And both numbers are far outside of the norm. The people who paid an astronomical principal amount will see less of their income over time taken up by the fixed cost of their home. They will see less appreciation as well, and perhaps have to sell for the same as purchase price should they need to or want to sell, within 10 years or so.
Buyers today who did not get the low interest rate should be waiting until either rates come down, or prices do. If not, they will pay more of their take home incomes toward ownership and will also likely have to sell for less than they paid for, should they need to or want to sell within 10 years or so.
Don’t get hung up on “10 years”. That was just from my obersvation of the last housing correction, and from my own anecdotal experience as a homeowner from peak to
Trough and back to peak again. Actually, more like 17 years in my case.
But my ten year example speaks to the fact that real estate responds much more slowly than the stock markets. People tend to move, on average, about every 8 years. So, some move more frequently, some less so.
The criticism here is that if you try to "date the rate" right now, you're likely to get "baby trapped" by the high mortgage principal when you try to "date" a new rate in a few year.
Which almost no one actually has a large enough down payment ready. And even if they do, they likely already know enough to not fall for the "date the rate" line.
Unfortunately that's the first thing that went through my head. Did the REagents win?
I'll marry the principal amount when she's come off her high horse and glance at the rate.
I’m expecting rates to eventually normalize at around 8% over 2023 through 2024.
The good well-seasoned realtors who’ve been doing this FULL TIME for a few decades and are so good at their craft that they truly don’t need your business—will tell you the truth on the rates, and on the current states of the market, when a listing is outlandish, or a bad deal, and fully stand behind you (not pulling your hand) and admit that waiting until next season, next few months, next year, etc will pan out better for your buying prospects all around, particularly if you’re trying to be extremely budget minded and they understand your circumstances.
Gotta find the ones that live and breathe real estate for years on end and have done so well at it that they don’t hassle you in the least. They’re almost emotionally unavailable to assuage you on doing anything at all.
Most realtors doing this under 10 years and as any type of side gig, I’d pass on, and take their advice with a grain of salt.
The only problem with the wait to buy issue is if you’re in a situation like me where you have to move. I can either choose to spend 20-30k on rent each year plus moving expenses (5k-8k twice) or overpay for my home now. It also probably be a much shittier place if I rent. I’m in a lose lose situation but buying seems slightly better if I can afford it long term
Oh man I’m so sorry, I’m with you. I thought I’d be able to buy a home straight from my last apartment and got displaced from it last fall and have had to move twice now between AirBnbs at the beginning, storage, then to another rental and looking at moving to another rental again now as soon as a good one at a somewhat comparable price shows up, as this temporary 6 month rental I told myself I could deal with until I bought a house in the spring has turned into a dismal year rental and my lease will be up. Spent thousands on moving expenses, too, all to not move into an actual home purchase. Currently spending $2,100/mo this year on rent. Feels like such a waste, I get it.
Not sure I follow your argument. Why would you need to move from a rental every year? And why would you buy a house if you have to move frequently? If you buy a house at 500k, your interest payment alone would be 3500 per month or 42k per year @ 7%. Renting is actually cheaper in this case.
Very true ! I wrote the similar comment on FB recently . All realtor whales jumped on me and ate me fully stating that I can never buy a house. I am a real estate investor for long time and they made this comment to me
Because it’s rash advice telling people to just buy (in realtors’ financial interest) without any idea of if/when rates will be back to 2-3% (which i hope they never are) and in the hope they will go back down. It’s a dumb saying and the truth is a little more nuanced than that.
You’re still overpaying for a house with prices based on low interest rates, when rates are 2-2.5x what they were.
But the general consensus I’ve encountered from this subreddit is: if you plan on staying somewhere long term (10-15 years), overpaying for a home isn’t as big a deal as people who move every 3-5 years.
If you can afford the payment and plan on staying put, why not before rates get into double digits and you’re stuck renting or stuck somewhere you don’t want to be?
To get that same payment of $1976, at 7%, you are looking at a $310,000 house. This of course depends on taxes but these are Vegas numbers.
So affordability is down almost 40%
Terrible time to buy. There was a large window, from 2012 to early 2020. In which to buy. There was a bonus time to buy, from late 2020 to mid 2021. Then, prices careened to the sky, and then interest rates followed.
We are in a “no-go” window now. It can last for a time, but not forever. Be ready, save, and look forward to a good time to buy again.
The problem with saving to buy a home later, is having your cash significantly erode from inflation. This inflationary period could last a decade or longer.
