See I told you, it's Thatchers fault, btw I'll say it again, home prices have risen far more during Tony Blairs time in office than Thatchers.Curious Orange said:
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Home Ownership
- Thread starter Lord Bracknell
- Start date
Goring Gull
New member
Doesn't matter whose fault it is, but something needs to be done, all this moaning though you can still get a house for 15k in Burnley - Rather you than me though.
Lammy
Registered Abuser
DIFFBROOK said:
This is the best answer IMHO but will never happen. Why?
Because most of the MPs are land lords.
Storer68
New member
Lammy said:
Beacuse part of the deal was to prohibit councils from using the reveniue that selling houses brought them into using that money to build new housing, thereby shrinking the market and forcing prices to rise.
simple supplyside economics really
Storer68
New member
Now I could buy my father's house at the price he paid 40 years ago (four bedroom detached front and back garden, desirable location) with two months wages!
Whereas at todays prices at would take 17 years straight repayments (no fees, no interest and all spent on paying off the mortgage)
Whereas at todays prices at would take 17 years straight repayments (no fees, no interest and all spent on paying off the mortgage)
Uncle Spielberg
Well-known member
Don't forget most of the cabinet will have more than 1 property so taxing second home owners to the hilt ain't gonna happen.
Tessa Jowell £ 350000 loan , pay it off in a few weeks from cash. Not really in the same world as me and you are they
Tessa Jowell £ 350000 loan , pay it off in a few weeks from cash. Not really in the same world as me and you are they
tinx
Well-known member
Lammy said:
Yes but thats the jump from a small flat to a reasonably sized three bed house. Still we're planning on staying put for a fair few years now and I have ONLY got another 17 YEARS and I'll own the place outright
Barnet Seagull
Luxury Player
DIFFBROOK said:
bingo.
Hatterlovesbrighton
something clever
Uncle Spielberg said:Don't forget most of the cabinet will have more than 1 property so taxing second home owners to the hilt ain't gonna happen.
Tessa Jowell £ 350000 loan , pay it off in a few weeks from cash. Not really in the same world as me and you are they
Eh by that reckoning they would change the tax rate for high earners to 0% but they don't.
Agree though that the £350,000 is a bit mad and I work for her!
Goring Gull
New member
Barnet Seagull said:
Single dwellers is all down to society
That's all down to a more selfish society less people in relationships because both men and especially women expect so much more of people they all want big houses, good careers and kids. unfortunatley in most cases things have to be compromised and these days people aren't preapred to sacrifice the satelite tv or the flash car etc etc.
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acrossthepond
Active member
Which quote to pick?!
The movement of property from public to private ownership is a done deal, and your opinion as to whether that is a good thing or a bad thing will depend on your personal circumstances, and political hue to a degree. (and the Oscar for stating the bloody obvious goes to...)
What it did was move a great chunk of the housing stock into the hands of Joe in the street for a limited period of time. All the points about increasing cost are well made, and it will in all liklihood push more people to longer mortgage terms, and it is the banks that will really own the property. If you have a 50 year mortgage term, then it is really the bank that owns the property, until you or more likely your kids pay it off. if indeed you ever do, because paying for education, social care etc will continue to eat into the virtual capital that you have in a property, and lead to extending the length of tme until the loan matures.
If the local authorities had retained ownership of the housing stock, then the costs of maintaining and replacing those properties would have broken many of them, though not all.
With having properties being perceived to be in private hands, the resonsibility reverts to the 'homeowner' to keep the place in good nick. If in future the property is bought on a longer term mortgage, the effective landlord, the bank, is absolved of responsibility for upkeep, even though it's generating income off the back of the property.
Now the REALLY good bit in all of this is the fact that our social security system is screwed. The way the system is set up, younger generations have always payed for older generations in terms of pensions, care etc. This system is going to fall apart long before I get to the age where I could expect younger generations to be paying for me, as there won't be enough cash in the pot. I'm 34
So how will people pay for it?
