Negative Equity is upon us!

  Uboat 10:52 07 Mar 2011
Locked

Morning folks! as some of you may or may not know I rent my house from a good friend, simply because we don't have any need to buy at the mo, anyway the landlady is selling the house we live in which we knew about ages ago so it comes as no shock!

Anyway the Estate Agents have just left some 20 mins ago as well as the landlady who paid £110K just under 3 years ago, She has had the house valued today of which she had spent £20K on getting the walls re-plastered/new bathroom with a nice corner bath,roof & electric's etc, the estate Agent told her although it's in a very nice area of Lincolnshire the house wouldn't go for anymore than £89k at a push??

My landlady has in fact lost a lot of money, I think that this is terrible, we live our lives & try to excel to be bitten in the rear!

DO i get the feeling this type of thing is going to get worse?

  oresome 11:21 07 Mar 2011

Worse for who? There are always two sides to a story.

Good news for first time buyers I'd have thought if property prices fall.

Why should property be expected to continually rise at above inflation rates in order to keep property owners in the life to which they have become accustomed?

The young in effect being made to pay for the lifestyle of an older generation who have also benefitted from generous final salary pensions in many cases.

  Chegs ®™ 11:39 07 Mar 2011

I agree with oresome.Too many people buy property expecting the value to rise and get brought to earth with a bump when its value stays the same or drops.

  Grey Goo 11:55 07 Mar 2011

Yes and it's probably us filthy rich pensioners that are helping out our kids in many cases. I get really pissed with the attitude that the older generation have somehow blighted the youngsters.
If you took the trouble to find out you would probably find out it is the Fortysomthing generation of me firsts that have precipitated the greed and avarice in society of today.
Us oldies can still read books,find out the route to where we want to go without a bloody SatNav and know what day of the week it is without going on line to find it out.

  Woolwell 12:07 07 Mar 2011

Have you considered that one reason for the low price may be you? This house may well be on the market as a rental property with existing tenant and then it depends on your rental agreement and how much you are paying.

Ps We don't want to nor should we know about your rental arrangements.

  PaulsonW 12:12 07 Mar 2011

Well, there's a cheery lot of Monday-morningers for you.

Your friend will probably have to wait two or three years for the value to soar again. Which it most certainly will.

  interzone55 12:33 07 Mar 2011

We've just bought a house for £75k

Previous owners only used it as a holiday home, spent probably 60 days there in the last three years.

They paid £125k for it, plus extra cash for furnishings etc which they've left for us.

That's at least £50k lost in three years, or almost £1,000 per night spent there...

  SparkyJack 12:52 07 Mar 2011

At the looking at the value of 'Things' Car deprecation is one
'Negative equity' is another
Unless you own outright your accommodation-[or a squatter] you will be paying someone for the right to occupy that place.
That is all there is to it.
It matters not whether it is 'rent' to a landlord or mortgage to a lender- you are paying.

Or to look at the situation another way any figure given for the price 'paid' for the 'purchase' is equally false because it does not take into account the interest element paid whilst in possession- which could make the 'loss' situation look worse.

  interzone55 14:18 07 Mar 2011

Good point.

If you pay for a property using a mortgage you are instantly in negative equity unless you've paid a whacking deposit, because the 25 years of interest added to the purchase price will probable come close to doubling the initial outlay.

  Uboat 14:41 07 Mar 2011

Woolwell Not sure what side of the bed u woke up on but that wasnt a nice reply! what justified a reply like that?

Alan14 well done!

  carver 14:50 07 Mar 2011

We are in the position of having paid in full for our house and when we bought it it's purpose was for it to be a home.

Too many people bought houses as investments and expected to make a fortune, the property market has burnt a lot of peoples fingers and to be honest I'm not one bit sorry for those people.

The ones I feel sorry for are the ones who had to pay over the odds just to get a first time house and now can not sell because of negative equity.

One thing that keeps value on a house more than anything else is location, we live close to 3 very good schools and the prices are still going up.

If we move to Lincolnshire we can buy something like this click here or this click here for less than the cost of our house and it's all to do with location.

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