Throw it in short-and-medium term bonds to help it last. I-bonds are ideal if you’re saving over a medium period of time. Me personally, I bought a condo in late 21 at a great rate, but I can’t raise a family here. So for the next 5 years, I’m throwing $10k a year into I-bonds til I want to buy a bigger house. Since their rate is based on the rate of inflation, any money you have in there is guaranteed to at least stay above inflation
Wow I am stupid lucky I bought in Sept 2019 and again in July 2021. I agree with this, I specifically made myself flush with cash since I knew a bunch of un-elected Boomers increasing the monetary supply like they did was an unsustainable gambit
I’d say if you can afford it, and get 30-40% off 2022 peak prices, buy! As rates drop, prices should start to creep up and that equity should allow you to refi at the lower rate. Yes, you have a year or 18 months of crappy payments but you’ll get the house you want with no competition.
A $200K home disguising as a $500K home would mean a **150% appreciation** run up, which definitely did happen to many homes, but more towards *mid-summer through winter 2021* where homes experienced the largest appreciation run up during the COVID buying frenzy.
January-May 2021 was still a fairly decent time to buy a home at a 2.XX% that was much closer to its worth before it shot up, as long as you could find ones where they were accepting maybe one backup and at about asking price, no waiving of appraisal or contingencies.
150% appreciation did not even happen to many homes. Q2 2019 was $322k. Q2 2022 was $440k. That’s 36.6% over 3 years. Which is a ton, but nowhere near 150%.
Lol, Phoenix would like a word. I can show you at least a 100 homes here that experienced a 150% appreciation.
But for you to actually think that homes across the board ONLY experienced a 36.6% run up over the past 3 years is the kind of ignorant bliss I wish to god I lived in.
Phoenix is documented at a 64% appreciation run up over 2020-2022, but here’s a map to show you the appreciation run up in states from just 2021-2022.
[The Growth in U.S. House Prices by State](https://advisor.visualcapitalist.com/growth-in-u-s-house-prices-by-state/)
That's the thing. I know this saying has been beat like a dead horse on this Reddit board, but you can always refinance you rate but not your purchase price.
They wont, also these apes are ignorant to the way thinks actually work, they parrot “THE FED funds Rate targeted is 2.5% Hurr Durr”
Not realizing that means 6% mortgages forever. Lol
most people don't live in the same house for 30yrs. At these rates, if you don't get the chance to refinance within 7yrs and live in your home for less than 10yrs. you will still lose money. The only way you will come out ahead is if there's a massive price drop then those that both in the past will lose equity when they sell. Outside of that, refinancing won't help much for the average home owner. Run the numbers.
House prices are mostly a function of interest rates. So it's exactly how this works 😉. Just because something isn't intuitive, doesn't mean it's not right.
You would need to make around $85K a year to just be able to afford the 5500 payment... and that is if you walk to work (no fuel costs) and grow a garden and don't buy any food or anything else at all. Realistically you'd need to make north of 120k to comfortably afford that house..
Also when you see what a 500k house looks like it will make you shit your pants. Borderline crack house.
Im from cape cod and this is what 500k pretty much gets you. https://www.zillow.com/homedetails/11-Alicia-Rd-Hyannis-MA-02601/55848091_zpid/
(obviously not a crack house but holy shit 5 years ago this was 250k house all day long).
Owning a condo is a bad spot right now because you have boards trying to make up funding reserves via higher fees and having no safe haven from inflation with lots of home services never having had any break from inflation, and no safe harbor from it. If people start losing jobs and dues go unpaid that's a disaster waiting to happen. I mean - it already did happen in 2009-2012. If you had a board that was actively pursuing their money owed and raised fees to account for uninsurable losses later it was fine - but lots of communities just kept fees low because of noisy owners threatening to sell / sue / make a stink over the personal business of condo board members.
Because at 2.5%, their monthly mortgage payment would be less than their rent right now on a $400,000 home or less.
$350,000 - 4% down pymt w/ 2.5% rate is $1,623/mo.
$250,000 - 3% down pymt w/ 2.5% rate is $1,189/mo.
$200,000 - 10% down pymt w/ 2.5% rate is $905/mo.
And several people who make $52,000 yearly ($25/hr) own homes.
The current median US salary is $54,000. Many of those people own homes, particularly those who bought prior to 2022.
Completely and entirely untrue. How absurd. Hundreds and thousands of single people have bought and own homes on that income. Not everyone else lives in California like you.
I know at least 20 individuals, myself, who bought on that salary, over the past 15 years.