Their 'assets' - which are?
I'm off to throw my crystal ball down the Karzi.
flame away...
The movement of property from public to private ownership is a done deal, and your opinion as to whether that is a good thing or a bad thing will depend on your personal circumstances, and political hue to a degree. (and the Oscar for stating the bloody obvious goes to...)
What it did was move a great chunk of the housing stock into the hands of Joe in the street for a limited period of time. All the points about increasing cost are well made, and it will in all liklihood push more people to longer mortgage terms, and it is the banks that will really own the property. If you have a 50 year mortgage term, then it is really the bank that owns the property, until you or more likely your kids pay it off. if indeed you ever do, because paying for education, social care etc will continue to eat into the virtual capital that you have in a property, and lead to extending the length of tme until the loan matures.
If the local authorities had retained ownership of the housing stock, then the costs of maintaining and replacing those properties would have broken many of them, though not all.
With having properties being perceived to be in private hands, the resonsibility reverts to the 'homeowner' to keep the place in good nick. If in future the property is bought on a longer term mortgage, the effective landlord, the bank, is absolved of responsibility for upkeep, even though it's generating income off the back of the property.
Now the REALLY good bit in all of this is the fact that our social security system is screwed. The way the system is set up, younger generations have always payed for older generations in terms of pensions, care etc. This system is going to fall apart long before I get to the age where I could expect younger generations to be paying for me, as there won't be enough cash in the pot. I'm 34
So how will people pay for it?
Their 'assets' - which are?
I'm off to throw my crystal ball down the Karzi.
flame away...
Lammy
Registered Abuser
tinx said:Yes but thats the jump from a small flat to a reasonably sized three bed house. Still we're planning on staying put for a fair few years now and I have ONLY got another 17 YEARS and I'll own the place outright
The best way to save money is to plough as much extra cash as you can afford into your mortgage. You will see a much bigger return than any saving account. If you overpay by £10 that is £10 that will not be gaining in interest over 17 years. Probably save you about £1000.
Barnet Seagull
Luxury Player
Lammy said:
You'd be far better off saving towards your pension.
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Rougvie
Rising Damp
I think way too many people in their twenties whine on a bit too much about how they cant afford to buy a house.
Maybe if they spent a little less on SHITE and racking up massive credit card bills and other debt then they may be able to afford it, but then the reality of the salary that a lot of people acheive when they leave uni is way less than they thought it would be when the racked up the debt in the first place.
Maybe its a tad boastfull, but I have never had a credit card or loan in my life (well other than 3 mortgages now), earn a decent salary, but by the time I was 30 (only 2 years ago) I had managed to buy a 3 bed house and a flat in Brighton (one on a buy to let).
If you are prepared to work at saving there really isnt much excuse.
Maybe if they spent a little less on SHITE and racking up massive credit card bills and other debt then they may be able to afford it, but then the reality of the salary that a lot of people acheive when they leave uni is way less than they thought it would be when the racked up the debt in the first place.
Maybe its a tad boastfull, but I have never had a credit card or loan in my life (well other than 3 mortgages now), earn a decent salary, but by the time I was 30 (only 2 years ago) I had managed to buy a 3 bed house and a flat in Brighton (one on a buy to let).
If you are prepared to work at saving there really isnt much excuse.
Lammy
Registered Abuser
Barnet Seagull said:
Ideally you'd want to do a bit of both. Personally I pay a fair bit into my pension. However I don't want to spend my entire life simply plough all my money into my retirement. I'd much rather work at getting rid of my mortgage sooner rather than later so that I have alot more desposable income whilst I'm still young enough to enjoy it.
Pensions go up and down too so the money you invest may not show that great a return. However, you mortgage interest will always go up. The best time to pay money into your mortgage is when you first get it. This way you avoid the long term interest payments over the full 25 year term. The same could of course be said for a pension. The only trouble with that is if you decide one month that you don't want to pay the extra, as you want to go on holiday or if you want to go to minimum payment when your kids are at uni, then you will still need to pay the full mortage amount. If that money had been invested in you mortgage then you will have much less to pay freeing up vital income when you need it most.
