Current public sentiment towards the housing market?

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"Herd" and "market" don't go together in my experience.

"Educated" or "experienced" might?

Not everyone has the lemming mentality and that might be the deciding factor on the ultimate direction and result.

To simplify, many of us did not buy into Eircom shares, irrelevant of us being led to BELEIVE by that we should.
 

If a housing crash has a very serious negitive effect on the ecomomy than our ecomomy is flawed and just being propped up by borrowed money. If that is the case and I firmly believe it is than the sooner a crash happens the better so that we can finally begin to start dealing with the problem and try creating jobs that actually produce product that can be exported, not just selling houses to one another and paying more and more for the same houses each month.
 
All i know is that in the supposed "summer slowdown" there's 7 pages of properties for sale in my local paper,where normally it would be only 4 or 5
 

Markets are human constructs driven by fear and greed. And while it may be unpalatable to accept this truism it has been proven countless times.
I've attached a short paper on market psychology that is worth a read.


[broken link removed]
 
Read a little about how the housing market is faring in the US to understand how markets work. Its a market remember, a place free of sentiment.
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So to summarise Mary Thompson, realtor with Long Foster Parole office.

"The houses that are priced even at 5 percent (more than worth on the market) are being looked over,"she said. "Price is everything and the prices are correcting and that's good for the market. Because the bigger the boom, the bigger the crash."
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Hobbs/McWilliams move over!
 
As regards predicting the doom 3 yrs ago..... a small bit off the mark there Wollie... but one day you will be right for sure!

ninsaga[/quote]


Things have changed dramatically since 2003 Ninsaga. Since than lenders have extended the borrowing mania by using the following,
· Interest rates at 2% for about 4 years giving the impression of permanently low rates. I've actually heard a mortgage broker telling potential customers over the phone that rates would be low for a very long time to come.
· Mortgage lenders pushing the terms of most loans to 35 years or more.
· Interest only loans introduced.
· 100% mortgages.
Now however rates are going up and could go well beyond 4%. The lenders have little or nothing left in their arsenal to allow FTBs to enter the market except for maybe 60-year terms. Than we'll know we're really in Japanese territory.

The real interesting thing for me is that when people attempt to compare the UK to the Irish market they seem to forget that when house prices began to slide in the UK in 2005 the BOE cut rates by 0.25% very quickly. We cannot do that and the ECB will not give a tinkers curse what kind of shape our economy or housing market takes on. They will say that we were well warned and hold the Irish housing market crash up as an example to the rest of the EU countries about what happens when governments allow credit institutions to lend dangerously.
 
  • Never underestimate the stupidity of the general population.
  • People prey on mathematically challenged people.
  • The smart money makes the money that the dumb money lose.
  • A bubble wouldn't exist if there weren't plenty of persuasive theories to justify the high prices.
  • It absolutlely stuns me how so many otherwise intelligent people can be so stupid about real estate.
  • The general public is always on the wrong side of the market at important turning points.
  • The real estate bubble had to end with a bang, otherwise everyone would be able to get out with their profits - which is literally impossible.
  • Once again large segments of the population have come to believe that they have found the way to unending wealth by doing little or no real work.
  • "I can calculate the motions of heavily bodies, but not the madness of people" -- Issac Newton
  • 90% of our population does no thinking of their own, they believe what they hear either from friends and family or the media.
  • What the wise do early, the foolish do late.
  • "Many in California have reached the dream of living in a million-dollar home without moving." -- Appleton-Young.
And many more quotes exist on the Madness of Crowds. My favorite is "a new boom sweeps clean" Groucho Marx in the film Coconauts (1929) a comedy dealing with the Florida real estate bust of 1926. Nothing new under the sun.

P.S.

SW I think you are pulling our bearish legs
 

Couldn't agree more. The sooner that we face up to the over reliance on property in the economy the better. There are school kids making decisions on what courses to do in college etc so I am not sure Ireland Inc will benefit in the long run (15+ years) if they forego technical courses for the ones which can deliever the quick buck. If this forces people to get on the planes out of here so be it. We will only have ourselves to blame
 
SineWave said:
Oh [broken link removed]?
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There seem to be a lot of this style .ie sites springing up of late. Very American looking, even down to the Mom and Pop pictures.
 
