to "work"

Saying that you have to take risks to build wealth is rubbish. My most profitable investments were initiated where I had little or no risk.

I think if someone had a profitable investment and thought there was no risk when position was initiated (provided it was not a savings acc insured by somebody) then he got lucky.

 

[whathome]

I think if someone had a profitable investment and thought there was no risk when position was initiated (provided it was not a savings acc insured by somebody) then he got lucky.

Why do you think it was luck?

Buying undervalued revenue creating assets, whether they are equities or property ensures that risk is minimised while potential gain is maximised. I just don't get the "you have to take a risk to make a good return" thing.

Property markets are cyclical. Right now the Irish property market provides maximum risk for minimum reward (if any) - not a good buy! And it's not about timing the market, it's about analysing your potential investment on a fundamental basis.

 

[Open_Window]

It seems to me that a lot of the recent articles by industry and commentators, resembles the kind of pressure usually put on the next batch of newbies who seem doubtful or quickly want to leave the recent "Pyramid scheme" they got involved in but suddenly threaten the continuing supply of cash, or fundamentally speaking the entire charade itself.

Its rather telling, pathetic.

 

[fatmanknows]

Just browsing at some of the big Gaffs for sale on Myhome.ie. Noticing a number of them are now appearing with no mention of price (although they previously had one). I believe this is the new way of disguising the reduced price. You gotta ring them to sound out their new acceptable offer. Obviously they dont want to spook the market by publicly displaying their reduction.

 

[whathome]

It seems to me that a lot of the recent articles by industry and commentators, resembles the kind of pressure usually put on the next batch of newbies who seem doubtful or quickly want to leave the recent "Pyramid scheme" they got involved in

The pressure to "come on in" reminds me of this guy:

[broken link removed]

 

[Maine]

But the absolute increase is smaller.

100k @ 9% interest (charged annually) = 9k
100k @ 14% = 14k (5k per year increase in interest payments)

100k @ 2% = 2k
100k @ 4% = 4k (2k per year increase in interest payments)

The more you borrow the more pronounced that absolute differential will be (and the better off you are at lower absolute interest rates!).

Assume the person was on 50k

In the 9% days he would have probably got a 50k mortgage on average, max of 75k. = 9% by 75k = 6,750

In the 2% days the 50k person got a mortgage of 300k = 300 by 2% =6,000

9% to 14% - 10,500 or increase of 3,750

2% to 4% = 12,000 or increase of 6,000

The big change is that once a bank manager had a conversation regarding uncertainties and 20 year terms, now the conversation is more around his targets to lend more money and can you get someone in the HR dept to look again at what your max bonus would be in a great year and maybe you could rent out the garden shed to tourists so that could be also added to the income side.

 

[roland]

whathome: "Why do you think it was luck? Buying undervalued revenue creating assets, whether they are equities or property ensures that risk is minimised while potential gain is maximised. I just don't get the "you have to take a risk to make a good return" thing. "

Hmmm....talk about 20/20 hindsight. 'Undervalued revenue creating assets' in the form of equities or property have risks attaching no matter what they are. Sure, some might be a 'safer bet' than others, but you were still at the mercy of many factors outside of your control (market forces, economic shocks, fraud, incompetence etc.). You may have done well but I wouldn't fool yourself or us that you were not taking risks.

 

[Maine]

[broken link removed]

and the spin from sherry fitz.

IMO the S Fitz article is a shocker, the uber bulls coming out to say a slowdown in prices is a good thing - what will they say to all the investors ?? Its certainly a big change from what Finnegan was saying only recently.

How many redrafts of that article were reviewed in S Fitz before they sent it to the Irish Times. Hazard a guess at maybe 15.

 

[whathome]

Hmmm....talk about 20/20 hindsight. 'Undervalued revenue creating assets' in the form of equities or property have risks attaching no matter what they are. Sure, some might be a 'safer bet' than others, but you were still at the mercy of many factors outside of your control (market forces, economic shocks, fraud, incompetence etc.). You may have done well but I wouldn't fool yourself or us that you were not taking risks.

"Risk comes from not knowing what you're doing" - Warren Buffett

Even cash is at the mercy of many factors outside of your control.

I should explain it better, I'm talking about making investments with little or no "relative" risk. It takes time and a lot of patience but there are plenty of low risk investments that provide an excellent return. It's a shame that many Irish investors can't see anything beyond property.

It's not about hindsight, even today I added to an excellent equity investment that has very little risk. Once I'm sure that the market has misappraised my potential purchase, I don't give it a second thought - buy with confidence and then forget about the market. If the stock market crashed tomorrow, I'd just see it as a great opportunity to buy more potentially undervalued assets.