US to let housing market fall off the edge?...interesting.

[RDMcG]

http://www.nytimes.com/2010/09/06/business/economy...

Not good for existing home owners, but might make long term economic sense.

[Plotloss]

Interesting.

I'd say a similar adjustment is needed here.

However and I'm not sure if this is the case in the US, a lot of lending is secured on residential properties in the UK, not just mortgages but business lending as well...

[rs1952]

RDMcG said:

Not good for existing home owners, but might make long term economic sense.

This is a point I could never understand. Somebody please tell me why people think that rising house prices are a good thing?

The only time you personally will make any money out of your house price rise is if and when you downsize. If you take out extra borrowing on the back of your house price rise, you've still got to pay it back - you're just using the value of the house to back the loan. The only people who make more money if house prices rise are estate agents and solicitors, which I doubt many of us have much sympathy for (unless you're an estate agent or a solicitor ), and those who you leave your property to when you shiffle off - you might have some sympathy for them but you won't be around to tell 'em.

Negative equity is only a problem if you try to sell when you're in that position. If you stay where you are, its a paper loss only, and presumably you could afford to pay the mortgage you took out, so you just keep paying it. Try thinking along the lines that if you were renting, the money would be going into a bottomless pit that belongs to somebody else anyway. If you can't afford to keep paying the mortgage, welcome to the consequences of capitalism

If the value of my house falls from £200,000 to £20,000, and the value of the £250,000 house I want to buy has fallen to £25,000, that means I have to borrow an extra £5k to buy it, not £50k as I would have done had house prices not fallen.

Am I missing something? Or is my logic akin to "when things get hot they expand, that's why the days are longer in the summer than they are in the winter"

[princeperch]

anonymous said:

[redacted]

my mates dad (who happens to be a surveyor of some 40 years experience) is getting things in a line to buy a couple of villas out in florida.

I have yet to see the exact properties but I understand he is paying 40k gbp a piece in a gated community. These were changing hands at the top of the tree at about 300k gbp apparently...

[RDMcG]

princeperch said:

anonymous said:

[redacted]

my mates dad (who happens to be a surveyor of some 40 years experience) is getting things in a line to buy a couple of villas out in florida.

I have yet to see the exact properties but I understand he is paying 40k gbp a piece in a gated community. These were changing hands at the top of the tree at about 300k gbp apparently...

46% of all homes in FLA are in negative equity. Stuff is very cheap there. Nevada is worse.

[Targarama]

The article says "The unexpectedly deep plunge in home sales this summer is likely to force the Obama administration to choose between future homeowners and current ones, a predicament officials had been eager to avoid. "

I read this as current voters or longer term future voters. So I think I know the answer.

[princeperch]

anonymous said:

[redacted]

The funny thing is he doesnt even intend on renting them at the moment. He is happy to let them sit there (with an eye on them to ensure they dont become squats) for the while, and flog them off in a few years.

It's risky, but if he has played it right, he could be richly rewarded for the size of his balls in a 7-10 years time.

If he has got it wrong, well, he is a baby boomer. They have plenty of cash to take such a risk with, after having pulled the ladder up from all the 20 somethings like me

[ianash]

princeperch said:

anonymous said:

[redacted]

my mates dad (who happens to be a surveyor of some 40 years experience) is getting things in a line to buy a couple of villas out in florida.

I have yet to see the exact properties but I understand he is paying 40k gbp a piece in a gated community. These were changing hands at the top of the tree at about 300k gbp apparently...

I presume he has looked into the property taxes in Fla.