Looking for real estate in US or UK and it's outrageous.
I think one should be able to buy for 3 times average salary in a decent area, so at least a 40% discount on current prices.
Am I crazy or just wise or looking in the wrong place ?
IMF says 40% overvalued, are they right ?
OECD says UK worst place to bring up kids, are they right ?
Please help a.m.a.p. As much as possible !
Thanks everyone !
2007-12-04 02:09:37 · 4 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
A thing is overvalued when it will not sell for the price being asked. Telling a seller that you "should be able to buy for 3 times average salary" won't make them sell to you for less than they could sell to someone else.
What I'm saying is that the marketplace drives prices, not economic theory. You are welcome to offer 40% under current prices, and sellers will promptly ignore your offers.
Now, if you are not limited to specific geographic areas, then the answer is to look for areas that are having short term economic problems, but are otherwise good areas. While I'm not sure I'd go for Detroit, there are small to mid sized cities throughout the midwest where people are selling luxury homes for a fraction of what they cost just a few years ago.
For the same price as a modest house in my area, I could easily buy a mansion on acreage in the midwest, but that won't help me unless I'm willing to move to the midwest.
And all the economic theory in the world will not change that.
2007-12-04 06:18:06 · answer #1 · answered by Anonymous · 0⤊ 0⤋
No (at least not in UK).
In UK houses are still selling at (what you call) 'overvalued prices' .. which proves that they are NOT 'overvalued'
However in USA, in SOME ares / States you may be correct - in these areas houses are NOT selling (which proves the asking price is indeed 'overvalued').
Please ignore what you read in the (so called) 'news' papers .. articles are written by idiots who did "media studies" at Uni. and wouldn't know the meaning of the word 'finance' (let alone 'economy')
In (most of) the Western World we have something call Capitalism .. this means 'fair price' is established by Supply and Demand.... perhaps you get your 'I think one should be able to buy for 3 times average salary ' from some left-over socialist / communist teacher ??
If so, they are doing you a disservice .. prices are not set by what people 'think' is 'fair' .. the world does NOT work that way :-)
To some extent Demand is governed by what people can afford to repay (i.e. the cost of Mortgage repayments wrt you income) ..
As interest rates dropped over the last 10-20 years, houses are affordable at much higher income multipliers .. thus, as more & more people could afford to buy, Demand increased.
However housing Supply in UK is extremely limited, so sellers simply demanded (and got) higher prices .. this forced buyers out of the market until Demand and Supply became balanced.
If the current 'credit squeeze' leads to a wave of 'sub-prime' Mortgage defaults (as is happening in USA), the Supply of houses will suddenly be increased (as banks repossess....) and prices will drop until enough buyers are added to the Demand side again ..
The other danger is (of course) the buy-to-let owners .. a good few must be thinking of selling up quick to take their profits (before the credit squeeze forces them to sell anyway) - the highest prices are going to be had by those who get out first ..
2007-12-04 02:32:19 · answer #2 · answered by Steve B 7 · 2⤊ 0⤋
Yes, you are crazy....you won't get that kind of discount on any property in the USA.
2007-12-04 04:05:34 · answer #3 · answered by Expert8675309 7 · 1⤊ 0⤋
Plenty of houses for sale in detroit for dirt cheap.
hehehehe.
good luck
2007-12-04 02:13:43 · answer #4 · answered by WhereTheBuffaloRoam 5 · 1⤊ 0⤋