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Credit deflation and the reflation cycle to come (part 2)


spunko

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Green Devil
11 hours ago, Barnsey said:

I must be mad but have arranged a viewing for a property tomorrow, one that initially came onto market a year ago, has gone sold STC twice, and now back on for the same guide price but key difference this time is “no upward chain”.

I know many of you will say it’s too early, but I’ve mulled over a potential price if we like it, around 13% below asking. Long list of genuine potential issues, but from the tone of the busy estate agent (so many offers rushing in since lockdown was lifted, rushed off their feet apparently), I’m confident my offer will be rejected instantly, even though we’re first time buyers with 2 mortgages in principal and 1 months notice for our rental flat. I could offer even less but I’m also looking at what % a further year of renting would add up to. We’re ahead of the game in the sense we rent on the same development so know the issues well with the area and the potentially patchy build quality. Perhaps this knowledge might scare them off?

Just wanted to ask, is it generally acceptable, in an offer email, for me to list all the reasons why we’re making a lower offer to at least back up how we reached this price? I’m certainly not going any higher so it’ll be a one and done. If rejected then I know it’s too early and we’ll take a back seat and continue saving for now.

Depends on the property. Rest assured any spin the scumbag is spouting is BS.

Since its already sold and fell through twice, i would just put youre offer in. Say youre in rented good to go and no chain. Leave it at that. If theyre end of chain all well and good. If not, dont expect any reply soon. The way EAs work is you wont get a reply unless they have exhausted all the other potential purchasers might pay more. Move on, find a forced sale, death divorce debt.

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12 hours ago, Barnsey said:

Just wanted to ask, is it generally acceptable, in an offer email, for me to list all the reasons why we’re making a lower offer to at least back up how we reached this price?

I did that once.  All it did was annoy the vendor.  Such lists read a bit grubby and justify the price if not very good.  Next time I would just put in the offer saying it's a nice house but that's what it's worth to me given everything.   That I would be happy to talk.  I would also be prepared for a symbolic give in some area.  Let them ask if they want to.  They'll feel better for asking than being told.  But each to their own. 

PS:  Whether it's sane to buy anything right now, who knows.

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1 hour ago, MrXxxx said:

I think you probably know the right answer yourself...you cite all the reasons here as to why you should wait, but still think about the `rent is dead money`...I look on renting as giving a opportunity to time a purchase, and with things the way they are you will have either a) security of tenure until you do so, or b) have a buying opportunity from your current LL.

It would be dangerous of me to take that view @MrXxxx as I’d probably go loopy thinking about just how much rent I’ve paid over the years (£100000 over last 8 years in our previous damp, no central heating, mice infested, crumbling 60’s kitchen, 1 bed in SW London, and probably somewhere around £140000 in total over the 14 years I’ve been with my better half). Renting has given us flexibility, and we've had ok landlords over the years. 

But I’ve continued to rent as many others bought, expecting a crash back in 2016, and here we are 4 years later with activity apparently picking up after the biggest economic shock in a very long time. This in itself simply can’t be possible, which makes me think I’m too early, but how prolonged will a 20% decline in nominal prices be? 2 years perhaps? That’s another £15000 in rent, around 8% of asking price.

BOE forecast -16%, Aviva -12%, CEBR -13%, could and probably will be worse, but over how long I ask myself, and what crazy monetary madness will be conjured up by everyone to prevent falls going much further than that? #jaded
 

By relocating to the Midlands we’ve almost halved our rent so I’ve reduced the sense of urgency, and we’re happy in this flat for the time being, but when you’ve waited for your own place for so long, it’s hard to see the wood for the trees, especially when reasonable and calculated expectations for a correction continue to be demolished. They learned a lot from the previous crash about scale and speed.

Pre-COVID I was aiming for 15% off anyway as this isn’t a massively bubbly area (big part of planning the relocation), if I can get 12% off and a years rent saved, secure a low fixed rate for the full term or 10 years at least, then I’m pretty much there. If we stayed in the SE then goodness knows how I’d feel right now, but the frustration was enough for me to leave a job I was happy in behind, drag the missus away from her friends, and struggle to settle into the new job, definitely not been easy but I’m sure it’ll pay off long term and fingers crossed my other half seems to be doing ok up here too. Thankfully prior to our 8 year stretch in London we had moved around quite a bit.

Thanks everyone for your advice, really helpful, I’ll be implementing it in the weeks and months ahead the best I can.

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Our house is for sale. 10% off asking and its yours. I'll even throw in the greenhouse which is currently full of tomatoes :Beer:

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16 hours ago, Dogtania said:

Saw mentioned somewhere gold confiscation being mentioned as a possible but unlikely thing.

Do you have any views on whether this could happen.  It happened in the US before but back then the dollar was convertible into gold now we have fiat so different.  But can't rule anything out so guess my next question is what would happen to the price of gold.  

When the gov has a printing press, why would they bother confiscating gold? Most people don't even have it these days. If they ever wanted to steal something tangible, they will rather target real estate or pensions. Some dollar-hungry countries may nationalise gold mines but that's a different story.

btw. It's usually gold dealers who spread the fear of confiscation and they've been doing it for years.