Goring Gull
New member
Rougvie said:
I'd agree in some extent to that, I've never owed any money or even had a loan saved upo 12k in cash for a car once, maybe should have put it towards a house or flat but when i was 19 that wasn't a top priority. Also at that age and living at home i'd blow 5k roughly on going out on the piss and parties but it was always money i had not money i'd borrow. Iknow some right dickheads who borrow cash to go n holiday, have nights out etc. I'm sorry if the money isn't there you shouldn't be spending it.
As for uni leavers well most of them take these courses to avoid working for three years then moan when they owed thousands and end up temping at Lloyds bank registars. No time for them at all.
Lammy
Registered Abuser
Rougvie said:
Totally agree with this.
Oh btw that's ANOTHER starter flat off the market
Goring Gull
New member
I was always brought up to save money and when i was living at home i always put about £300 a month away.
Minute i wanted a house though i was saving like mad, even if it meant only 1 night out a week so be it, even downgraded my car and i loved that car.
Minute i wanted a house though i was saving like mad, even if it meant only 1 night out a week so be it, even downgraded my car and i loved that car.
Lammy
Registered Abuser
Goring Gull said:
1 night a week! I was living with my parents drinking homebrew for a year!
This article is US-centric but very interesting
Forget what your friends say. Owning a home is hardly the best way to save for retirement. How do we know? We ran the numbers.
MOST PEOPLE THINK of their home as a blue-chip growth investment — especially in times like these, after the stock market has come through a long decline.
The truth is, it's more like the most expensive mutual fund you can imagine: Not only does it have a front load consisting of closing costs, moving expenses and other charges, but it exacts high management expenses each year, in the form of maintenance and property taxes. Then, on top of all that, most people get charged a 6% back-end load for the broker's fee when they sell.
Do the benefits of leverage and tax breaks outweigh the "loads"? Sometimes. But not by as much as you'd think. For most of us, building wealth with our residence is a slow and inefficient process — if it works at all. It's especially hard in this era of low inflation simply because the underlying asset, your home, typically doesn't appreciate very quickly. Compared with average share prices or even bond returns, house prices plod upward at a very slow rate: since 1979, about 4.4% a year. If you can't do better than that in the stock market, you need to fire your broker.
Real estate enthusiasts will point out, correctly, that you can leverage your purchase of a home — that is, realize a profit on the total value of a house with only a small down payment. When you combine that with incredibly generous tax breaks, an inherently tepid asset becomes a better wealth-building tool. But there are other costs that offset those advantages. For one thing, the house you live in has a much higher carrying cost than your other investments. Not only do you pay mortgage interest and insurance premiums, but you often get hammered with significant property taxes. And don't forget maintenance. That's easy to ignore — especially in years when you don't have to paint, fix the roof or replace the boiler. These add up, especially over the long term.
--------------------------------------------------------------------------------
The right way to treat your house is as an expense — one that, if you're lucky, will pay you a rebate when you're done with it.
--------------------------------------------------------------------------------
In order to quantify just how good an investment the typical house is, we built a model that takes each payment you make on your house and calculates what would have happened if you had instead invested that payment in a hypothetical investment that returns a fixed rate each year and is subject to the 20% capital gains tax.
The average American home has appreciated somewhere between 3 and 6% a year during the past 20 years, depending on which time period you look at. Let's say you buy a house for $250,000 and get the high end of that range: 6%. That means you will be able to sell it for almost $376,000 after seven years, the average time active buyers and sellers own their homes, according to the National Association of Realtors. Nice gain, right?