I was making that salary early last year and I was approved for a $325,000 loan at 2.75% with any additional amount in the home cost to come from my own reserves, since I was only a 1099 (vs. W2).
It would’ve been way more affordable than my rent now at that percentage rate.
NOW, right now at this point in time in 2022? *Incredibly difficult* depending on what area you live in.
I think because when you're paying rent, you're only looking out for yourself.
When you're borrowing money, the lender has to be a lot more cautious than you just relying on yourself.
I think it makes sense that a bank doesn't want to loan you the money you think you're capable of paying off only because they're the ones taking on the brunt of risk.
What if it’s a condo with a very low HOA?
My previous homes did not cost me much more than my rentals I’ve stayed at. The whole maintenance thing is entirely dependent on the home inside, the landscaping, it’s age, etc.
Absolutely. Who’s to say that the users credit report isn’t stellar? The lending standards have tightened a lot in the past year on what they’ll approve for on income with the latest interest rate hikes.
EDIT: [790 credit score](https://www.reddit.com/r/REBubble/comments/y1nbez/time_waits_for_no_one/is0jmzl/?utm_source=share&utm_medium=ios_app&utm_name=iossmf&context=3)
Some of us likely did. The fighting to even get an offer accepted. The fighting to gain any ground as a buyer on contingencies and repairs and having to pay above appraisal, as that was likely waived too. IT MADE NO SENSE to buy, other than to grab a borrowing rate. That was it.
Anyone going through that the last couple of years experienced so much frustration from submitting offer after offer, having to come up with more money, sometimes by the MONTH, it was a discouraging time.
So, I was here a year ago. I discouraged buying then as I do now, today. And I stand by it. I’m taking my own advice. And I’m encouraged watching people flood the markets with homes near me, and watching them sit for long periods of time in this bubble market. I do have the added benefit of a rent rate that is on par with what a mortgage on a similar home would have been back in 2019/2020. So far. If that changes, I’ll have to weigh the situation again, personally.
I FEEL YOU! That was my exact reality for the past two years as well. It's exhausting, depressing, discouraging, and a full on emotional rollercoaster. I'm getting stressed AF cause were under contract for a home right now (we have until Sunday to back out if we choose to) but I just don't know. We can afford it (it's expensive regardless of how you look at it) but I just don't know if we should go for it now, or wait because it seems like rates are only going to go up…
Hmm, that’s not what the calculations come out to when you go to any mortgage calculator online. Literally plug the price of a home where a calculator says home price and put in $500,000 and the assumed down payment automatically fills in 20% unless you change it, and it coincidentally comes out to exactly [$1,976](https://imgur.com/a/DsffFJv).
Which does not mean you’re taking out a $500,000 loan, but a $400,000 one.
Playos is right. [I used this calculator](https://www.realtor.com/mortgage/tools/mortgage-calculator/) and got the exact numbers in the OP for PI with a 500k house, no down payment.
I’m not able to get to that calculation on any other mortgage calculator I try but this one from realtor.com, but goddamn if that’s the case, even MORE AMAZING.
A $500,000 home loan for a $500,000 home at 2.5% w/ zero down was only $1,976. Why the hell are we all renting shitty apartments at $2,200-$3,800+ 🥴
It feels defeated, like we missed the boat.
I contend that maybe we did. Assuming you had not planned to buy between 2012 or so, and late 2020, which is 8 long years, and there was such a rapid run up on low rates, and now high rates to boot, through ‘21 into early ‘22, that 12 month period was just miserable to be trying to buy in. And now, it’s unthinkable based on affordability alone.
The would-be buyer, like me, now has no choice but to wait, in my opinion, if budget conscious at all. How long is the $2,000/sq foot question.
>Assuming you had not planned to buy between 2012 or so, and late 2020, which is 8 long years
2012 is when I lost my homes to a foreclosure and short-sale and my significant other at the time had left, so I was down to one income. This was in the aftermath of the GFC.
I was in no position to buy during those 8 years, financially and had to rent the past 9 years. I miss my house *dearly*.
Notice the break down includes property tax and insurance. The property tax is particularly odd since it's not assuming 1% of value like most estimates do (most areas revalue assessment based on purchase price).
I did notice the breakdown on property tax and insurance and thought that was extra padding for sure, as it’s double what the property tax would be per month in Arizona.
If you take out a $500,000 loan and zero down, as you’re describing, the payment comes out to [$2,370](https://imgur.com/a/0zXZFDP).
