Hyperthetically what would happen if house prices suddenly fallen?
House price at the moment are very high in uk, but if they had suddenly fallen what would be the options for the house owners? What would also happen to people who are currently just buying houses one after the other. What are there options, is there do you think any effidence of house prices falling in the near future.
Answers:
People affected most will be first time buyers who borrowed nearly all of the cost of buying the house. Prices will fall if interest rates rise too much. If they borrowed the maximum they could and they are paying an interest only mortgage and it has a variable rate their repayments will probably go up beyond what they can afford. They will fall into arrears then either have the house repossessed or have to sell it. They will be selling to the first time buyers market so thier potential buyers will be in the same position. This will create over supply in the market which will make prices fall.
No MaxD, it will not mean you can buy a house unless you are paying mostly cash because the repayments will be as high on cheaper houses because of the mortgage interest going up.
DavidM obviously was not a householder from 1990 to 1997 during which house prices fell consistently and hugely because of high mortgage interest rates causing a property price slump. There is no point in thinking that lots of people wanting houses is sufficient to support values if these people cannot afford a mortgage to buy them. For the supply and demand theory to work it has to be applied to people who at least have the capability to buy.
RedNot would probably not be able to buy a house for the same reason but the property developers may because they often would not be buying with a mortgage. Either way developers would do ok because if interest rates went up so would rents which are set in proportion to hypothetical mortgage repayments for that value of house at the current rate of interest. That would not be enough to support the prices, however.
House prices will fall. Mortgage rates are within about a percent of being the cheapest for over 35 years and they are likely to go up. The average mortgae rate during this period has been about 8% and it did go up to about 13% 15 years ago.
i know what it would mean to me
it would mean i would be able to afford to buy one in the town ive lived in most of my life.
house prices will not fall,because there are to many people,and not enough properties
Hopefully the parasites and scumbags that are property developers who are pushing the prices higher and making it impossible for first time buyers like myself to get a small, simple, basic house where I can live with my fiancee will be caught out, thrown into massive debt because they will not make back what they paid, and ordinary hard working people will be able to have a home which is a basic human right after all! Here's hoping but unfortunately I can't see it happening- if even house prices stopped rising, current thinking is that they would just level off at whatever prices they have risen too. And if prices did drop there are always scum property developers who will use the lower prices to buy more for less and push the prices up again.
they'll never fall unless u chuk every non white and non english outa the country.
A lot of people would find they have a mortgage worth an awful lot more than their house. If prices crash, and they try to sell, they'll have a massive loss. I can't wait, it's the only way I can afford to buy a house.
theres nothing hypothetical about it should it happen there will be a bloody mad rush for the highest building in town to jump, and no i don't think prices will u turn for a number of years yet so sleep easy in bed tonight
The options for a home owner if your house depreciates in value are (1) hang on through the dip and hope that prices rise in the future, (2) sell at a loss if you don't want to wait, (3) walk away from your house and let the bank foreclose. The last is an option if your equity in the house is zero or less than zero, and your mortgage is non-recourse.
Your decision may also be affected by the type of loan you have. Your real concern if you have an adjustable rate mortgage may be interest rates. If you have a fixed rate mortgage and interest rates are rising, you may be more inclined to stay put even though your house has declined in value.
Remember that your losses in a home are all on paper. You only actually make or lose money when you actually sell. So living in a house that is worth less than you paid for it actually does not affect you at all, although it doesn't make you feel very good.
if house prices were to drop then there would be a total lack of properties to go round the world would just be in total chaos buying and selling 24 ,7
A lot of people who took out large mortgages will find themselves in negative equity where they would owe more on the mortgage than their property was worth.
If lenders were less greedy and irresponsible in what they were prepared to lend, then sellers and estate agents would have to get real in the assesment of values.
I have also had personal experience of having a large national estate agent value my last property at around 25% more than it was worth. Fortunatley I ignored their advice and afatre have 3 other valuations manged to agree a realistic price privately.
A property is only worth what someone else is prepared to pay for it.
A crash in housing prices / values is probably not in the interest of most people. The first casualties would be the people with a mortgage who wanted to move for whatever reason. They could be in negative equity ie. owing more and trying to make repayments higher than the fallen value of their property. Great I hear those who want to get on the property ladder for the first time say but what about the ordinary folk who have already just made that step, they were just ordinary people waiting to get on like you are now. People who have already invested in several different properties would be more able to ride out the storm because actual property value is only part of their total equation, they would be getting their rents, and some people will always need to rent for a variety of reasons. It is a pity some of the answers are so bitter, presumably those people believe in trying to sell their labour for the highest price or do you work for very low wages so I can buy things other than houses which at present I can't afford because your labour costs have priced things out of my reach, its market forces in a free market economy and its very difficult to cherry pick only those bits which suit us although we will always keep trying.
