Real estate, post level 4

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#2694053 17-Apr-2021 02:00

Handle9:
mattwnz: They used to only have the CV to work from, which was often several years out of date, so often a lot lower.

Wrong again. Before the estimate websites you got the real estate agent to pull the recent sales in your area. You could then use that that to benchmark the market.

That's exactly what the estimate websites do now, they just automate it.

No if you were the buyer 10-15 years ago, buyers pricing expectations was often based around the CV at the time, as well as what other houses may have sold for in the area, and sometimes you got in a registered valuer in. Also sellers very often got their CV recalculated if they thought it sounded too low, and wasn't likely what the house would sell for based on what other properties had sold for at that time. I have been through this process before years ago when challenging a low CV.

Agents also put far more notice on what the CV was, and sometimes even advertised, selling below CV etc. These days CVs seem to be totally ignored by agents, and some even state that the CV bears no relevance to the market price.

But sales data on some properties can take months to be released, and in todays market, the market may have moved on a lot from what properties had previously sold for just a few months ago. Whereas these estimate website tend to use algorithms and other metrics to calculate estimated prices monthly.

The agent is working for the seller, so they will be trying to extract as much money from the buyer as they can. I am not even sure if the selling agent is allowed to provide their estimated selling price to the buyer, as wouldn't that normally be confidential between the seller and their agent.

mattwnz

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#2694054 17-Apr-2021 02:10

mudguard:

mattwnz:

But why should rates be based on what a property is worth anyway, as rates shouldn't be a wealth tax. Why isn't it based on the resources a property uses? Eg why not a flat fee per property? Or based on how many people live in the house. You could have 10 people living in a 400k house paying $3k in rates per year, and using lots of council resources. Then you could have a single elderly person living in a 1 million dollar house paying $6k in rates, and they would be using less council resources.

The problem is keeping it simple. In your example if we pretend the ten people in the cheaper house are renting then they are paying the rates (through their rent) and on paper are considerably less well off than the pensioner next door in the million dollar house.

I've read that argument before maybe in Gareth Morgan's Big Kahuna book, where we pay people universal superannuation despite the differences in wealth, say a pensioner in Devonport, vs a pensioner in Invercargill who both own their own homes.

I think they do it overseas. I recall poll tax was similar, where they rate per person. At the moment rates are a form of wealth tax. Especially as in some areas if you live in a relatively expensive house compared to other houses in the town, you can be paying multiples more in rates, for exactly the same services. I know someone who was rated over $6k in rates, when the average rates were $2k, just because they lived in a higher value property relative to others.

I think the UKs Council tax system could be better, as it rates in bands, up to a maximum of 200% of the normal rate. Whereas I am not sure there is a maximum in NZ, and rates between area can vary significantly. I understand Cartertons rates are some of the highest in NZ.

mattwnz

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#2694055 17-Apr-2021 02:14

tdgeek:

mattwnz:

We have had a form of helicopter payment, with the 100+ billion that was printed, but this went to people who own houses, as it has inflated their values, making them feel wealthier. When it has just decreased the value of our money, and is now causing prices on goods to rise. The government were warned that printing all this money would have this affect. We are now in a sticky mess. I hope we don't end up like Argentina.

Where is mine? Cheque lost in the mail? I'm a home owner, I never got any free money of the 100+ Billion that went to people who own houses. The form of helicopter payment went to support businesses. The QE that every country did dropped interest rates, thats the problem. The other problem is we shifted from a inflation environment to a low inflation and low wage economy. We had higher inflation, higher wage increases house price growth, all more or less in line. Now we have low inflation low wages but the low interest rates are the mis-aligned figure, they artificially created more demand than the wages deserved. Factor in more immigration, Kiwi's dont like building houses, Kiwisaver (more demand from many people that would never have been homeowners) and you have this mismatch. In the past, house price growth was normal, but wages grew too. It never got out of control. But the last 20 years has, and its been ignored.

IANAFA You can get some of that new equity you have got, by borrowing against the house to say start a business etc. Or by getting a reverse mortgage AKA Equity release. So people don't need to sell to take advantage of the new increased equity they have got as a result of all this. I can see equity release schemes become more popular, as some banks and other financial providers move towards this with house prices going up so much. They are big in the UK at the moment, and they seem to follow big housing price rises. But anyone doing any of this should get some good financial advice first.

First home buyers are worst affected by this crazy house price inflation. But so are people who want to upsize, or to go up the housing pyramid by moving into a higher value home, as they will also need to pay a lot more too.

tdgeek

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#2694063 17-Apr-2021 08:27

mattwnz:

IANAFA You can get some of that new equity you have got, by borrowing against the house to say start a business etc. Or by getting a reverse mortgage AKA Equity release. So people don't need to sell to take advantage of the new increased equity they have got as a result of all this. I can see equity release schemes become more popular, as some banks and other financial providers move towards this with house prices going up so much. They are big in the UK at the moment, and they seem to follow big housing price rises. But anyone doing any of this should get some good financial advice first.

First home buyers are worst affected by this crazy house price inflation. But so are people who want to upsize, or to go up the housing pyramid by moving into a higher value home, as they will also need to pay a lot more too.

Grabbing funds from your equity always existed, that hasn't changed. So your equity has doubled in recent years, well that's fine if you can afford paying it back, its not free money. FHBs are worst affected thats right, they are the only ones really affected. Has you mortgage changed in any given year when house prices rose? Or rates? No. If you want to upsize, well if you are in the same market its little different. Yes, 15% more on a higher priced house is more than the past, but so were mortgage repayments. Downsizing you win, as you always did, more so now.