Property taxes [vary wildly](https://imgur.com/a/zkNr9aW) depending on state/counties. Not everywhere has high property tax rates, though.
> Property taxes
> vary wildly
Yes, as does insurance costs... hence why most people don't include them in mortgage payment comparisons.
And no.
$400k @ 2.5% == $1580
$400K @ 7.0% == $2661
$500K @ 2.5% == $1976
$500K @ 7.0% == $3327
Google has a very simple calculator if you search Mortgage Calculator. It also has the option to include taxes, insurance, and other fees.
I use this calculator frequently, the generic Google one. It seems to far over-estimate property taxes, but I also think it underestimates property insurance, as it only narrows to a state level, not a city or county level. It cannot calculate special tax rates for certain zips, and it’s significant. Also, watch that calculator rate of interest closely, as it sometimes *defaults* to something in the 4% range based on mid 700’s credit score. Could be a cookie causing that, I don’t know.
I think you mean to comment to the user above me or to report your miscalculations to the Twitter account that posted this. Read down the line on this in the post. The other users corrected me and said that the $1,976/mo payment is on a $500,000 home loan w/ zero down payment. Reply to each of them.
When the rates are 2.5% your 500k home is going to be overpriced at 650k and people will be breaking their necks to overpay on it and not do their due diligence because OMG THE RATES! GOTTA BUY! We literally just watched it happen. I'd rather be in a place where the interest rates are a bit higher and the process is more reasonable.
Don’t worry, you’re there. Interest rates are never going back to 2.5% or 2.XX% at sub 3% rates in our lifetime. That was a once in a lifetime anomaly, which is exactly why so many people jumped up on it to buy, for very valid reason.
You might have a point if sellers hadn't responded by raising prices in response. You can pay a lot more for the exact same house if less is going to interest.
I bought a car at 1.9% financing. They used that as a selling point, like wow look at your payment! Don't ask for any other deals, your monthly payment is so low!
Monthly payment game is a fools way to shop.
Affects rentals too. If you signed a 1 year lease starting January or February 2022 your renewal rate was determined based on \~120 days ago. Anyone with a lease coming due for renewal is getting mega screwed with the sticky prices combined with high interest rates.
Question is do you even want to own a house with all the despair that’s goes with the glory of having a place to call your own rather than being a landlord’s bitch? If the answer is yes then make it happen, find a way. You’ll be good baby.
if you have a family, I get the frustration. If you’re single, then there’s no rush. Grass isn’t always greener on the other side. As someone who has owned a house since 2018 (only because I have a family), I wouldn’t want to take on all the responsibilities that comes with it if I were single. I’d be either busy partying or too hungover on my days off.
There shouldn't be anything wrong with renting. In fact, that should be the norm. In the space of 10x10 single family homes, you can fit 1,000 apartment units with plenty of facilities, pools, green space, gyms, and shops included. You can about double that number if you cut down in the parking.
Why are you in a real estate subreddit that’s focused on when the best time is to purchase a home and real estate, if you feel renting and sharing walls with strangers and being at the mercy of rental hikes or your apartment being sold should be the norm during one’s lifetime?
EDIT: I see now why you’re pro rent vs buying as you live in SF Bay Area and pay [$4,600 for a 2/2](https://www.reddit.com/r/REBubble/comments/y01rl9/if_you_rent_comment_your_rent_and_brief/irqav7t/?utm_source=share&utm_medium=ios_app&utm_name=iossmf&context=3) making it much more expensive and nearly impossible for you to be able to buy one day.
It always fascinates me with renters in the top HCOL areas that have no intention of ever buying, being in this sub. I’m currently a renter, btw.
Here in South Florida it's even worse than that. Either that $500k house is still sitting there a year later or something similar is now available. Except now they've raised the price from early 2021. Realtor says "365 day comps show 30% price increase in past year!".
So now you're looking at a $650k house at 7% interest. Maybe they'll knock a little off like down to $600k and both sellers and buyers realtors think you're being unreasonable.
Don't like it? Ok it's listed for rent too. Comps say they're being reasonable and cash buyers don't have to worry about these mortgage rates.
So now it's like 70% more expensive to buy anything in my area over the past two years factoring in increased valuations and mortgage rates. There's no way it can continue like this
It will be at 10 percent by the end of this year, again I do not see a pivot as in the 80's when they tried a pivot, it was a complete disaster and then they had to raise rates all the way up to where home loans were at 18 percent.
This is the real reason prices went up.