There are school kids making decisions on what courses to do in college etc so I am not sure Ireland Inc will benefit in the long run (15+ years) if they forego technical courses for the ones which can deliever the quick buck.
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Bricklaying would then be the first choice on the CAO form?
 
Why did you sell when rates were so low,houses were still growing in double digits etc, you were obviously worried about fundamentals of market when you sold ,what has made you change your mind? if things looked bad enough for you to sell in 2003 things must look really bad now? no? maybe your just annoyed your missed out on more filthy loot? dont change your convictions due to fear or greed, only a very small few were predicting a crash in 99/01/03 ,you could have held on till price growth slowed to inflation ,the few "doomsters" may have got their timing wrong but they couldnt have predicted 9/11 and a 5 year zero/negative interest rate environment,maybe their predictions should be allowed to be postsponed untill next year or two due to the nature of 9-11/monetary union. You will be proved right if you really did sell in 2003 ,and if you didnt sell do you really think you would have sold now facing these conditions?
Basically if you felt so strongly about the markets value in 2003 why nearly 3 years later when market values have further spiralled have you changed your view? you sound like sir isaac newton who sold out of speculative bubble but when the bubble got bigger and bigger he was tempted back in and lost all his money.
 

yes, it will effect the overall economy, but the sooner a turnaround happens the less of an impact it will have. Hence I would like to see it now rather than after another 5 years of 10% house price growth.
 

Anyone who thinks having all this capital tied up in an non-productive asset is good for the irish economy,is only fooling themselves in the long run.
The higher prices go,the more damage will be caused in the long term.
When people on this thread mention 60year mortgages i get very scared, because the banks in this country have a long and shady past of screwing the irish public,they do not operate in the national interest ever !.
When you boil it all down this housing boom/bubble is for the benefit of the few (banks,developers,government) and the detriment of many (the people),i would rather see the irish economy on a sound footing going forward rather than the debt laden leaky vessel we are fast becoming.
 
I think you should spare a thought for the people involved in a crash. I lived in London when negative equity hit. There were marriage break ups, depression and even suicides. What about the FTB we all feel so sorry for, usually young and only starting out? What about older people who have sunk their pensions into property? What about the tax payer, who will probably be asked to foot the bill when many are made homeless or lose everything?

I realise when discussing the economy it's essential to remain detached but nevertheless, at the end of the day, it's people's lives we're talking about.

IMHO we should be hoping and praying for a soft landing! No one should be trying to precipitate it.
 
liteweight said:
I think you should spare a thought for the people involved in a crash.
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I do. This is why it is better for the whole country if we deal with this now. The market is overvalued and needs to correct. The longer it continues to grow the sharper and more severe the correction.

Such tragedies are inevitable but there is little that can be done. Many FTBs (like SSB) could rent cheaply in the area in which they wish to live but instead buy somewhere they don't want to live. This action is driven by greed, they hope the price increases enough so they can eventually purchase where they want to live. It's the type of illogical fear (of missing out) psychology that drives most bubbles.

Again, nobody asked the older people to sink all their money into a property pension. They should have taken impartial advice and sought to invest in a diverse range of asset classes.

As I said, these situations are sad but nobody was forced at gunpoint to purchase a home and indeed most people had other options.

liteweight said:
What about the tax payer, who will probably be asked to foot the bill when many are made homeless or lose everything?
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This who I feel most sorry for. Paying for everyone elses madness without ever being consulted. Personally, I won't stand for it. I'll simply emigrate. Why should my taxes increase to subsidise the greed of others?

