[AdTheNad]

My wife and I currently have a complicated housing situation to which I can see no good outcome, so would like some advice to see if there is something I am missing.

As things stand we own half a house in Cambridge England. Very shortly we have to either buy out the other half or sell up and move.
If we buy the other half:
This will rinse nearly all savings - which is clearly a bad idea with all the uncertainties heading our way. We all know what many of the forumites here think of people who put themselves into the position of having no savings.
Additionally, this puts us at more risk of being caught up in a house market crash. I don't think this risk can be ignored, giving what is going on in Eurozone and Greece especially right now. If Greece defaults, this could make the asset prices crash of 2008 look like small potatoes.

If we sell up and move:
We could either rent somewhere, which would incur moving fees, plus the cost of renting somewhere is higher than the mortgage would be, putting us at an immediate short term disadvantage.
We could buy a caravan/ boat which is pretty insecure, and I don't think wifey would go for it in any case.
We could buy a different property, but the mortgage would be on a worse rate so would be much more expensive.
We could move to an entirely different area where rent is cheaper, but then we would both have to find a new job while living on savings, as well as moving further from friends and family. Clearly another bad option.

Really then there are 2 options. 1 - Buy the house and hope the various governments keep kicking the can down the road till we can pay off as much capital as possible. Hope that if house prices do crash, everyone else is in a similar situation and the government decides to enact policies to prevent people from being kicked out.
Or 2 - rent a property, try and save as much as possible for when/ if house prices crash. If this happens, credit will have dried up making mortgages very difficult to obtain and we will not have enough savings to buy a house outright anyway.

Or of course option 3 - be born 10 years earlier, hope cold fusion is real solving all the world's problems, and then win the lottery.

I'm sure I sound pretty whiny in this post, and I'm aware that for scenario I've posted above there is a flip side that means it could be taken in a positive light, but this is a pretty big decision. This board is full of people who criticise people for making bad choices, from taking on student loans, to buying a house when everyone could see it was a bubble in hindsight. Well I need to make that decision right now, and it's a lot more difficult in reality than just looking at things retrospectively knowing what should have been obvious to everyone. Especially when everyone we know (who don't seem to be peak oil aware) thinks we should buy, and there would be an immediate reduction in monthly bills if we did.

Thanks in advance.

[AgentR11]

The property being in England and most here not in England makes it kinda difficult.

My inclination is that if I could get clear title on the property, such that its current value in total was significantly greater than the total debt held against it, I'd buy. I doubt property values will slip much further as expressed in Pounds, Euro, or US$, so the risk of getting drug underwater seems fairly low. You say you're worried about a Eurozone induced crash, but I think the ole bankers have dug their heels in and will do just about anything to keep some sense of price stability or slight inflation.

My thoughts on the economy itself are that the jobs that were marginal have already been cut; and what remains is the true "meat" of the company or organization. So if you have the same/similar job now, that you had in the beginning of '08; you're likely OK, short of your company going belly up.

Of course, we don't know you're full personal situation either, so all we can really do is put ourselves mentally in your shoes and guess. This includes my own personal bias against changing a living arrangement. I don't like to move, at all.

[DomusAlbion]

How about selling and leaving England?

[Hawkcreek]

Sell the house, use part of the cash to buy some land further out of town, put a small trailer on the land, raise a garden, throw away the TV, eat some peaches (sorry, started channelling John Prine), start building your own house, etc, etc.
At least you would have a place paid for in cash, with the ability to raise a garden, no matter what happens next.

[Crazy_Dad]

Whatever you do just don't come to Australia. We are fucked.
I was born here and will never afford a house. I work full time in IT.
Maybe if we get a USA style crash we might have a chance but probably no job.

Too many dicks on the dance floor.

http://www.youtube.com/watch?v=9Wl_uQOABxg

Thanks to our cuz's in NZ for the ref.

I think Libia is looking up - go there.

[Pops]

I doubt anyone knows what's gonna happen to the Euro.

