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Response to So when will it be a good time for me (a previous repo sufferer) to buy?

from Lee (repossession@home-repo.org)
It's a good question... I mean, there ought to be a formula that computes the answer. It would have to be based on the following logic:

"Are house prices in my area at a level that, if I were to get a mortgage, I could likely continue to service that mortgage for the lifetime of that mortgage given my continuing earning prospects, desire for x level of disposable cash and given the risk that I might lose my earning power and would need to be able to recover the mortgage debt and associated costs by selling if I do lose earning power."

There's a few variables that are pretty hard to compute in there. Eg, likelihood of maintaining earnings, likelihood of maintaining adequate disposable income, likelihood of being able to sell the house at the right price if you had to... It's that latter one that I think is the particular problem. I do not think house prices are going to maintain this level... but you may disagree.

Each of these things is about "risk of x happening".

You can't compute the exact risk but you can say that circumstances make the risk look high or low.

My own view is that the faster house prices rise, the more likely they are to fall. I also think that if the economy has been doing very well for a few years - as it has - you can expect it to be carrying wage costs that it will want to cut if things turn down, and that a turn down is more likely than a turn up or even of continuing as they are. So I think there's two high risk factors there. When you add in the dismal outlook for the US economy and the effect that will have on nations that just lurv exporting to the US (like Britain), then you have a third high risk.

Three high risk factors like those would be enough to keep me out of the housing market - even if I could get a mortgage!

But high house prices alone would keep me out of the mortgage market. You know what stockbrokers say: "Sell high, buy low". I'd modify that for house-buying to: "If you can't buy low, don't buy high. Rent."

Luckily, I'm probably *the* most mortgage blacklisted person in the UK, so it's all academic for me - but you can have all the above risk analysis for free!

Lee

(posted 7969 days ago)

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