The Lemon Fool

What are your thoughts on the residential property market at the moment? Are you looking to move?

Is it a good time to buy?

Shaker wrote:What are your thoughts on the residential property market at the moment? Are you looking to move?

Is it a good time to buy?

I think you need to reveal a bit more about why you are asking. Why would it matter to you if I am considering moving?

I think the best time for you to buy is when a house you want is for sale.

we are trying to sell a house , had some interest , which has now dried up.

people have lost jobs and banks more tight , which could be reasons .

so if you have cash , good time to buy.

I would imagine the banks would be very nervous about offering mortgages at the moment. Especially to anyone on furlough or short time. And there's always the possibility of prices falling in the certain recession to come in the next few months. So I think to buy at the moment you'd have to have a lot of cash, and be very brave. Which means not a great time for sellers.

Gryff

gryffron wrote:I would imagine the banks would be very nervous about offering mortgages at the moment. Especially to anyone on furlough or short time. And there's always the possibility of prices falling in the certain recession to come in the next few months. So I think to buy at the moment you'd have to have a lot of cash, and be very brave. Which means not a great time for sellers.

Gryff

What normally happens is liquidity evaporates. Good quality houses retain their value when the sellers are under no pressure to sell, good quality slips 10% when sellers are under pressure. Second rate properties stick on the market when sellers are under no pressure to sell as they are delusional about values, while vendors under severe pressure to sell (and repos) get a 30% haircut from a year previously.

Massive generalisations though. Every house is different. The key to a bargain lies in sussing out the vendor's personal circumstances and need (or otherwise) to sell.

Mike4 wrote:

gryffron wrote:I would imagine the banks would be very nervous about offering mortgages at the moment. Especially to anyone on furlough or short time. And there's always the possibility of prices falling in the certain recession to come in the next few months. So I think to buy at the moment you'd have to have a lot of cash, and be very brave. Which means not a great time for sellers.

Gryff

What normally happens is liquidity evaporates. Good quality houses retain their value when the sellers are under no pressure to sell, good quality slips 10% when sellers are under pressure. Second rate properties stick on the market when sellers are under no pressure to sell as they are delusional about values, while vendors under severe pressure to sell (and repos) get a 30% haircut from a year previously.

Massive generalisations though. Every house is different. The key to a bargain lies in sussing out the vendor's personal circumstances and need (or otherwise) to sell.

Have a friend who is a divorce lawyer. She is fairly confident she will be busy next year. I would think the property market, post Covid-19, will be healthy from a transactions perspective at least.

All the banks are currently offering much lower loan to value rates, I think around 75% instead of 95% pre corona.

So unless you get lucky and find an 'all cash' buyer, it seems logical that all other things being equal, prices should fall around 15-20%

If there are a bunch of divorces in the next year that could see a big increase in housing demand, assuming most setup a new household and don't immediately move in with someone else.
But all of those new households will have less money, so I don't think that will help prices.

Lanark wrote:All the banks are currently offering much lower loan to value rates, I think around 75% instead of 95% pre corona.

So unless you get lucky and find an 'all cash' buyer, it seems logical that all other things being equal, prices should fall around 15-20%

If there are a bunch of divorces in the next year that could see a big increase in housing demand, assuming most setup a new household and don't immediately move in with someone else.
But all of those new households will have less money, so I don't think that will help prices.

I think between 1/4 and 1/3 of all homes sold are bought without a mortgage. Similarly more homes are owned outright than those with an associated mortgage debt.

I don't think you can "logically" drop house prices in the fashion you describe on the basis of Bank's LTV policies. (The direction is probably correct though!).

Anecdotal evidence from Estate Agents in the SW and Welsh Borders is that pent up demand is very strong with buyers very keen to get moving.

Last September we got 3 agents around to value the place and suggest what would help it sell and what wasn't worth doing. They all said the same, and all valued the house at the same price to within 4 or 5k, saying that it wouldn't get over the next 100k threshold. Over winter just a bit of decorating and replacing a very very very tired hall carpet, and over the last couple of months I rebuilt the leaning wall supporting the greenhouse and replaced some steps where the bricks had spalled and looked worse than it was.

We had the EPC done last week and started viewings yesterday.

The agent is madly busy this week and trying to get furloughed staff back in so we agreed to do viewings, and they were literally queing up at one point. Tonight the first viewer came back for a second look and confirmed their offer of the asking price as chain free buyers. Another couple in rental accom were/are also in the running, but as the asking price offer actually came through within a couple of hours of the first viewing then they get priority.

Obviously it is early days, but at least we don't need to go and renegotiate on our purchase as per my earlier thread.

From what the viewers said, they all wanted to get things sorted before/in case there is another round of lockdown, and whilst I quite expect a revision to the price post survey, the potential buyer is from a family of builders and spotted the issues we were aware of (mainly boundary walls bulging) and wasn't phased as he can sort them easily and cheaply.

Paul

Interesting comments their DrF

My expectation is that demand will decrease. We have circa 7 million people on furlough, restricting what they can borrow compared to normal. We also have X million people worried about their longer term future.

Shaker wrote:Interesting comments their DrF

My expectation is that demand will decrease. We have circa 7 million people on furlough, restricting what they can borrow compared to normal. We also have X million people worried about their longer term future.

You also have a lot of people with time on their hands to have realistic conversations about what they want from life, where they might ideally live, and should they now be taking the opportunity to change. In addition you will have many more than usual couples divorcing, people inheriting wealth, people planning a move to accommodate a granny annexe as parents "won't be going in a home".

The market is a lot more dynamic, and people generally have more time to consider, and travel the path of, making one of their biggest financial decisions in life in purchasing a property.

It is far from clear what will happen to prices, given all these competing factors, but I would be far less gloomy on the market generally in terms of transaction numbers than many others.

One thing I should say is that all but one viewing was booked for the dirst day. The other is on Friday from someone who was coming down to view several properties, si we have cancelled that one.

Also only 5 viewings, however the agent was trying to filter it to people who are serious buyers either in a position to proceed, or already on the market with finances in place. There are quite a few people who are "tyre kicking" as they've been looking online and have free time and are considering their options (I guess 7 weeks of watching Escape to a home under the hammer can do that to you).

Paul

Opportunities arise when one can least afford them.

Having priced our house above two agents' suggestion, I have not done so in order to disprove them but to avoid underpricing. Some friends with a smaller house than ours had it valued by one of the agents at some £45,000 less than it went for. Important to remember, I shall say in a new post, that agents are only interested in rate of stock turn, (turnover) not in absolute pricing.

Quite apart from the fact that agents don't really know, there is no set scale of values, the tendency to dismiss cosmetic improvements to the property as non-recoverable expenditure can miss the point that customising to personal taste and life-style may well be shared by others. It is darn sight cheaper (and less hassle especially if you are new to the area and don't have any connection with or knowledge of local tradespeople) to buy something where the bulk of the work that you would do has already been done.

Buyers that wait until the right thing comes along at a price they can afford are generally more likely to wait a lot longer than buyers that wait until the right thing comes along.