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Had a note from underlying-landlord through door today. The site is being redeveloped and I will need to find somewhere else to live by the end of December 2008. This is a shame, because I was actually quite liking it here. :
I will have to think about this for a bit. I found the idea of buying somewhere to live at what was hopefully going to be the top of the market absurd; but house prices are starting to fall already in London, and Waltham Forest looks really quite affordable (as well as being handy for work and for friends). But I'd be surprised if they bottomed out by December; and I don't want to lose out on a bear market. I had been saying that I would see how the market looks like towards the end of the year and decide then; I guess this is still the plan.
Update: Actually, looking at the other pieces of paper more carefully, they in fact want me out by September the 17th. Confusing. Will phone.Tags: flat
Yes, but if n > 150, this is an irrelevant calculation.
I don't know why people think of renting as somehow "lost money". In that way of thinking, paying the interest part of a mortgage is also "lost money". Also, even when you've got equity in the property or even finally own it outright, the equity in the house doesn't earn interest as it would if it was in the bank, so that's also "lost money" from owning a house.
For example, I've enough money that the interest on it more than covers my rent, quite easily, so I gain overall every month. But that money would only buy half a house, so if I did buy, I'd have to pay lots every month.
Owning property is way more expensive than renting, at present. And thats before you even start considering stamp duty, other fees, lease payments and repairs and maintenance. Or falling house prices.
|Date:||July 9th, 2008 02:23 pm (UTC)|| |
Yes - but you have to figure into the calculation how much your property value increases which is the analogue of the interest that your bank pays you. Here in the US property prices have taken a dip overall, but our house value has more than doubled in 10 years which seems like a pretty good investment.
As for the cost of owning - it certainly is more expensive from that point of view. I haven't sat down to calculate how much we have to pay out a month to cover the cost of yard updates, termite control, insect control, basic repairs and appliances, but I don't think it's all that bad. You get whacked every once in awhile with a big bill like needing a new roof, but you only have to do that once every 10-20 years depending on the roof you buy, so averaged out it's not so bad.
They've gone up here consistently in the UK the last 10 years, so much that I would describe it as a bubble. The credit crunch has started to deflate it. They have gone absolutely absurd and nobody can afford anything any more. The not particularly nice 2-bedroom semi I was living in in Tottenham in late 2006 sold for £313,000 in October! (It had been bought for £100,000 in January 2000). Lunacy!
Edited at 2008-07-09 10:25 pm (UTC)
"the equity in the house doesn't earn interest as it would if it was in the bank"
I inherited some money in 1997 and I bought a flat with it, with the help of a small mortgage. It's now worth at least three times what I'd have if I'd put the money in the bank and not touched it for 11 years, despite interest payments and all the rest. The last eleven years have been a bit unusual, though.
Walthamstow is cheap, niceish, cheap, ugly and cheap. And cheap. And not full of BNP, unlike Dagenham, the only place nearly as cheap.
5-15% drop estimated over 12 months (minus some existing drop), buy for 160k, "loose" 8-24k (plus some additional home-ownership costs), rent for 7-9k p/y one assumes, I'd wait.
*Not someone with a mortgage so take under advisement*
On the other hand, keep your eyes peeled; if you see a place that you like and is at a price that you're willing to commit to, take it.
Negative equity is going to be a fact of life for the next while, no matter when you want to buy, but bear in mind that not all residences are equal, so if there's one on the market today that suits you, and is at a price that you can handle paying a mortgage on, then seriously consider taking it and not looking back at what might have been because even if you try to play the markets to get a lower price, it may not be for a place of the same quality.
Also, with inflation as pretty much a given, the negative equity will only hang over you for a few years, meaning that so long as you can keep up the mortgage repayments during that time, you'll be grand.
Also, one of the reasons I'm saying all of this is so that you don't have to leave it to the last minute; December is one of the busiest, most tiring and most stressful months of the year, and tracking down, negotiating, buying, moving into and furnishing a new house is not going to ameliorate that situation.
At any rate, g'luck.
Of course, negative equity only really matters if 1) You're trying to sell or 2) You're in danger of foreclosure.
And that comment succinctly sums up a lot of what I was trying to say in that big longwinded post. Thanks. :)
Mortgages are becoming hard to get at the moment. Question is what ridiculous conditions are they imposing. I think quite a few are saying no 5%/10% deposit no mortgage.
|Date:||July 9th, 2008 02:25 pm (UTC)|| |
If you only had 5% deposit here in the US you basically couldn't get a mortgage from what I've heard. Banks are making sure there is enough equity in the property to cover the cost of repossesion if it happens. Totally sucks for first time home buyers.
Is Waltham Forest a real forest?
I live in Waltham forest! :) Well, not in the forest itself, but the forest is just down the road, and there's a boating lake and it's nice. I keep meaning to go there this summer if it ever stops raining.
I've been through such stuff. Sucks.
Choose your new place wisely - I'm pretty sure they're obliged to give you at least a couple of months to relocate.
The housepricecrash.com forum topic on renting
has a lot of valuable information. Though the site is generously sprinkled with argumentative half-wits and economics-theory flat-earthers, who are all feeling unbearably smug, now that the thing they've been predicting to each other for three years has finally happened.
Kind've like mad cult, who are standing on a mountain in the middle of the Mohave desert awaiting the end of the world, and a space-ship actually does