But what did it cost you? Let's say you put down 20% to avoid having to buy mortgage insurance. You should expect to pay $800 to $1,000 or 2% of the house's value, whichever is higher, in closing costs. Let's say you get lucky and end up paying only 1.5%. Assuming you're equally lucky and pay slightly less than the averages across the board, you'll end up with a 7% mortgage, property taxes of about 1.5%, annual repair costs of about 1% of the purchase price, tax and repair inflation that rises slower than the overall consumer price index, 1% initial furnishing expenses and annual insurance premiums of about 0.3% — and your income-tax break will be figured at a 32% combined federal and state rate.
After selling the house, you'd have to fork over $22,554 to the broker and $182,295 to satisfy the outstanding mortgage principal, leaving you with $171,058. Your total payments over the seven years would have amounted to $167,011 (including the tax givebacks), leaving you with $4,047 to add to your wealth — the equivalent of a 1.1% annual return. If you hold the house for 12 years — the NAR's best guess at the average homeownership period for the whole population — your selling price would rise to $503,049. Your share of that goes up to $309,702 because you have less mortgage principal to pay back. Of course, your total payments rise as well, to $249,247, but the final proceeds of $60,456 represent the equivalent of a taxable investment with a 3.7% annualized gain. Let's say the house appreciation rate drops, to 4.5%. Now the proceeds fall short of your total 12 years of expenses by $13,878. For seven years of ownership, you would find yourself out $29,503.
Hot markets perform better, right? Surely you can do better in the San Francisco Bay Area, San Diego or Westchester County, N.Y.? In fact, if you have a very high appreciation rate, the leveraging advantage really does kick in. Take the same $250,000 house with 9.2% annual appreciation — the highest rate for a major metro area over the past 10 years. In that case, your equivalent annualized return rate would be 11.2%. Not bad. Of course, you can't make the case for investing your retirement savings in a house by cherry-picking only the best markets for proof. For one thing, most of us don't have the option of living in the hot markets. For another, they seldom stay hot for more than a decade at a time. The tech wreck is already killing housing prices in the Bay Area.
The fact is, when it comes to outsize returns, equities win walking away. In one of the worst 12 months in recent Wall Street history, 16 of the 80 stock sectors we track here at SmartMoney still had gains of 30% or more.
Once you stop looking at your house as an investment, it's easy to see the real advantages of homeowning. Take the case cited above, where you are out $29,503 for living in a house seven years. Could you have rented the same living space for what amounts to a little more than $350 a month? We doubt it.
In other words, you should treat your house as an expense — one that, if you're lucky, will pay you a rebate when you're done with it. That's what it really is. A home is your "best investment" only metaphorically — if it helps you achieve a more comfortable life. If you do it right, your house purchase will free up much more of your income — now and in the future — to fund some truly outstanding investments.
--------------------------------------------------------------------------------
Forget what your friends say. Owning a home is hardly the best way to save for retirement. How do we know? We ran the numbers.
MOST PEOPLE THINK of their home as a blue-chip growth investment — especially in times like these, after the stock market has come through a long decline.
The truth is, it's more like the most expensive mutual fund you can imagine: Not only does it have a front load consisting of closing costs, moving expenses and other charges, but it exacts high management expenses each year, in the form of maintenance and property taxes. Then, on top of all that, most people get charged a 6% back-end load for the broker's fee when they sell.
Do the benefits of leverage and tax breaks outweigh the "loads"? Sometimes. But not by as much as you'd think. For most of us, building wealth with our residence is a slow and inefficient process — if it works at all. It's especially hard in this era of low inflation simply because the underlying asset, your home, typically doesn't appreciate very quickly. Compared with average share prices or even bond returns, house prices plod upward at a very slow rate: since 1979, about 4.4% a year. If you can't do better than that in the stock market, you need to fire your broker.
