House value dropped - what happens now?

[MagicalTrevor]

I'm a bit confused about moving house when in negative equity.

We bought our house at, what we now discover to be the peak of the market. We didn't max out the mortgage and we were fairly sensible a out what we bought. The payments are comfortable and not a problem at all.

So let's say we wanted to move house. The amount we owe is more than the value of the house and we don't have 'house buying' levels of savings to get us back to a neutral equity level. What happens in this situation, I'm afraid I'm a bit confused about it all and would appreciate some guidance.

Cheers

[MagicalTrevor]

ringram said:

Exactly the issue in the US. People cant move.
Or they can but end up locking in their losses.
If you have to move and have done your sums you may need to rent and pay off the debt.
Im sure someone else will advise.

It's just frustrating that we did 'the right thing' in having a deposit where others were maxing out their mortgages and putting no deposit down

[MagicalTrevor]

The house dropped 25%!

Basically; developer built the street (3 bed houses) and was renting and selling them as time went buy. He's now struggling with cash-flow (so I believe) and has therefore dropped the price of the final house in his portfolio just to get shot.

I imagine he'll still make a profit on the final house and doesn't care that it devalues the entire street. There is nothing I can do about that, his house, up to him what he sells for.

So we now have a house that the developer himself has devalued lower than the Market average and has screwed us over.

If it was just a drop inline with the market then we could deal with that and move on.

[MagicalTrevor]

Cheers everyone.

We don't NEED to move, we'd simply like it if we could. Looks like we'll just have to hang tight. As I said, the mortgage is comfortable so the house isn't a burden at all.

I guess we should just simply look to reduce the negative equity as much as possible?

[MagicalTrevor]

groak said:

MagicalTrevor said:

The house dropped 25%!

Basically; developer built the street (3 bed houses) and was renting and selling them as time went buy. He's now struggling with cash-flow (so I believe) and has therefore dropped the price of the final house in his portfolio just to get shot.

I imagine he'll still make a profit on the final house and doesn't care that it devalues the entire street. There is nothing I can do about that, his house, up to him what he sells for.

So we now have a house that the developer himself has devalued lower than the Market average and has screwed us over.

If it was just a drop inline with the market then we could deal with that and move on.

You could be worrying about nothing. The developer has basically created 'forced sale' conditions by reducing price artificially to generate a fast sale. That doesn't mean your house is worth what he has to take to get rid of it quick, unless you need to get rid of yours quick too (which you don't).

I personally think that the true market is between 10% - 12% less than what we paid. I'm just worried that him selling this house for 25% less then he's setting the value of the other houses down there as well. Other people aren't going to appreciate that it was a 'forced sale' and they're not going to want to pay more for what they perceive as the same house in the same circumstances.