If you lined up 100 homeowners, life is no different for most of them.

Handle9

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#2694325 18-Apr-2021 02:17

mattwnz:
No if you were the buyer 10-15 years ago, buyers pricing expectations was often based around the CV at the time, as well as what other houses may have sold for in the area, and sometimes you got in a registered valuer in.

Lol. I bought my first house in 2006. I paid 35% above CV. That was what the market in that area was and I got a very good deal.

Geektastic

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#2696405 22-Apr-2021 08:12

Long long ago, in Galaxy far away, I worked as a valuer. The definition of open market value we were held to by the Royal Institution of Chartered Surveyors is (or was, it may have been tweaked since but this will be close)

'The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. '

Interestingly and merely for information, when you borrow money to buy a house in the UK, the bank will send a valuer to inspect and value the property in person. This at least helps temper some of the mystery around prices I often note here in NZ but is mainly to provide comfort to the lender that the asset you’re offering as security is worth enough and is in reasonable condition etc.

quickymart

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#2696866 22-Apr-2021 21:21

I have noticed a very slight dip in prices in my area. Not exactly earth shattering, but it's something. Mind you, I do wonder how long it will last (or level off at this new level).

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mattwnz

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#2696896 23-Apr-2021 01:29

Geektastic: Long long ago, in Galaxy far away, I worked as a valuer. The definition of open market value we were held to by the Royal Institution of Chartered Surveyors is (or was, it may have been tweaked since but this will be close)

'The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. '

Interestingly and merely for information, when you borrow money to buy a house in the UK, the bank will send a valuer to inspect and value the property in person. This at least helps temper some of the mystery around prices I often note here in NZ but is mainly to provide comfort to the lender that the asset you’re offering as security is worth enough and is in reasonable condition etc.

They used to do that in NZ too. Not sure if they do that today? When my parents purchased a house in the mid 80's the bank manager had to come before they would approve the loan, and that was when interest was in the double digits.

mattwnz

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#2696897 23-Apr-2021 01:31

quickymart:

I have noticed a very slight dip in prices in my area. Not exactly earth shattering, but it's something. Mind you, I do wonder how long it will last (or level off at this new level).

Lower Hutt has gone down $41,000 since Feb 21 which is like about 5%. Noticed that the mainstream media hasn't reported these drops as a major story, like they have been when prices have gone up. I wonder why ;)

mattwnz

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#2696899 23-Apr-2021 01:35

Handle9:
mattwnz:

No if you were the buyer 10-15 years ago, buyers pricing expectations was often based around the CV at the time, as well as what other houses may have sold for in the area, and sometimes you got in a registered valuer in.

Lol. I bought my first house in 2006. I paid 35% above CV. That was what the market in that area was and I got a very good deal.

That is relatively recent and was when the online valuations, were coming in, and when house prices were also going crazy, and right before the GFC. So I hope history isn't going to repeat. But I remember in the 90's, people really paid attention to the GVs (as they were called back then), and there was a good 3 years in Wellington when prices went down, and people were lucky to even get GV.

Handle9

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#2696900 23-Apr-2021 01:38

mattwnz:

mattwnz:

No if you were the buyer 10-15 years ago, buyers pricing expectations was often based around the CV at the time, as well as what other houses may have sold for in the area, and sometimes you got in a registered valuer in.

That is relatively recent and was when the online valuations, were coming in, and when house prices were also going crazy, and right before the GFC. So I hope history isn't going to repeat. But I remember in the 90's, people really paid attention to the GVs (as they were called back then), and there was a good 3 years in Wellington when prices went down, and people were lucky to even get GV.

Make up your mind. You said 10-15 years ago now it's 30 years ago.

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#2696901 23-Apr-2021 01:47

I wonder how valuation websites caused rapid house price inflation between 1971-1974 or 1992 -1998

mattwnz

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#2696902 23-Apr-2021 01:58

Handle9:

I wonder how valuation websites caused rapid house price inflation between 1971-1974 or 1992 -1998

I said the easy access to online valuation websites were just one of the factors, that people are using to justify paying these crazy high prices. Today there are far more than there were even 5 years ago.

However the record low interest rates and cheap easy money are currently the main factors driving the prices up, mixed with a very limited supply on the market. The mutliple valuation websites with almost real-time data are being used by buyers to justify paying the crazy high prices

tdgeek

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#2696909 23-Apr-2021 06:52

mattwnz:

Lower Hutt has gone down $41,000 since Feb 21 which is like about 5%. Noticed that the mainstream media hasn't reported these drops as a major story, like they have been when prices have gone up. I wonder why ;)

How do they work out these numbers? Houses rose $41000, houses dropped $41000. How does it work if mainly expensive houses are selling or of there was a run on entry level homes?

tdgeek

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#2696910 23-Apr-2021 06:55

mattwnz:

I said the easy access to online valuation websites were just one of the factors, that people are using to justify paying these crazy high prices. Today there are far more than there were even 5 years ago.

However the record low interest rates and cheap easy money are currently the main factors driving the prices up, mixed with a very limited supply on the market. The mutliple valuation websites with almost real-time data are being used by buyers to justify paying the crazy high prices

Id say what I bolded is literally the only cause. Supply hasn't been at the correct level for decades and decades, no issue. But interest rates have never been 2%. Mortgage Calculators on bank websites is where the maximum anyone is prepared to pay, is decided.

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