vulture funds

Vultures are a key part of our housing recovery

When we hear talk of ‘vultures’ and ‘vulture funds’ it’s usually in highly negative overtones. That’s why the name-calling exists in the first place, the idea is to imply you have these groups that feed off the dead bodies of an innocent party.

Put this aside and realize that even if a company does feed off the assets of a failed one, that it doesn’t mean the firm that failed was somehow an innocent bystander. Usually they lost their market share and assets as a result of their own decisions and by definition a liquidator would sell these on to somebody.

Whether that ‘somebody’ is a person, fund or regular company hardly matters. What does matter is that we have a housing crisis and that these same ‘vultures’ will likely be delivering about 75% or more of private new housing in Dublin where the problems are most pronounced.

Take a look at some of the numbers in new developments: * Lone Star own 600 acres of land in Dublin with the potential for 7,000 homes: in Adamstown, where it has …

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Pat Kenny Show on Newstalk 106, featuring Irish Mortgage Brokers

Pat Kenny had Lorcan Sirr from DIT and Karl Deeter from our company on to talk about the property market in particular in light of the changes announced by the Central Bank.

The conversation covered many topics in the market and outlined where so many issues in housing are arising.

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2016-11 trump wall

The Irish ‘Trump walls’ we don’t discuss

Commentators in Ireland love looking down on Americans, even more so since Donald Trump beat establishment insider Hillary Clinton.

They seem unable to stop labelling and name calling ‘the deplorables’, while forgetting that acceptance and tolerance used to be their moral high ground. As an American in Ireland, this makes me think about the po-faced hypocrisy of it all.

“He said build a wall,” I hear people cry, as if that alone is the acid test of an entire nation’s future. It’s true, he said some mean things; he didn’t use the language we like and accept. So here are a few home truths about our own great Irish walls – the ones that are far more acceptable than Trump’s because they aren’t referred to directly.

Many of them are invisible, which makes them seem okay, but in reality the outcome is the same. They just don’t sound so Six-Hirb’ish (that’s sexist, ignorant, xenophobic, homophobic, Islamophobic, racist and bigoted).

We don’t have Mexicans in Ireland, but we do have other minorities such as Travellers, who we build walls to stop. …

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2016-09-29 irish times article

Irish Times mentions Irish Mortgage Brokers: Why is there a housing shortage?

We were featured in today’s Irish Times on an article by Barry McCall asking ‘why do we have housing shortages’.

Our contribution is as follows: Karl Deeter of Irish Mortgage Brokers believes this is part of a global trend. “The mega-trend is that we are now living in a low-yield world,” he says. “Central banks are being forced to play both sides of the same table. Low interest rates cause asset prices to rise and the Central Bank is curtailing credit to prevent asset price rises. But there is an upward pressure on house prices despite this and it has been compounded by the earlier economic collapse which has led to supply disruption. These are trends that are bigger than any of us.”

While the Central Bank rules are undoubtedly playing a part in the problem, Deeter sees supply as equally, if not more, important and one factor here is planning laws. “Ireland has a particular problem when it comes to third-party property rights,” he argues. “Planning applications for housing developments are being turned down in areas where …

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construction 2020

Even supply doesn’t fix a supply issue.

Housing is confounding, we are at a frustrating juncture where after a massive property crash brought about in part by a glut of housing we now have the opposite situation of a housing shortage in many areas.

Solutions abound, but no matter what happens this shortage is going to persist due to the time it takes to deliver housing and even if we announced a shovel ready, commencing tomorrow plan for 25,000 houses in cities the shortage would persist for at least another two years.

When you see various commentators saying what will or won’t work it’s almost arbitrary because nothing works in the short term, the main ingredient required to fix this is time.

Housing grants to first time buyers may push up prices, even if they don’t it doesn’t of itself create supply today. Many of the proposals will serve one side of a transaction without affecting price.

If we got rid of VAT would house prices drop? Or would developers merely pocket the additional income because of the fact that a price set during a shortage becomes …

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Newstalk: Pat Kenny show features Irish Mortgage Brokers

The Pat Kenny Show on Newstalk had Karl Deeter in studio to discuss the property market today. We tried to make the point that there are several issues in the market making a tricky situation even harder to navigate, but that double sided approaches by the Central Bank (loose monetary policy and low interest rates) are helping to drive prices up while other rules are attempting to restrict credit.

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20016-09-14 unaffordability table

The unaffordability index of Irish housing

This picture speaks a thousand words and in many cases tens of thousands of earnings that a person would have to have in order to afford an average home in different parts of the country. We used recent data from the Daft report and then broke it down into borrowings and compared that to average wages.

The column after ‘county’ is the average price in that region. If we assume a first time buyer will typically want a 90% mortgage we then look at the amount of earnings they’d need to have in order to get the loan.

The last column is where the real story lies, it compares prices in the area to average wages taken from the CSO.

Anything in a white cell with a minus is very affordable, anything in black means you’d have to be earning above average wage to buy a property in the area.

If the cell has a red background that is showing you where the difference is greater than €10,000.

It’s fairly clear that cities and in some cases …

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2016 central bank macroprudential mortgage rules

2016 Mortgage lending rules submission by Irish Mortgage Brokers

We sent our research and thoughts on the lending rules to the Central Bank as part of their industry consultation process regarding the existing mortgage lending rules.

While we are critical of them in particular for first time buyers, we haven’t had an issue on other aspects of it (such as controls for investors). The submission argues with supporting evidence for 90% loans for first time buyers to be available generally but to keep other controls generally in place, or to do nothing at all and give the adjustments more time to bed in.

Submission is here: 2016 Central Bank macroprudential rules submission Irish Mortgage Brokers

The findings of a survey carried out by Behavior and Attitudes of clients of Irish Mortgage Brokers, DNG and Hooke & MacDonald which was mentioned in the press is also available here: 2016 MacroPrudential review – survey findings

 

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RTE Drivetime: Discussing Home Choice Loan, 25th August 2016.

On the 25th of August we were featured on RTE’s ‘Drivetime’ with Mary Wilson to discuss Home Choice Loan which is a state run mortgage lender. The state lender has only done 21 loans to date or about 3 loans a year.

There are many reasons that HomeChoiceLoan should be popular but in practice they are not lending and there are many questions about the validity and use the scheme has.

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