Also, people don't become homeless because they don't own a home. Most property bulls posting here seem to forget that.

liteweight said:
I realise when discussing the economy it's essential to remain detached but nevertheless, at the end of the day, it's people's lives we're talking about.
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Yes but it is precisely because of this concern that I personally would prefer to see a correction sooner rather than later.

liteweight said:
IMHO we should be hoping and praying for a soft landing! No one should be trying to precipitate it.
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Whether houses decrease quickly in both nominal and real terms (i.e. crash) or simply remain static in nominal terms and decrease in real terms (i.e. "soft landing") the effect is the same, it just takes a much longer period of time for the market to correct. However, I understand the psychological element of not seeing houses decrease in nominal value may be important.
 
A soft landing is nothing of the kind...it means that prices don't correct rationally, and it is only a conduit for suggesting to people that in fact, it will all be okay when they wonder about the wisdom of what they have done.

The point is, property in this country is disproportionately costed vis a vis available salary income. That cannot continue, and unless it falls significantly or we suddenly have massive salary inflation, we are in an unhealthy position.

Property market matching salary growth is highly unlikely. We're lucky to scrabble 3% a year out of IBEC in national wage discussions - the employers do not want to pay out any more money in salaries than they can get away with and if they could cut it, they would. So the only other mechanism for getting a more reasonable balance between average salaries and house prices is for the latter to fall.

I have listened to a lot of people buying houses both to live in, to get their foot on the ladder and for investment purposes claiming "it'll be a great pension" and "property can't fall" and "things are different in Ireland".

I don't see them, who by their profligacy with borrowed money pushed house prices into this position, thinking of those they priced out of the market now. I do see them making some patronising remarks to those who do consider this insanity and unviable in the long run. Why should I have any sympathy at all for them if they lose out because of their own actions? Apparently no one forced them to get into that position.

The property market needs to come into some kind of balance. The idea that we can continually manufacture money out of nowhere to sell houses to each other despite not making money out of anything much else needs to be killed right now. As far as I'm concerned if we had a decent correction three years ago when it should have happened, we wouldn't now be in a position where it looks increasingly like an elastic band is about to snap.

I don't get up in the morning hoping a property crash will happen so as to wipe the smiles off smug property owners. I get up knowing that every day those property prices don't correct, the closer we are to major economic problems, because the longer it goes on, the more they will correct by. People with vested interests know that a major correction will be very very serious. They have now reached the point where they are very afraid that the turn is coming. From what I can see, most of the talk of a "soft landing" is based on wishful thinking more than anything. From what I can see, they seem to predicate on inflation matching price growth. Unfortunately, that would be fine if average house prices didn't happen be over ten times average salaries.

If and when the crash comes, it will hurt. If, however, any political party dares to suggest we dig people out of the mess they got into because they didn't have the cop on to understand that "what can go up can also come down", particularly would be speculator/investor types, I will actually make sure that the life of any of their representatives who knocks on my door is miserable for 15 minutes. Representatives of Fine Gael in particular, after their recent FTB policy announcement should start trying to find out where I live in order to avoid me.

I am not sure what market sentiment is at the moment. I can only observe certain things. I observe, for example, that rents in parts of county Dublin now match rents in Dublin City. I can only observe that some properties in county Dubli match some in Dublin City purchase price wise. I can also only observe that some properties seem to be spending a fine amount of time on property websites which leads me to conclude that either 1) their estate agents are lazy about clearing sold property from the listings or 2) their estate agents are not managing to see the properties. I can also add that fewer and fewer people are telling me to buy property.

People who have bought houses that they are willing to live in for quite a few years I think are unworried. Those that bought houses or apartments expecting to trade up are most at risk of the problems caused by negative equity.
 
liteweight said:
What about the FTB we all feel so sorry for, usually young and only starting out? .
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Why didn't we think about them when they were signing up for jumbo mortgages?

liteweight said:
What about older people who have sunk their pensions into property? .
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You mean the older generation who have been made zillionaires off the backs of the young?

liteweight said:
What about the tax payer, who will probably be asked to foot the bill .
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I will not tolerate my taxes being spent this way. I can and will relocate.

liteweight said:
when many are made homeless or lose everything?.
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Ireland is full of houses, how could anyone be homeless here?
 
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