ciphergoth | ...or perhaps not buying a house after all

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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.

Flat | Top-Level Comments Only

From:

webcowgirl.livejournal.com

The strongest argument I know for renting over buying is when you can find a rental at a really good rate. Here in Seattle, a mortgage on a moderately-priced condo at $200K will run you some $1500 a month over a 30 year term, with $100 each property taxes and insurance figured in. A $900 a month apartment is cheap by comparison if you are smart enough to take the difference and invest it wisely (I'm not that smart). It takes years before the amount you earn in equity actually adds up to something; after four years our equity in our house amounts to some $6K, whic is just crap. On the other hand, thanks to inflation and a low initial price our house has gained 50% in value since we bought it. But even though we live in a skanky neighborhood, we still can't sell it and move to something nicer, since the houses in the other neighborhoods have all gone up just as fast.

I'm very curious about what arguments your friend used against buying now. I think the very best one TO buy is the very low interest rates available now, as they can save you hundreds of dollars on a monthly basis, but I have no idea what the situation is like on your side of the Atlantic, either for rents or for mortgage financing.

From:

babysimon

I think the very best one TO buy is the very low interest rates available now

In the US, most mortgages are 25/30 year fixed, right?

In the UK, almost all mortgages are variable or fixed for a few years at most. Yet people are still paying twice as much for property because current interest rates have halved. When rates go up again, these people will be hurting badly.

From:

webcowgirl.livejournal.com

15 or 30 fixed are very popular, interest rates currently are 5.125%/5.5% (I stopped looking at them daily so I'm not sure). I would never get into an adjustable rate mortgage - but I've got the option not to. They really could be deadly.

Current low interest rates have allowed property prices to creep up in the US because people can still pay the same per month for a house as they would have when rates are higher. Is that what you're saying is happening in the UK, too?