Property crash, just maybe it really is different this time (Part 2)

[JoeDavola]

There's also the pressure in this line of work to stay young and hip forever - I thought the bloke had a suspicious amount of hair for a 40-something especially since you can see he was receeding in his early/mid 30s in the older videos; being well versed in this stuff I can see in this video from 2 years back he's had a hair transplant - that's a transplanted hairline....but beyond that the reason why that video caught my eye is imagine your father dying and your knee-jerk response a day later being "this will make good YouTube content" - not saying this fella is a bad bloke or didn't love his Dad; just the lives these people lead are so alien to me - nothing is sacred it seems.

 

Edited June 25, 2023 by JoeDavola

[reformed nice guy]

2 hours ago, Axeman123 said:

Who the fuck relies on content creation income to service a mortgage?

 

SCENE: High street bank

BANK MANAGER AT DESK, COUPLE ENTER STAGE LEFT

PREAMBLE OF REMORTGAGE DISCUSSION

Bank manager: So how will you be funding these increased payments?

Man: I am glad you asked that. We are going to pivot our channel to a more profitable split core, isn't that right babes?

Woman: That's right hun. I am going to be doing yoga in skin tight leggings with enough camel toe you could park a bike in it. I will also review diet pills and mindfulness apps.

Man: I am now a Web 3.0™ bro. I will be talking ordinals, staked wrapped coins and helping my loyal followers become millionaires. I will also talk about the latest EVs natch.

Bank manager: So...... what are your monthly earnings?

Man: You see, Web 3.0™ is more than just earnings. You are adding value to the community and receiving waves of value in return. There are no such things are wages or salaries. If you add value, value adds you.

Woman: Like, totally. We will do at least 3 videos a week as well as 3 twitches, 1 exclusive of course, and that will grow our content.

ZOOM TO BANK MANAGER FOR INNER DIALOUGE

Bank manager: What a load of shite

FADE TO BLACK

[Butthead]

2 hours ago, JoeDavola said:

Got this randomly reccomended to me on YouTube - had never heard of the fella or his channel.

Not really worth watching the video but the TLDR is he says he simply can't afford his house at today's IR's and will be selling up and moving the family to Portugal.

So I spent a few minutes checking out their YouTube channel - they seem to be living this dream perma-vacation life with a couple of kids couple of dogs very decent house in Bath which I know is an expensive place. @gibbon might get a laugh looking at their YouTube page looks like the sort of awful hipsters hes mentioned - these ones putting their entire lives on YouTube for the clicks.

Anyway it appears neither of them have 9-5 jobs and are 'content creators' for a living. Maybe you can earn very good doing that I dunno, but it seems obvious to me that every facet of their life has been built on cheap credit, which they assumed was going to last forever (the bloke even refers to the 'extortionate' interest rates).

 

 

 

Great find. There is definitely a sense of panic in their recent video posts!

"Our mortgage timebomb"

"More interest rate hikes!"

"A big problem!"

"We can't afford to stay here"

"Selling everything!"

"Moving to Italy as a family in 2023!"

 

[JoeDavola]

He's now suggesting that MIRAS return - tax relief for mortgage intrest payments:

 

[JoeDavola]

Ah I see he was at least honest about the hair transplant:

 

[BoSon]

23 minutes ago, JoeDavola said:

Ah I see he was at least honest about the hair transplant:

 

Probably a dosbodder, so many on here seem obsessed with hair and fasting.

Better be careful he doesn't end up like Rylan off Thunderbirds.

When the plastic ages:

 

[BoSon]

Loads with mental issues, like those that above putting vanity before sanity, will be sinking into depression with the property prices after years of believing it was a protected market too big to fail.

There is no new normal just short sighted beliefs that those making the money out of it all have changed.

I see a rise in Joker 'why so serious' permagrins as the next plazzy surgery trend for those wanting to keep up appearances all is well.

 

[Sugarlips]

2 hours ago, belfastchild said:

Im going off old figures but before youtube started cutting costs a 1 million view video with ads etc would get the provider roughly 40k gbp over a year/18 month lifetime.
Its at least half that now (or , depending on content).
After a certain number of subscribers/views/full watchers (i.e. not bailing out 4 secs in) then they get promoted more and more. Their algorithm is ruthless.

Anyway, quick look at their 255k subscribers and 400 odd videos arranged by popular makes me think they made a great start to moneymaking years ago when you could make a mint at it, now, not so much, pretty much nothing at all with 10-20k views the norm over the last couple of years. Might be enough to pay bills but not a lot more.