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Answers:
People affected most will be first time buyers who borrowed nearly all of the cost of buying the house. Prices will fall if interest rates rise too much. If they borrowed the maximum they could and they are paying an interest only mortgage and it has a variable rate their repayments will probably go up beyond what they can afford. They will fall into arrears then either have the house repossessed or have to sell it. They will be selling to the first time buyers market so thier potential buyers will be in the same position. This will create over supply in the market which will make prices fall.
No MaxD, it will not mean you can buy a house unless you are paying mostly cash because the repayments will be as high on cheaper houses because of the mortgage interest going up.
DavidM obviously was not a householder from 1990 to 1997 during which house prices fell consistently and hugely because of high mortgage interest rates causing a property price slump. There is no point in thinking that lots of people wanting houses is sufficient to support values if these people cannot afford a mortgage to buy them. For the supply and demand theory to work it has to be applied to people who at least have the capability to buy.
RedNot would probably not be able to buy a house for the same reason but the property developers may because they often would not be buying with a mortgage. Either way developers would do ok because if interest rates went up so would rents which are set in proportion to hypothetical mortgage repayments for that value of house at the current rate of interest. That would not be enough to support the prices, however.
House prices will fall. Mortgage rates are within about a percent of being the cheapest for over 35 years and they are likely to go up. The average mortgae rate during this period has been about 8% and it did go up to about 13% 15 years ago.
i know what it would mean to me
it would mean i would be able to afford to buy one in the town ive lived in most of my life.
house prices will not fall,because there are to many people,and not enough properties
Hopefully the parasites and scumbags that are property developers who are pushing the prices higher and making it impossible for first time buyers like myself to get a small, simple, basic house where I can live with my fiancee will be caught out, thrown into massive debt because they will not make back what they paid, and ordinary hard working people will be able to have a home which is a basic human right after all! Here's hoping but unfortunately I can't see it happening- if even house prices stopped rising, current thinking is that they would just level off at whatever prices they have risen too. And if prices did drop there are always scum property developers who will use the lower prices to buy more for less and push the prices up again.
they'll never fall unless u chuk every non white and non english outa the country.
A lot of people would find they have a mortgage worth an awful lot more than their house. If prices crash, and they try to sell, they'll have a massive loss. I can't wait, it's the only way I can afford to buy a house.
theres nothing hypothetical about it should it happen there will be a bloody mad rush for the highest building in town to jump, and no i don't think prices will u turn for a number of years yet so sleep easy in bed tonight
The options for a home owner if your house depreciates in value are (1) hang on through the dip and hope that prices rise in the future, (2) sell at a loss if you don't want to wait, (3) walk away from your house and let the bank foreclose. The last is an option if your equity in the house is zero or less than zero, and your mortgage is non-recourse.
Your decision may also be affected by the type of loan you have. Your real concern if you have an adjustable rate mortgage may be interest rates. If you have a fixed rate mortgage and interest rates are rising, you may be more inclined to stay put even though your house has declined in value.
Remember that your losses in a home are all on paper. You only actually make or lose money when you actually sell. So living in a house that is worth less than you paid for it actually does not affect you at all, although it doesn't make you feel very good.
if house prices were to drop then there would be a total lack of properties to go round the world would just be in total chaos buying and selling 24 ,7
A lot of people who took out large mortgages will find themselves in negative equity where they would owe more on the mortgage than their property was worth.
If lenders were less greedy and irresponsible in what they were prepared to lend, then sellers and estate agents would have to get real in the assesment of values.
I have also had personal experience of having a large national estate agent value my last property at around 25% more than it was worth. Fortunatley I ignored their advice and afatre have 3 other valuations manged to agree a realistic price privately.
A property is only worth what someone else is prepared to pay for it.
A crash in housing prices / values is probably not in the interest of most people. The first casualties would be the people with a mortgage who wanted to move for whatever reason. They could be in negative equity ie. owing more and trying to make repayments higher than the fallen value of their property. Great I hear those who want to get on the property ladder for the first time say but what about the ordinary folk who have already just made that step, they were just ordinary people waiting to get on like you are now. People who have already invested in several different properties would be more able to ride out the storm because actual property value is only part of their total equation, they would be getting their rents, and some people will always need to rent for a variety of reasons. It is a pity some of the answers are so bitter, presumably those people believe in trying to sell their labour for the highest price or do you work for very low wages so I can buy things other than houses which at present I can't afford because your labour costs have priced things out of my reach, its market forces in a free market economy and its very difficult to cherry pick only those bits which suit us although we will always keep trying.
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