Current public sentiment towards the housing market?

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The Florida Real Estate Bubble

From here , seem familiar ???

Many astute investors took notice and started buying Florida real estate. The population in Florida was growing exponentially and housing couldn’t meet the demand.
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Then

It seemed you could do no wrong by just buying any property in Florida and become a millionaire. By 1925, real estate prices had become so exorbitant that buying land wasn’t affordable any longer. New investors failed to arrive and old investors started to sell.
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Finally , after Hurricanes and Tidal Waves and Floods and Pestilence all arrived to help poop the party as well :D

the investors were bankrupt from the enormous mortgages.
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Read the lesson bit at the end of that article which is a standard disclaimer for each and every bubble in history. That will include ours :eek: , of course it will.
 
I realise its the slow season and that is why stock at the moment is not moving. I look at D7 properties and the stock is increasing and is moving off very slowly. ( total stock is increasing by 2 a week )


However i'm don't agree with this whole slow season bit (as property is/was the leading investment vehicle in this state) as if you really are in the market for a house you surely could pick up a 'bargain' now rather than wait for the rush in autumn. Stock is not moving and not because of reluntant sellers but low or no offers.
 
Article in the Irish Times said:
Property group Kenny set for sale at €475m

"The Kenny Group is one of the biggest and most active developers outside Dublin. Its Irish portfolio is said to include assets in Galway, Limerick, Cork and Dublin. The group was highly acquisitive in the past and it traditionally held on to property assets where it could.

It was unclear late last night why the group was contemplating a sale. Sources said that the Kenny family appeared to be planning to dissolve the business.
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Looks like the smart people are exiting the market
 
Kenny Exiting

Kenny are housebuilders too, not Civil engineers who could go road building.

If anything Kenny service the FTB market more than any other segment.

Best exit while your land bank is worth something I says
 
[FONT=verdana,arial]Kenny's property sale to fetch E475m[/FONT][broken link removed][FONT=verdana,arial]Thursday, 10th August 2006 07.06am[/FONT][broken link removed][broken link removed][broken link removed][FONT=verdana,arial]The property portfolio controlled by the Galway-based Kenny Group is to be sold with a price tag of around E475 million.

Translation : Nervous Lemons gathering at the cliff edge.............go on, jump.


The sources said the family-owned group has approached Merrion Capital and DTZ Sherry FitzGerald to find the buyer ...

Translation : Maybe the Lads at Merrion will package it in nice wrapping paper and flog it to a few ejits across their client base.

It was unclear late last night why the group was contemplating a sale....

Unclear why they were contemplating a sale ???.......please, please....don't start inviting answers on a postcard.
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Kenny Group shutting up shop! Property crash imminent! Umm no, not quite. The Kenny Group's property portfolio is primarily commercial (retail, government, student accomodation, etc). Also, they've also recently won a contract for a government/retail development worth €100 million on Patrick's Quay in Cork City. These assets are the reason why the company is expected to fetch nearly €1/2 billion. It's housing stock and construction arm would definitely account for the smaller share of it's net worth.
 
Calina said:
While his attitude might leave a certain amount to be desired, you can't be certain that he will buy in the first dead cat bounce, can you?
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Judging by his comments I'd be very surprised if he doesn't. Although he has said that he will not buy until the market bottom (I'd love to know how he will judge when that has occured) he seems to think this will happen soon.

Saving money to buy when the crash occurs is silly business. Inflation will depreciate the real value of your savings as rapidly as the nominal value of housing falls. This is a very illiquid market and the bulk of the correction will probably be in real terms.

I think people should give up thinking about making money on property for a while - like you said, let's go back to thinking about houses as somewhere you live rather than some kind of cash generation machine.
 
room305 said:
Saving money to buy when the crash occurs is silly business. Inflation will depreciate the real value of your savings as rapidly as the nominal value of housing falls. This is a very illiquid market and the bulk of the correction will probably be in real terms.
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So buy now then? Or don't save money and borrow to buy when the crash occurs?
 
room305 said:
Saving money to buy when the crash occurs is silly business.
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Traditionally, people were compelled to save up to 10% of the purchase price of a house. There may be the odd few people around who are trying to save 100% or 50% of their purchase price, but I suspect a lot of people are not anywhere near close enough. But it would be good practice to bring a deposit because equally, it is not exactly bright to take out a loan of 100% on an asset which is widely suspected to be overvalued. My position is I would rather have a deposit than a massive mortgage.
 