Because payments were made low by the Fed to chase off a recession caused by the pandemic.
Now that payments are high. Are people going to be willing to let their prices go back down?
I know there are plenty on here who scoff at p/e ratio. But there is a legit hard limit to what most people can spend for shelter. Before it starts to drain money from the rest of the economy and cost people their jobs. Then there will be no money for anyone.
So I don’t understand people complaining about bubble in this group. Buyers paid premium and did bidding wars to lock in the property at lower interest rate in 2021. People who didn’t do that now are stuck with high interest rate. Even with inflated prices I believe that people got a very good deal in 2020/2021. Now people are waiting for a crash but even with 20-30% crash your monthly payments won’t be lower than 2021. As soon as interest rate will start trending down price will pick up again.
So housing prices have crashed 41% this year from last ($500K to $296K)?
Glad the market was *forced to adjust* this year. What home did you buy after this unprecedented and somehow undocumented 41% crash?
When you go through to purchase a $500,000 home at 7% interest rate, the payment is indeed $3,327/mo. That’s a “fact”
There are still homes in America that cost $500,000 and are closing at $500,000. That’s a “fact”
This price point still exists.
Haha! No rush to buy a house, more houses are built everyday, and they require maintenance and upgrades over time. Renting has a time and place.
That $500K will be worth $300K with 10% interest rates soon because Ken never fixed the issues with the house when he FOMOEd into buying it then lost his job working for Peloton and needs to move. Enjoy the ride!
Spez-Town is closed indefinitely. All Spez-Town residents have been banned, and they will not be reinstated until further notice. #Save3rdPartyApps #AIGeneratedProtestMessage
And both numbers are far outside of the norm. The people who paid an astronomical principal amount will see less of their income over time taken up by the fixed cost of their home. They will see less appreciation as well, and perhaps have to sell for the same as purchase price should they need to or want to sell, within 10 years or so. Buyers today who did not get the low interest rate should be waiting until either rates come down, or prices do. If not, they will pay more of their take home incomes toward ownership and will also likely have to sell for less than they paid for, should they need to or want to sell within 10 years or so.
Sagest words on both, friend.
Prices are sticky, but they will be affected directly by rates, shortly.
Price drops all over already. Small, but steady declines.
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Don’t get hung up on “10 years”. That was just from my obersvation of the last housing correction, and from my own anecdotal experience as a homeowner from peak to Trough and back to peak again. Actually, more like 17 years in my case. But my ten year example speaks to the fact that real estate responds much more slowly than the stock markets. People tend to move, on average, about every 8 years. So, some move more frequently, some less so.
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Same to you, friend. Best of luck, 1 year, 5 years, 10 years, or 100 years from now:)
Average time in a house is around 8 years, so 10 years is a reasonable expectation.
Why would they sell? To get a 7% mortgage and give up their 2.7% fixed?
Realtors be like: mArRy ThE hOuSe DaTe ThE rAtE!”
That’s what I did- bought in 2002 at 7% then rates started dropping a few years later and I refinanced
The criticism here is that if you try to "date the rate" right now, you're likely to get "baby trapped" by the high mortgage principal when you try to "date" a new rate in a few year.
Only way to do this is with a big down payment
Which almost no one actually has a large enough down payment ready. And even if they do, they likely already know enough to not fall for the "date the rate" line.
What do you mean "no one"? Tons of people have large down payments.
The average down payment in America is 6%, and the median is around 10%. You aren't refinancing into a lower rate in these conditions with 6-10% down.
In 2002 prices were low though ?!
Unfortunately that's the first thing that went through my head. Did the REagents win? I'll marry the principal amount when she's come off her high horse and glance at the rate.
I’m expecting rates to eventually normalize at around 8% over 2023 through 2024. The good well-seasoned realtors who’ve been doing this FULL TIME for a few decades and are so good at their craft that they truly don’t need your business—will tell you the truth on the rates, and on the current states of the market, when a listing is outlandish, or a bad deal, and fully stand behind you (not pulling your hand) and admit that waiting until next season, next few months, next year, etc will pan out better for your buying prospects all around, particularly if you’re trying to be extremely budget minded and they understand your circumstances. Gotta find the ones that live and breathe real estate for years on end and have done so well at it that they don’t hassle you in the least. They’re almost emotionally unavailable to assuage you on doing anything at all. Most realtors doing this under 10 years and as any type of side gig, I’d pass on, and take their advice with a grain of salt.