To put it in context a friend of mine works in a related field but not on youtube, produces content for use by video production companies etc. He was making over a million dollars net a year about 10 years ago when I visited him in his miami south beach seafront apartment. Told me he barely made 50k net last year, despite almost doubling his output. IIRC the service charge for the apartment is half that.

You may want to introduce Miamiman to this channel, he’s an expert on this stuff specifically south Florida and quite entertaining. I second the cash out now idea.

 

 

[Option5]

3 hours ago, Axeman123 said:

Who the fuck relies on content creation income to service a mortgage?

Everyone in the media 

[Frank Hovis]

25 minutes ago, BoSon said:

When the plastic ages:

 

[Chewing Grass]

Just been back into my postcode search and I got a surprise, biggest number yet and a 3% jump in 7 days.

Have noticed a few boards popping up within 1/4 mile of chez chewy now.

Its started, more want out at what they think is the top but too many rats are trying to jump ship at the same time now.

[Sugarlips]

57 minutes ago, Chewing Grass said:

Just been back into my postcode search and I got a surprise, biggest number yet and a 3% jump in 7 days.

Have noticed a few boards popping up within 1/4 mile of chez chewy now.

Its started, more want out at what they think is the top but too many rats are trying to jump ship at the same time now.

Can’t imagine how bad the backlog at the probate offices is going to get what with all these additional deaths and listings. The housing market feels like it’s really locking up here.

[Ash4781b]

Just Looking at those moving from 1.8-2% fixed rates to 7% got some crazy numbers like a 65% increase in the mortgage payment. I need to look at the maths again as upthread comments this is going to be a problem for most of the south east / London. Unfortunately high house prices have gone hand in hand with rising indebtedness in particular with the younger generation. Dangerous time now is could see huge nominal falls in house prices and the level of negative equity could be unbelievable.

[Chewing Grass]

1 minute ago, Ash4781b said:

Just Looking at those moving from 1.8-2% fixed rates to 7% got some crazy numbers like a 65% increase in the mortgage payment. I need to look at the maths again as upthread comments this is going to be a problem for most of the south east / London. Unfortunately high house prices have gone hand in hand with rising indebtedness in particular with the younger generation. Dangerous time now is could see huge nominal falls in house prices and the level of negative equity could be unbelievable.

Just noticed that the two fat fuckers with no kids up the road have ditched their his'n'hers XC Volvos (leased) and now have some Vauxhall badged French thing (not seen what he's got yet). Seeing quite a bit of this automotive downsizing going on amongst the 50 somethings. Their kids (with kids) are still filling their boots as they know no better. I was nearly barged off the road 3 times this weekend by local tarts in monster SUVs going to the cricket club as they've had some sort of kids cricket festival on.

[Option5]

Bit off topic but I had a quick look at rental properties near where I am at the moment in Norfolk.

Reductions are common, 10% down after a month for one. Quite a few look like probate types, old folks carpets, furniture and decoration.

[leonardratso]

18 minutes ago, Option5 said:

Bit off topic but I had a quick look at rental properties near where I am at the moment in Norfolk.

Reductions are common, 10% down after a month for one. Quite a few look like probate types, old folks carpets, furniture and decoration.

best get in there quick and snap up that retro crap, wont last forever you know, event the fashion for it wont last more than a few hours, or you could just wait for the inevitable skips outside to start filling up and pick it up for nowt.

[Axeman123]

Quite a blunt choice of tweet conidering. Absolutely no optimism out there it seems.

 

[JoeDavola]

47 minutes ago, Axeman123 said:

Quite a blunt choice of tweet conidering. Absolutely no optimism out there it seems.

 

Yes that's exacly the amount I have been saying they need to fall by - not that I have faith they will.

My folks house went up in price 15% during the second year of the pandemic alone - now fair do it was all theoretical money that they'll never see cause they never sold, but it was galling to see their house go up in value by £40K in a year....

[Axeman123]

17 minutes ago, JoeDavola said:

Yes that's exacly the amount I have been saying they need to fall by - not that I have faith they will.

I don't think it stops there at all. 

I think we are on for a real nominal crash, at least on the margins which set the market prices. When the sad face "mortgage costs up" stories turn into sadface "can't sell at any price" and "sold it for half what it was worth" ones I could see sentiment going into blind panic, as it somewhat has in terms of headlines this weekend.

