People talking about houses dropping 30%

[ayvian]

AIBU to think they should shut up.

Banks are still lending, furlough has saved millions of jobs and no one is going to sell their biggest asset at a 30% loss. It just won't happen all it will create is a mexican standoff that will freeze the market until buyers get a sense of reality. We want to move, but not that desperate to accept a loss of what something was worth a few weeks ago. We'll hold on. It's wishful thinking that anyone can get a bargain right now

Just don't sell it then, simples!

YANBU OP
There are as many armchair economists as there are armchair epidemiologists these days. People who state their opinion as ‘fact’ wind me up no end (see - first page - someone saying it WILL be more than 30%)

Thing is, this really is unprecedented (sorry to use that phrase!) so nobody really knows what will happen. People can make educated guesses but that’s it.
I don’t have an issue with people stating their opinion of what might happen... but I think the Dunning-Kruger effect is in play here... people aren’t aware of their own limitations of knowledge surrounding the subject and so conflate their own opinion with fact.

Your house is only “worth”’what someone will pay. Hold on as you like but don’t hold your breath. Housing market price crash might be one of the few good things to come out of this situation.

Houses are only worth what people are willing to pay for them.

I have no idea what will happen to house prices, but no, I don't think people should shut up about it if they think differently from you.

The very idea that someone could buy it at a 30% loss is silly

If you bought it for 180k and it was worth 600k before pandemic then you won’t be making a loss if you sell it for £480k now.

Sorry- 420k

You might not sell your house at a loss, but what about the people who bought houses like yours within the last year or two? They could easily have a mortgage that is ten times yours, or more.

They might not have a choice about whether they want to sell, they might have to. And if we get to the situation with lots of repossessions, the houses aren't going to go for £600k when they're up for auction, far from it.

There will be house price rises in some areas after this. Falls in others.

More demand will circulate round "nice" areas of open space, places to go for walks etc.

Anyone saying they KNOW what will happen is a dick head. Nobody knows, you included.

Indeed!

We bough ours for 180k and have 40kish left on the mortage. The very idea that someone could buy it at a 30% loss is silly - we won't sell for that. Unless people want to sell at that price then it won't happen.

The idea that you think a decrease in the hypothetical market value of your home is a loss is beyond 'silly'. The hypothetical market value that you see on Zoopla etc. is a rough guide to current market conditions, nothing else. It's not real, and a change in that amount isn't a gain or loss.

All houses are different, and worth different amounts to a potential buyer, even within the same street. You don't actually know what your house is actually worth (in any meaningful sense) until you try to sell it - a house is worth what someone will pay.

furlough has saved millions of jobs
I think it has just delayed redundancy for many people sadly. Also most people wont be selling at a 30% 'loss' many people would have bought years ago and will be selling their properties in some cases for 3 times as much as they paid for it. If that turns out to be more like selling at 2 times as much as they paid for it instead, they aren't actually losing any money, just not making as much as a profit as they might have done pre the impending recession.

@stophuggingme sorry if I confused you, it was more of a I completely agree & emphasising my point. Does that make sense?

Furlough hasn't saved millions of jobs, it has frozen the issue. A major issue will remain and all business owners I know plan to make major redundancies as soon as it's no longer cost effective to keep people employed on furlough.

No one knows for sure how much house prices will tumble- but if you listen to people working in the industry they do predict a major fall which makes sense to me.

It’s not just about selling though. Or what someone is prepared to pay for it. What happens when people’s mortgage deals run out and they try to buy a new product? The bank value your home and offer you a product based on that.

It won't happen - maybe a 10-15% correction in the very overpriced parts of London

@dibble15
Yes

If the market drops that much the government will intervene. They have a lot of room on stamp duty, especially at the higher end.

On London prices a house move would cost us around £90k at the moment so we're staying put. If this dropped for a while we'd be quite likely to move.

@stophuggingme 👍🏼

Assuming you like in an area with similar houses, what they sell for (if anyone sells) will affect the value of your house. So a repossession that goes for 400k will knock a huge chunk off a 600k value. If everyone sits tight and can afford to stay, less impact, so more stagnant market than huge drops.

Do you remember the property market in Spain (or Greece) last time they crash?

Cash buyers might have been able to grab a few bargains. People who think they will be offered a mortgage when they couldn't afford to before are naively dreaming and in for a very big shock even if the market does collapse.

I do find it odd that people who mention house prices dropping are akin to Lucifers bessie but when the prizes go up & up & up completely fine.

It’s hard to say how it will pan out.

But very tough economic times are ahead. Furlough is just a sticking plaster.

House prices are certainly over valued. In Ireland, 10 years ago they did drop by that amount and more. That created significant issues due to lack of liquidity in the market. Some managed to hold on and ride the wave. Others lost a helluva lot.

Who knows. But it is silly to dismiss the possibility.

And very silly to make financial plans on the basis that your house will never lose value.

Some houses are sitting there empty and people need them sold ASAP - so yes some people will sell for less!

Plenty of price drops I’ve seen the last few weeks - I’ve been looking for a place to buy for nearly a year - some places we’ve had our eye on have dropped 10% - if they still. Any sell it - they may come down again.

furlough has saved millions of jobs

Has it?

Yes, yes it has, but all of the ones that it's absolutely saved are the low wage jobs in service industries that will come back - The fast food restaurant staff will be back and not that reduced, many of the shop workers etc. So it's likely reliably saved lots of those, for others it's just postponed things and allowed companies the breathing room to really choose the right people to help the business survive.

Housing market is screwed - the lack of bonuses for many even if they don't lose their job can screw the top end of the market, and that and every level below has redundancies and divorce running rampant through the market.

Airbnb being decimated in many cities will also lower rental costs in lots of places making even less reason for those first time buyers with money less motivated to buy as waiting will give them more for their money.

No-one really knows the size of the reduction, nor the size of the recession, but the likelihood is much more towards the larger one. Fear alone will reduce growth and kill jobs for a long time even if the virus is only good news from here.

Can't see there not being a substantial drop. Plenty of cash buyers around to take advantage of bargains that come onto the market though.