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jhegarty said:the crash will happen , might be 10 months or 10 years ,but every day that passes means it will take a bigger crash for people who bought in 2004/2005 to be in negotiate equity...
walk2dewater said:How big is a crash? This post confirms my belief that people really don't grasp what sort of monster we're dealing with. The apex of a correction, the darkest moment if you like, where prices fall precipitously, is the point where sellers are forced to sell and buyers know it. The game is effectively up. There is no safety net below which prices cannot fall. If no one wants what you have to sell the market value of what you're selling is ZERO. Sellers who have to sell become panicked, fear of extraordinary wipeout losses pulls in more sellers, and the scarce few buyers around demand extreme discounts for "catching a falling knife"; todays extreme discount then becomes tomorrows best market price, as so on, until prices become so battered that some base is eventually achieved. The base appears because buyers cannot extract any further concessions from sellers.
Spouting ideas that prices will only fall by "10%" or "40%" is unrealistic. In a full blown bust, sellers look into an abyss. Rational economic valuation is ignored on the down as much as it was on way up.
WTTW
walk2dewater said:How big is a crash? This post confirms my belief that people really don't grasp what sort of monster we're dealing with.
Loki said:Sorry what are you saying? House prices will crash and all house prices will crash and nobody will be able to sell their property?
Where will people live? Why will people need to sell their homes? If it is only investment property I think you are mixing up financial information and reality.
AFAIK in the UK crash many properties recovered within a year or two. The properties that stayed in negative equity were mostly up north in areas of large unemployment at the time of pruchasing let alone after the crash. even in negative equity it doesn't mean you are actually in day to day trouble.
If you own a house close to good services you will be protected from a crash and recover quicker. Many investment properties are in such places. Crashes aren't actually as bad as people think and certainly not enevitable espically in a country with an increasing population let alone high employment and the highest home ownership.
This is exactly the sentiment that is destroyed during a crash... everything will NOT be alright for people starting the crash in a highly leveraged position...gearoidmm said:belief that eventually the price will rise and they will make money. ...people will still convince themselves that everything is going to be alright..
Many people quote huge drops yet in many cases that means houses prices would drop below construction costs.
walk2dewater said:Where will people live? In their houses of course. I'm talking about the PRICES of houses not the physical thing. etc...
ubiquitous said:I think that this point misses the fact that the sharp property price inflation of the past 10 years has generated a parallel surge in construction costs. (In 1995/96 it was eminently possible to build a house in most parts of the country for IR£30-40,000 plus site costs.)
Loki said:I don't get what your point is.
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Loki said:Sorry what are you saying? House prices will crash and all house prices will crash and nobody will be able to sell their property?
Where will people live? Why will people need to sell their homes? If it is only investment property I think you are mixing up financial information and reality.
AFAIK in the UK crash many properties recovered within a year or two. The properties that stayed in negative equity were mostly up north in areas of large unemployment at the time of pruchasing let alone after the crash. even in negative equity it doesn't mean you are actually in day to day trouble.
If you own a house close to good services you will be protected from a crash and recover quicker. Many investment properties are in such places. Crashes aren't actually as bad as people think and certainly not enevitable espically in a country with an increasing population let alone high employment and the highest home ownership.
jpd said:It will probably turn into a seller's market - as did the UK and France, at least for those with spare cash!
woods said:The problem with a lot of people is that they will see the value of their house as being the highest value that it reached before it drops (if it drops) and not the price they paid for it, and will be measuring their loss from there.
We did not make one penny on the first 3 houses that we owned in Ireland because there had been no increase in value while we had them. We were lucky to get our money back so all we had was the benefit of having a home for the years that we were there.
Most home owners in the country have seen an increase in the value of their property and the drop will have to go below this average gain before it would get to be a problem for the economy.
The increase will have to come to a stop but I do not think that it will come to a sudden jarring halt that will catapult us all out of our orbits.
Exactly. Economists are sensible rational people. Year after year they declare the housing market is at unsustainable levels, yet year after year prices go up. They have not been "wrong", their analysis appears correct which is that prices are overvalued.Loki said:Economists can miss social elements.
hmmm said:Exactly. Economists are sensible rational people. Year after year they declare the housing market is at unsustainable levels, yet year after year prices go up. They have not been "wrong", their analysis appears correct which is that prices are overvalued.
What they can't factor into their algorithms is the mass hysteria that is driving the housing bubble worldwide. For a rational investor, they can choose to ride the fundamentals or they can ride the momentum in a market.
Economists therofore can't predict anything as people do things based on social order not on economic principle. If economists ignored the weather effect of food production they would always be wrong if they ignore social order on housing they will get it equally wrong. There analysis is either correct or not. If they say x will happen and it doesn't you don't get to say they got the calculations right so they are right. X didn't happen their prediction has been wrong I don't accept that as their logic makes sense that makes them right.hmmm said:Exactly. Economists are sensible rational people. Year after year they declare the housing market is at unsustainable levels, yet year after year prices go up. They have not been "wrong", their analysis appears correct which is that prices are overvalued.
What they can't factor into their algorithms is the mass hysteria that is driving the housing bubble worldwide. For a rational investor, they can choose to ride the fundamentals or they can ride the momentum in a market.
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