Raskolnikov said:
Kenny Group shutting up shop! Property crash imminent! Umm no, not quite. The Kenny Group's property portfolio is primarily commercial (retail, government, student accomodation, etc). Also, they've also recently won a contract for a government/retail development worth €100 million on Patrick's Quay in Cork City. These assets are the reason why the company is expected to fetch nearly €1/2 billion. It's housing stock and construction arm would definitely account for the smaller share of it's net worth.
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1.Won a contract .........means to develope on behalf of a client.

2. Be it Commercial or Residential Property......the coming correction won't discriminate.

Back to school Raskolnikov.
 
StoppedClock said:
So buy now then? Or don't save money and borrow to buy when the crash occurs?
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Definitely don't buy now.

I am just counselling against people who are saving in anticipation of buying into the market after "the crash". The crash will be a long drawn out process, spanning at least five years.

Obviously you should save money but you should be thinking of investments outside of property. Simply sticking your money in the bank isn't the best idea IMO.

I'll stop now because I don't want to wander to far off topic.
 
Here's why I still believe property in still a good investment even at today's prices (don't shoot me all at once!!)
If you take a property in a rentable location for 500k. Over 30 years at a 3% growth rate the property will be worth 1.2M. Even if prices fall in the coming years, I think it's fairly safe to assume a 3% growth rate over 30 years as this is a long time frame and should incorporate a few economic cycles.
An alternative is to buy shares - say you put in 50k into shares (which would cover the stamp duty, legal and fit-out fees of buying the home) and you also save 700 euro per month to buy shares (which would cover the shortfall in rent not meeting the mortgage) and you do this for 30 years...the shares would have to increase by 7% over 30 years to get the same return on the house at 3%. I am ignoring dividends on shares here and also rent rises as neither are guaranteed.
Whilst the gearing with housing can result in bigger swings in value, over time my "sentiment" is that it will still be worth more than shares. Think about it this way...every time someone gets a pay rise of 2k, they can qualify for an extra 10k in a mortgage....
Am fully aware this is back of the beermat maths but it's just to illustrate my sentiment.

Firefly
 
Analysis by the OECD of the state of the Irish economy 2 March 2006
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Chapter 7 (summary)
The Irish housing market is very buoyant. The housing boom is driven by strong economic growth, dynamic demographics and low interest rates. However, large tax advantages and relatively lenient credit policies by banks have also played their part, and prices may have become overvalued. To the extent that high house prices reflect favourable tax treatment, they may lead to economic inefficiencies by drawing excessive resources into residential construction. While a soft landing appears the most likely prospect, a disorderly correction of house prices would pose risks for macroeconomic and possibly financial stability. In this context, one policy lever available to the government would be a phased removal of the tax advantages associated with housing. In addition, banks should remain cautious in their lending and provisioning policies.

Do these guys have a vested interest? How come the professionals have it so wrong in that they don't see a hard landing as the most likely outcome.

Perhaps professional investors are taking advice from professional economists rather than Estate Agents as many heRE seem to think!
 
Calina said:
There may be the odd few people around who are trying to save 100% or 50% of their purchase price
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That still happens :cool: My nervous brother had a meeting with the bank manager back in 2001 to try get a mortgage. Manager's jaw dropped to the floor when the brother revealed that he had a "deposit" of 75% for the mortgage. All the more remarkable considering he was only earning a little bit more than the average wage and his money came solely from saving and investment.

Obviously, someone who had the communion money invested in the Irish stockmarket is more of an exception than the rule. Don't however doubt that there are sizeable numbers of young people out there with significant amounts of savings.
 
I'm trying to do some maths here re. Firfly's theory and want to know historically what is the normal ratio of inflation to interest rates i.e. is rate of inflation normally above or below interest rates?
 
gidxl03 said:
Drops in asking prices have very little relevance.
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Wow - who would have thought anyone could have said this over the past few years!

We're talking about sentiment here, dropping asking prices are very relevant. They may not mean lower deal prices but that's not what this debate is about.
 
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