...or perhaps not buying a house after all

[ciphergoth]

...at least for a while.

Met up with babysimon at BU last night. He made a *very* persuasive case that now is not a good time to buy. Various folk made the opposite case, but his was backed up with detailed quantative historical data. I'm sore about it, but I'm convinced. It's sad but at least it means I'll be able to get a rather better property for the same money when the crash comes.

Just spoke to an investment advisor, who said if I was only investing for a year or so and then hoping to buy property, I should put my deposit in bonds. I'll also of course put the maximum I can into an ISA. It'll keep 'till I need it.

So I guess I'm looking to rent once again... but we're not in a hurry.

Comments

pedantry alert (sorry)

[ajva.livejournal.com]

I have to take issue with the logic here.

You say that he might not be able to get a better place for the same money.

But what you then give is two reasons why he might not be able to raise the same amount of money, rather than why the same amount of money wouldn't buy a better place.

What if he doesn't lose his job? What if he was never planning to stretch outside the traditional lending criteria in the first place?

These 'what if?'s don't seem too big to me...

Re: pedantry alert (sorry)

[ergotia.livejournal.com]

Pedantry no problem, I just think none of you are old enough to remember the last time we had a recession with really serious unemployment, the sort that effects the middle classes. In a situation like that all this speculation about buying now or waiting for the slump is irrelevant, whether you are "lucky"" enough simply to be unable to buy a better place for the same money or unable to buy a place at all. And my point about lending criteria is that in a slump "traditional" lending criteria cease to exist...

But as I say, simply not convinced - quite willing to be :)

Re: pedantry alert (sorry)

[ajva.livejournal.com]

OK, I certainly won't object to your basic points but answer me this:

If one loses ones job in a major slump following on from a housing market crash, why would it be better to be carrying an enormous mortgage debt than not?

[ergotia.livejournal.com]

Well, it never makes sense to be carrying an enormous housing debt, hence standard advice to put down the biggest deposit you can, not commit more than a third of your salary to the repayments, and go for a straight reepayment mortgage, but I think my basic point is that in a worst case scenario none of it makes much difference. If you can keep scraping together your mortgage payments you can sit out a slump, which is why your most basic calculation should be the third of your salary one (on the basis that if you lose your well paid job which allows you to live comfortably on that ratio of disposable income to mortgage payment you will struggle through with a job that tips the ratio nastily). If you cant you are fucked and have to live in rented property on housing benefit.

Re: pedantry alert (sorry)

[babysimon]

If I was rendered suddenly unemployed, I'd rather be living in a rented flat I could walk away from, than have to give the bank a cheque for £70,000 to be allowed to sell my house.

Re: pedantry alert (sorry)

[purplerabbits.livejournal.com]

Indeed, since there is still such a thing as housing benefit...

Re: pedantry alert (sorry)

[thekumquat.livejournal.com]

Good point.

[ergotia.livejournal.com]

Where would you walk to? Cheaper rented property/friends/the street, same as in house scenario. You are gambling on buying in a slump and having sufficient equity by the time the next slump comes to sit it out , right? My only point really is that it is all a gamble.

[babysimon]

Yeah, but I wouldn't owe the bank a huge sum of money in the process!

It is all a gamble, certainly. That's one of the worst things about it. But the odds on the gamble change constantly, and I think they're very bad now.

Anyway, I don't want to be arguing with you, particularly over house prices. We may just have to agree to disagree.

[ergotia.livejournal.com]

Oh, absolutely : )

xxxxx