The maths of loan-to-income that I have been playing with has some quite interesting implications. Assuming the bank will wear IO then the only really distressed mortgages (barring job loss or PCP car etc lunacy) will be 5x plus income borrowers, that will overwhelmingly be flash older ones on good money in trophy properties (exactly the types featured in most of the coverage this weekend). This exact group, especially its most overleveraged members IMO, have been key to driving sentiment higher with tales of million pound equity pots as their pension etc. The same maths also gives the "£4k/month mortgage increase" numbers for this group just because of the size of many of the mortgage balances. When this group start crying about having gone from being a paper millionaire to barely walking away wit £50k after selling up can you imagine the sentiment?! That group are also very good at getting their story in the press, so it will be wall to wall IMO.

EDIT with further thoughts:

I can totally see where the notion of 6% mortgage rates as the watershed for house prices comes in, because assuming IO as the last ditch measure that is the level where mortgages at over 5x income become near impossible to service even without job loss or other outgoings. At 5% mortgage rates only a very small number of borrowers on 7x income are in the danger zone, that extra 1% brings a fair few more borrowers in to it - a real pivot point IMO.

7 or 8% mortgage rates bring that death zone down to sub 5 and sub 4.5 times borrowers, which will be most recent buyers. The marginal pain of rising rates is AIUI an exponential curve.

Edited June 25, 2023 by Axeman123

[Calcutta]

1 hour ago, Axeman123 said:

Quite a blunt choice of tweet conidering. Absolutely no optimism out there it seems.

 

You can absolutely fucking hack down that stretch of road. Old boy across from that cottage used to stand in his garden spraying a hose pipe at us in some pathetic boomer attempt to get us to slow down. 

3am is a hell of a time to have a massive halogen lamp shined thru your window by the passenger of a transit van stopped 3ft away from your house.

Leckford is where they grow stuff for Waitrose. Fuck'em.

[Plan-b]

1 hour ago, Axeman123 said:

Quite a blunt choice of tweet conidering. Absolutely no optimism out there it seems.

 

[apples]

https://www.telegraph.co.uk/property/house-prices/britain-house-price-crash-will-worst-in-world/ (full article text in quote)

Britain’s house price crash ‘will be the worst in the world’

Quote

Downturn expected to be longest in the West as interest rate rise hammers mortgage market

The UK is expected to have the longest house price downturn in the Western world as a shock rise in official interest rates hammers the mortgage market.

Property values across Britain will keep falling until the second half of 2025, Oxford Economics predicted.

Prices are forecast to plunge by 11pc compared with their peak in 2022, the consultancy said.

By contrast, in other Western countries – including America, France, Germany and Italy – prices are expected to start rising again this year and throughout 2024.

 

Liam Bailey, global head of research at Knight Frank estate agents, said a gloomier outlook for interest rates is leading to increasing “forecasts for decline”.

British house prices had been previously expected to recover early next year, but this was before interest rates were projected to hit 6pc by the end of 2023.

The Bank Rate jumped from 4.5pc to 5pc earlier this week following worse-than-expected inflation data over the past five weeks.

Inflation remained flat at 8.7pc in May, confounding predictions of a drop to 8.4pc. The headline figure was pushed up by rising core inflation, which strips out volatile measures like food and energy prices. It climbed from 6.8pc to 7.1pc.

Wage increases have also fuelled higher forecasts for interest rates. Pay increased by 7.2pc in the past year, according to the Office for National Statistics, which is feeding into price rises by giving consumers more money to spend.

Markets are now forecasting the Bank Rate peaks at a higher level and stays elevated for longer. As a result, the rate on both variable and fixed-term mortgages have shot up as a consequence.

Mr Bailey said: “This is going to be a longer term issue for the UK housing market.”

In the US, where house prices are only expected to drop by 5pc, according to Oxford Economics, inflation has dropped at a much faster rate and now sits at 4pc.

Interest rates will be able to come down sooner there than in the UK. Britain has the highest inflation rate among the G7 group of economies and inflation is set to remain above the Bank’s 2pc target for three years, according to forecasts from Goldman Sachs.

Max Mosley, an economist at the National Institute of Economic and Social Research, said prolonged inflation will also eat into the amount of money households will have to spend on properties, applying downward pressure on house prices for longer.

 

Higher mortgage rates are also taking longer to feed through to house prices because most British homeowners typically have two and five-year fixed mortgages and so are shielded from higher costs until their deals expire.

Over a million households have yet to experience the full impact of mortgage rate increases, according to the Centre for Economics and Business Research.

Benjamin Trevis, an economist at the CEBR, said: “As more fixed rate deals come to an end these households will see significantly higher mortgage payments, and this delayed impact of higher rates is expected to prolong the housing market downturn.”