Real estate enthusiasts will point out, correctly, that you can leverage your purchase of a home — that is, realize a profit on the total value of a house with only a small down payment. When you combine that with incredibly generous tax breaks, an inherently tepid asset becomes a better wealth-building tool. But there are other costs that offset those advantages. For one thing, the house you live in has a much higher carrying cost than your other investments. Not only do you pay mortgage interest and insurance premiums, but you often get hammered with significant property taxes. And don't forget maintenance. That's easy to ignore — especially in years when you don't have to paint, fix the roof or replace the boiler. These add up, especially over the long term.
--------------------------------------------------------------------------------
The right way to treat your house is as an expense — one that, if you're lucky, will pay you a rebate when you're done with it.
--------------------------------------------------------------------------------
In order to quantify just how good an investment the typical house is, we built a model that takes each payment you make on your house and calculates what would have happened if you had instead invested that payment in a hypothetical investment that returns a fixed rate each year and is subject to the 20% capital gains tax.
The average American home has appreciated somewhere between 3 and 6% a year during the past 20 years, depending on which time period you look at. Let's say you buy a house for $250,000 and get the high end of that range: 6%. That means you will be able to sell it for almost $376,000 after seven years, the average time active buyers and sellers own their homes, according to the National Association of Realtors. Nice gain, right?
But what did it cost you? Let's say you put down 20% to avoid having to buy mortgage insurance. You should expect to pay $800 to $1,000 or 2% of the house's value, whichever is higher, in closing costs. Let's say you get lucky and end up paying only 1.5%. Assuming you're equally lucky and pay slightly less than the averages across the board, you'll end up with a 7% mortgage, property taxes of about 1.5%, annual repair costs of about 1% of the purchase price, tax and repair inflation that rises slower than the overall consumer price index, 1% initial furnishing expenses and annual insurance premiums of about 0.3% — and your income-tax break will be figured at a 32% combined federal and state rate.
After selling the house, you'd have to fork over $22,554 to the broker and $182,295 to satisfy the outstanding mortgage principal, leaving you with $171,058. Your total payments over the seven years would have amounted to $167,011 (including the tax givebacks), leaving you with $4,047 to add to your wealth — the equivalent of a 1.1% annual return. If you hold the house for 12 years — the NAR's best guess at the average homeownership period for the whole population — your selling price would rise to $503,049. Your share of that goes up to $309,702 because you have less mortgage principal to pay back. Of course, your total payments rise as well, to $249,247, but the final proceeds of $60,456 represent the equivalent of a taxable investment with a 3.7% annualized gain. Let's say the house appreciation rate drops, to 4.5%. Now the proceeds fall short of your total 12 years of expenses by $13,878. For seven years of ownership, you would find yourself out $29,503.
Hot markets perform better, right? Surely you can do better in the San Francisco Bay Area, San Diego or Westchester County, N.Y.? In fact, if you have a very high appreciation rate, the leveraging advantage really does kick in. Take the same $250,000 house with 9.2% annual appreciation — the highest rate for a major metro area over the past 10 years. In that case, your equivalent annualized return rate would be 11.2%. Not bad. Of course, you can't make the case for investing your retirement savings in a house by cherry-picking only the best markets for proof. For one thing, most of us don't have the option of living in the hot markets. For another, they seldom stay hot for more than a decade at a time. The tech wreck is already killing housing prices in the Bay Area.
The fact is, when it comes to outsize returns, equities win walking away. In one of the worst 12 months in recent Wall Street history, 16 of the 80 stock sectors we track here at SmartMoney still had gains of 30% or more.
Once you stop looking at your house as an investment, it's easy to see the real advantages of homeowning. Take the case cited above, where you are out $29,503 for living in a house seven years. Could you have rented the same living space for what amounts to a little more than $350 a month? We doubt it.
In other words, you should treat your house as an expense — one that, if you're lucky, will pay you a rebate when you're done with it. That's what it really is. A home is your "best investment" only metaphorically — if it helps you achieve a more comfortable life. If you do it right, your house purchase will free up much more of your income — now and in the future — to fund some truly outstanding investments.
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