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9 minutes ago, BearyBear said:

When the gov has a printing press, why would they bother confiscating gold? Most people don't even have it these days. If they ever wanted to steal something tangible, they will rather target real estate or pensions. Some dollar-hungry countries may nationalise gold mines but that's a different story.

btw. It's usually gold dealers who spread the fear of confiscation and they've been doing it for years.

I think your right.  Maybe if more people had it would be a bigger issue.  I guess that I was imagining a time that hopefully is only in a dystopic sc-fi fiction land where TPTB raid all visible wealth - maybe to take control rather than monetary use.

Good point re gold dealers - I'm sure it's not logical to them but I'd be more inclined to be put off gold after hearing that though

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TheCountOfNowhere
30 minutes ago, Sasquatch said:

Our house is for sale. 10% off asking and its yours. I'll even throw in the greenhouse which is currently full of tomatoes :Beer:

Jeese, in 2007 there giving out ipads and cars.  Sign of the times.

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9 minutes ago, TheCountOfNowhere said:

Jeese, in 2007 there giving out ipads and cars.  Sign of the times.

I'll throw in my old iPad as well if it helps. :Old:

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PaulParanoia
17 hours ago, JMD said:

As for Corona - it really does look like it will be forever with us! I wrote very early on here that I had a nagging feeling (I admit stemming from pure worry, no theory involved on my part) that this virus would have as big an impact on us as climate change (at the time I even asked how we could benefit investment wise; but can now see how naïve that question was). However,  what do others think, was i/am I - corona catastrophising? 

The director of Public Health of the World Health Organization (WHO), María Neira, said on Monday that the models they are working with are "increasingly" ruling out a second important wave of the coronavirus.

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DurhamBorn

https://www.bbc.co.uk/news/business-52812709

People waking up to what a massive deflation and financial dislocation means medium term.Much higher prices.

Key part of the cycle ahead is building huge capital heavy projects is going to increase in price (after a lag as always,maybe 18 months) due to input inflation and slowly rising cost of captial.

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10 hours ago, DurhamBorn said:

https://www.rightmove.co.uk/property-for-sale/property-80124379.html

Thats two doors away from where i bought my first house in 1992.I paid £27k

Thats come up today for £35k,so lets say it goes for £32k (probably less)

I bought my house after a crash not before.Inflation adjusted that £27k would be £61,905 now

So that house has gone up £5k in 28 years nominal.Inflation adjusted only it should be double the price,so in 28 years its halved in price.

Property only ever goes up.

Two up two down terraces have no demand these days apart from landlords in the north,but its interesting.

 

 

2004 £62k ouch....

It's nice round there. Had family in Newton Aycliffe...

That's a place I would live in. Much nicer up North.

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This has just come on the market in one of our target areas. Very nice other than I don't like the colour of the kitchen cabinets. Do you think they would take 50% off? :D

We could live in the big one and in laws in the little one. 

https://www.rightmove.co.uk/property-for-sale/property-70694550.html

Joking aside, I think it has been a posh B&B for the last 3 or 4 years. I suspect business is not good.

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Talking Monkey
1 hour ago, Loki said:

That would be epic :ph34r:

Chinese exporters would love it, but wouldn't the inflation it caused just add to the internal tensions as the poor see their standard of living fall.

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11 minutes ago, Talking Monkey said:

Chinese exporters would love it, but wouldn't the inflation it caused just add to the internal tensions as the poor see their standard of living fall.

I did wonder if i should clarify that - i didn't mean good or bad, just big.  Hence the scared smileyxD

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1 hour ago, Loki said:

That would be epic :ph34r:

There is a possibility of that and the consequences are unimaginable to my simple brain. USD Index will probably skyrocket.

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DurhamBorn
46 minutes ago, Panda said:

2004 £62k ouch....

It's nice round there. Had family in Newton Aycliffe...

That's a place I would live in. Much nicer up North.

Yep around 2004 the houses in Co Durham doubled in price over around 4 months.Then that was it.The good semis have pretty much stayed at 2004 prices where the terraces have mostly been cut in half.Most of the terraces where bought by BTL,mostly southern BTL who didnt even visit.Most locals took their hands off and went and bought a better house.The main damage up here will be HTB.A lot of young people have bought them at crazy prices and have the lease audi and mini on the drive.Negative equity for a long time until capital payments catch up with the price falls.

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1 hour ago, PaulParanoia said:

The director of Public Health of the World Health Organization (WHO), María Neira, said on Monday that the models they are working with are "increasingly" ruling out a second important wave of the coronavirus.

Back to worrying about climate change then.  SSE boss now saying it's a bigger threat than corona and gov should invest.

@DurhamBorn ...your crystal ball works well

https://www.bbc.co.uk/news/uk-scotland-scotland-business-52778666

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DoINeedOne

Isa now fully allocated to hold

Repsol

Gazprom

RDSB

BP

SSE

TELEFONICA

BT

NUTRIEN

Fund & Share Account to hold and play with

VODAFONE

ROYALMAIL 

+ Bunch of different miners and cash 

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Castlevania
58 minutes ago, DoINeedOne said:

Isa now fully allocated to hold

Repsol

Gazprom

RDSB

BP

SSE

TELEFONICA

BT

NUTRIEN

Fund & Share Account to hold and play with

VODAFONE

ROYALMAIL 

+ Bunch of different miners and cash 

Which version of Gazprom did you buy? The ADR at least with HL when I checked couldn’t be held in either an ISA or a SIPP.

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