You can get an idea of where the market is by looking at history, if your area has seen values rise more than average for longer than average it's a pretty good bet they will come back to average at some point. But the thing to remember is value doesn't matter unless you are buying or selling, so if you think you can keep your income long term and you like your place, buy it and forget about the "value".

If you aren't so sure or maybe are thinking that trading down would put you in a more sustainable position then maybe sell and buy a place more sustainable - maybe one that you could keep if you only had one income - or half of the current one.


Personally, I am inclined to agree with Hawk (or anyone who quotes John Prine for that matter) but that's because I'd rather own something outright.

[dinopello]

If you like the area and feel your job (and/or the job of your spouse) is somewhat secure, then buy and don't worry about a price collapse. I would love to see prices and assessments do down where I am as it might mean less taxes (although they would probably just raise rates ).

[Cog]

Could you clarify what you mean when you say "we own half a house"?

[AdTheNad]

Thanks for the replies.

I mentioned a mortgage but didn't say how much - including both halves we're talking about 15% down on a total house value of £180K, which is about $287K. A long way from having clear title or security from negative equity.

I am pretty sure my job is safe, as is my wife's.

Moving away from England would be a good idea for some reasons, but the world is too complex to know how we will fair compared to any other country we could move too. I don't really know where we would go if we did. Working out how each country is going to be affected in the best case long decline scenario involves too many random variables for me.

I quite like the idea of having a small plot of land, however if I tried to grow my own food right now I would probably starve judging by how my small corn trial turned out this year. I would therefore need to buy somewhere close enough to still commute to work while learning how to farm. To check feasibility I did a quick google search. Here is a small 4 acre plot of land not too far away, though I don't even know how much food you can produce on 4 acres. http://www.building-plot.org.uk/buildin ... sp?id=4362 Looks like the cost is £30K, or about $47K. This seems quite expensive to me, and after adding the cost of a trailer it will take a loan even before considering what we would need to buy to start growing any kind of food.

I completely understand the point about the value being irrelevant, as long as you can pay the mortgage and are not looking to sell. I wouldn't even really mind being a little bit underwater on the house, though it makes it impossible to sell and move. There is no option of trading down in Cambridge however. This is a small terraced 2 bedroom house, and if we buy the other half we will probably look into renting out the other bedroom. It is possible to find cheaper housing but that involves moving out of Cambridge with the subsequent loss of income from a tenant, switching to a 2 car family which incurs further expenses and longer commutes.

The idea of affording a house in England on 1 salary even when above average is a pipe dream. As such we have been priced out of the "having children" market, which is probably a good thing though my wife would not agree.

Edit for Cog, I didn't want to go too far into specifics, but I guess no one's internet anonymity is that strong for anyone who cares to dig deep enough. Basically my wife bought a house with a friend who put in most of the deposit before we met. The friend has moved out and would like her capital back so we can either buy her out or sell up.

[Cog]

ok got it.

I would go ahead and buy out the other half even if it depleted my savings to do so. You will have to have a place to live regardless of the economic situation. Being underwater won't matter if you intend to stay.

[tsakach]

You clearly have doubts about using your entire savings and a good portion of your income to buy the house you are in. Plus, you are in a position where you need to make a quick decision regarding buying or selling the house, which is not desirable.

Fortunately, homes take a while to sell in this market. You could put the house on the market now and set the price to something reasonable but not too cheap. This will buy some time and will provide you with a better picture of the market value of the house.

The idea of owning vacant land outright and developing it into something livable would be the most desirable outcome. But this scenario is less likely to happen if most of your savings have been consumed with the upfront payment and being saddled with a large mortgage payment. If you were to stay where you are at the moment then eventually move out and rent a place, you would be in a good position to save money while scouring the area for land bargains.

The fact that you are willing to entertain the idea of buying vacant land and eventually move on to it is a very positive step towards a financially sustainable position. But it takes time to do this and make necessary adjustments to your lifestyle. Don't feel rushed to do anything, take your time and make the right decision.