Mr Bailey said the US and European markets like France and Germany also benefit from households that have very long fixed-rate mortgages, which insulates them from mortgage rate shocks and therefore protects house prices.

Alternative funding models allow lenders in these other countries to offer cheaper fixed-rate deals.

Most Americans have 30-year fixed-rate mortgages because of federal support through lenders Fannie Mae and Freddie Mac.

In France, where house prices are expected to drop just 3pc this year before rising again in 2024, fixed-rate deals tend to be available for the whole mortgage term.

In Germany, 10-year fixed rates are often the cheapest available, which makes them very popular compared with Britain. House prices there will only fall 5pc and will start to recover by the end of this year, according to Oxford Economics.

Short, shallow downturns are also more prevalent in countries where house prices did not rise as steeply in the last several years. British house prices boomed during the pandemic, when interest rates dropped to record lows of 0.1pc, allowing buyers to take out bigger mortgages. A holiday from stamp duty also fueled price rises.

Mr Bailey said this followed years of substantial house price growth underpinned by cheap money.

In countries like Spain, where Oxford Economics said prices will only drop 1pc before recovering in the third quarter of next year, property values have not had the same boom.

Stagnant wages in Britain are expected to take an additional toll on house prices.

Although pay has increased in the past year, Mr Mosley said this has not been the case for a long time.

He said: “We have seen poor income growth since 2008 and over the past decade.”

Richard Donnell, executive director at property website Zoopla, said low interest rates compensated for this by allowing people to stretch their purchasing power, but this is now changing.

He said: “Each generation is not as well off as the one before. There’s an income compression happening where kids aren’t getting much richer than their parents.

“If the income distribution is not continuing to widen, like it has done in previous generations, that will act as a drag on house price growth.”

Edited June 25, 2023 by apples

[Plan-b]

33 minutes ago, apples said:

https://www.telegraph.co.uk/property/house-prices/britain-house-price-crash-will-worst-in-world/ (full article text in quote)

Britain’s house price crash ‘will be the worst in the world’

Good article but wrong. The falls will be at least 30% by 2025 - and that's not adjusted for inflation.

Edited June 25, 2023 by Plan-b

[Ash4781b]

50 minutes ago, Axeman123 said:

I don't think it stops there at all. 

I think we are on for a real nominal crash, at least on the margins which set the market prices. When the sad face "mortgage costs up" stories turn into sadface "can't sell at any price" and "sold it for half what it was worth" ones I could see sentiment going into blind panic, as it somewhat has in terms of headlines this weekend.

The maths of loan-to-income that I have been playing with has some quite interesting implications. Assuming the bank will wear IO then the only really distressed mortgages (barring job loss or PCP car etc lunacy) will be 5x plus income borrowers, that will overwhelmingly be flash older ones on good money in trophy properties (exactly the types featured in most of the coverage this weekend). This exact group, especially its most overleveraged members IMO, have been key to driving sentiment higher with tales of million pound equity pots as their pension etc. The same maths also gives the "£4k/month mortgage increase" numbers for this group just because of the size of many of the mortgage balances. When this group start crying about having gone from being a paper millionaire to barely walking away wit £50k after selling up can you imagine the sentiment?! That group are also very good at getting their story in the press, so it will be wall to wall IMO.

EDIT with further thoughts:

I can totally see where the notion of 6% mortgage rates as the watershed for house prices comes in, because assuming IO as the last ditch measure that is the level where mortgages at over 5x income become near impossible to service even without job loss or other outgoings. At 5% mortgage rates only a very small number of borrowers on 7x income are in the danger zone, that extra 1% brings a fair few more borrowers in to it - a real pivot point IMO.

7 or 8% mortgage rates bring that death zone down to sub 5 and sub 4.5 times borrowers, which will be most recent buyers. The marginal pain of rising rates is AIUI an exponential curve.

Yeah I was looking at similar. Looking at the numbers thinking that can’t be right at the 7-8% 80% of recent buyers will be in trouble. Could point to massive wage inflation demands but the gov froze the tax thresholds. 

[Chewing Grass]

16 minutes ago, Ash4781b said:

Yeah I was looking at similar. Looking at the numbers thinking that can’t be right at the 7-8% 80% of recent buyers will be in trouble. Could point to massive wage inflation demands but the gov froze the tax thresholds. 

The first ones in trouble will be the young couples earning 36K plus 24K with a £200,000 mortgage and two PCH cars (to get to work) who will have to find an extra 10K per year after tax to plug the increase from 2.5% (their old fix) to 7.5% their new rate.