Supply.. or lack thereof

Recent conversations with workmates and my landlord lead me to believe that people who dont have to sell, will not countenance selling at current prices, as they simply believe they are too ‘low’, “youd be mad to sell at that price” etc. At this point of the boom-bust cycle, and with even mainstream media acknowledging that a return to boom prices is unlikely\a long way off, people seem still unwilling at a gut level to accept that bubble prices are gone, even if they can logically accept that they are.

Is it going to be a standoff forever ?

No, but there is a lag.
So last years prices seem high now, same way as current prices shall seem high next year.

So some may not have to sell but may eventually confront the reality that they are losing more by holding on,
and even loosing any rents in the eventual sale price.

I reckon a lot of people can’t sell now. The bank won’t relinquish the deeds of the house until the mortgage is cleared. So if mortgage is say €400k for example and you get €300K for the house… I don’t believe the bank will actually allow you to sell, unless you have a handy €100 k ticked up your sleeve. I reckon that has a bit to do with some people refusing to slash the price of their house after years of no offers

+1. I asked a local EA if that was an issue in the local area and I was told it’s a major factor with vendors not reducing their price. They can’t close the sale at anything less than the asking price.

This makes total sense, however the people I am thinking of would have little or no mortgages relative to the current value of the property. They can sell, and realise a large profit, whether to bank it\trade up to another house (which itself would be getting more affordable all the time), yet choose to sit tight, because of a vague sense of ‘not getting what its worth’. This is why I fear the supply of suburban 3/4 bed family homes might stay at a trickle regardless of economic conditions…

It’s a mad situation really. They need to sell, can’t sell at current prices, the longer they wait the more their asking price is above market rate the less likely they are to sell. In my opinion executor sales seem to be moving a lot faster, presumably as they aren’t stuck to a certain lowest possible price.
I wonder if the difference between a house requiring modernisation and one in turn-key condition will grow due to this?

Smacks of a little greed aswell tbh. They could have bought in early 90s, be mortgage free or a tiny bit to go. Selling now, even at today’s prices, may earn triple what it cost them pre bubble, allowing for a trade down up, or more likely down if near retirement age and still leaving a nice sum of cash.

But no, sure I’d have got double that in 2007. Yes,in 2007 you would have made 6 times what you paid for it in the early 90s, but surely 3 times more in 2012 is enough, no?

There is a shortage of houses in Dublin.

During the boom developers built apartments rather than houses.

Over the last 5 years the population of Dublin has both grown larger and older. Thus the demand for family homes has increased but supply has remained fixed.

House prices are going to increase but apartments have still some way to fall.

What do these people move to if they sell?

What exactly is the logic for selling in this market if your mortgage is nearly paid off?

There’s a shortage of houses in my price range I tell you! I have alerts set up and am getting very few and nothing I want to go and see.

That’s a silly way of thinking of things is it not? If you have no mortgage it’s much of a muchness whether you sell at the height of the bubble to downsize or now, you still are getting more from your own house than you need for the next house. And if someone is downsizing for retirement there is no point hanging around, sure they’ll be long dead before prices ever get back to 2007 levels!

Any good with your hands?

I reckon a builder could turn a profit on a SCD fixer-upper (as in ‘in need of modernisation’, not a partial re-build) in the current market, as long as they paid cash for the house and could get it ready and back on the market within 3 months of getting the keys. Mid-level finish would do: semi-solid floors, a few tiles, neutral paint job, a couple of new fireplaces, IKEA monochrome kitchen (self-installed).

Personally, I’m definitely leaning towards a tired ex-rental at this point, rather than sticking an extra 50-100K onto the mortgage (not to mention getting into bidding for a ‘turnkey’ finish) to buy someone else’s styling. Short term pain with personal loans and/or continuation of hard saving will be the order of the day for the first 3-4 years methinks.

Yes, they are looking at it in a silly way. They won’t see those 2007 prices again for a long time.

I was going off JoeDolce’s implying that he has friends who want to sell in this market, for whatever reason, but refuse to as they wouldn’t get top bubble prices. They clearly still make a profit on 2012 prices compared to original cost but that seems not enough for them.

:unamused:

I’ve also come across similar anecdotal evidence of people who actually have the means to buy but are constrained from selling. Admittedly, in at least one case, the constraint is partly their own fault, as they are unwilling to dip into their war chest (“that’s for buying a bigger house”) in order to stump up for any negative equity shortfall after selling - their view is that the bank should just roll over that shortfall onto the new mortgage when they buy another house. (There are obvious reasons why the bank would be reluctant to do that - there’s no guarantee that after selling their own house, these people will actually buy into a new house that provides suitable security for that shortfall.)

BTW @Coles2, thanks for recommending daftdrop.com in your signature. It is indeed brilliant - kudos if you had any part in its development. I was quite surprised to learn that in my two main target areas of SCD, asking prices fell by less than 4% from May 2011 to April 2012. That level of granularity is very useful and I certainly recommend the site to other pinsters.

I was just looking on daftdrop graphs.

there is a pie chart showing the number of house for sale in each of the counties.

The top 5 are:
Cork 7461
Dublin 5319
Galway 4878
Kerry 4582
Mayo 3563

So there are more properties for sale in Cork than in Dublin, and nearly as many in Galway as in Dublin?

Surely the vast majority of people selling these houses (3-4 bed suburban semis) SHOULD still have the same reason for moving now as they always had, regardless of ‘this market’ as you put it ? Either to move to a different location, a bigger\smaller\different house ? And in each of these cases, they are at least as well off (and probably better off now) than they would have been doing it at the boom ? For example, trading up at the height of the boom would have cost them 500k, but now it will only cost them 300k (net) to get the same ‘better’ house. However they wont budge…

The average age is rising from a very low number.

There are more young families looking for a house than old people looking to downside.

Ireland is not Germany in more ways than one.

Stop digging :laughing:

There is nearly nothing in the trade up space in Cork at the moment. The sellers are on strike.

Long time lurker - First post - Be gentle :stuck_out_tongue:

IMO sellers are holding property off the market in Cork.

There is another form of sellers strike in Cork, whether from groupthink or auctioneers advice where prices seem firmly attached to bubble years levels. There seems to be a state of almost total denial about the extent of the decline in prices in the market generally - Its different in Cork !

Contrast prices for similar 3 & 4-bed houses in Dublin City and Cork City - it seems those in Cork are seeking higher prices.

I have been looking to buy in Cork City for over 4 years. In that time, I have seen totally overpriced houses in poor to dreadful condition - In fact I have only seen one house fit for immediate occupation. I am prepared to wait patiently for the inevitable repossessions and the subsequent appearance of realsitic prices (about equivalent to a 7% rental yield).

Whatever about sellers, the number of properties on the market on Daft in Cork Vs. Dublin shows that the buyers are most definitely on strike too. 8DD