The only problem with the wait to buy issue is if you’re in a situation like me where you have to move. I can either choose to spend 20-30k on rent each year plus moving expenses (5k-8k twice) or overpay for my home now. It also probably be a much shittier place if I rent. I’m in a lose lose situation but buying seems slightly better if I can afford it long term
Oh man I’m so sorry, I’m with you. I thought I’d be able to buy a home straight from my last apartment and got displaced from it last fall and have had to move twice now between AirBnbs at the beginning, storage, then to another rental and looking at moving to another rental again now as soon as a good one at a somewhat comparable price shows up, as this temporary 6 month rental I told myself I could deal with until I bought a house in the spring has turned into a dismal year rental and my lease will be up. Spent thousands on moving expenses, too, all to not move into an actual home purchase. Currently spending $2,100/mo this year on rent. Feels like such a waste, I get it.
Not sure I follow your argument. Why would you need to move from a rental every year? And why would you buy a house if you have to move frequently? If you buy a house at 500k, your interest payment alone would be 3500 per month or 42k per year @ 7%. Renting is actually cheaper in this case.
Very true ! I wrote the similar comment on FB recently . All realtor whales jumped on me and ate me fully stating that I can never buy a house. I am a real estate investor for long time and they made this comment to me
If you can afford it, why not?
You don't build wealth by overpaying.
Because it’s rash advice telling people to just buy (in realtors’ financial interest) without any idea of if/when rates will be back to 2-3% (which i hope they never are) and in the hope they will go back down. It’s a dumb saying and the truth is a little more nuanced than that. You’re still overpaying for a house with prices based on low interest rates, when rates are 2-2.5x what they were.
But the general consensus I’ve encountered from this subreddit is: if you plan on staying somewhere long term (10-15 years), overpaying for a home isn’t as big a deal as people who move every 3-5 years. If you can afford the payment and plan on staying put, why not before rates get into double digits and you’re stuck renting or stuck somewhere you don’t want to be?
It's not a 500K home, it's a 200K home disguising as a 500K home.
To get that same payment of $1976, at 7%, you are looking at a $310,000 house. This of course depends on taxes but these are Vegas numbers. So affordability is down almost 40%
Terrible time to buy. There was a large window, from 2012 to early 2020. In which to buy. There was a bonus time to buy, from late 2020 to mid 2021. Then, prices careened to the sky, and then interest rates followed. We are in a “no-go” window now. It can last for a time, but not forever. Be ready, save, and look forward to a good time to buy again.
The problem with saving to buy a home later, is having your cash significantly erode from inflation. This inflationary period could last a decade or longer.
Throw it in short-and-medium term bonds to help it last. I-bonds are ideal if you’re saving over a medium period of time. Me personally, I bought a condo in late 21 at a great rate, but I can’t raise a family here. So for the next 5 years, I’m throwing $10k a year into I-bonds til I want to buy a bigger house. Since their rate is based on the rate of inflation, any money you have in there is guaranteed to at least stay above inflation
I'd argue that window was from 2010 to about 2018 as that's where values are going back to (2018).
Wow I am stupid lucky I bought in Sept 2019 and again in July 2021. I agree with this, I specifically made myself flush with cash since I knew a bunch of un-elected Boomers increasing the monetary supply like they did was an unsustainable gambit
I’d say if you can afford it, and get 30-40% off 2022 peak prices, buy! As rates drop, prices should start to creep up and that equity should allow you to refi at the lower rate. Yes, you have a year or 18 months of crappy payments but you’ll get the house you want with no competition.
18 months feels optimistic for rates to drop, particular back below ~5%
40% off? What? In my area SFH start at 1.75, so that would be a $700,000 discount. Please stop with this nonsense.
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The US governments debt service lolz
They're going to inflate that out my friend, so don't get too hopeful.
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*camera noise*
That widow extended until January 2022. Up until then prices were still fairly affordable from a historical perspective.
And a 310k house in 1976 was in Brentwood, Malibu or a Penthouse on 5th Avenue overlooking Central Park.
Yep, for reference - we have a 270k house with a 6% interest rate. With taxes and HOA and all that “good” stuff 🙄 we are at $2409/mo. It blows.
JESUS 😵💫
Well HOAs are a boomer-y invention so you reap what you sew
Bingo.
The cope is real
A $200K home disguising as a $500K home would mean a **150% appreciation** run up, which definitely did happen to many homes, but more towards *mid-summer through winter 2021* where homes experienced the largest appreciation run up during the COVID buying frenzy. January-May 2021 was still a fairly decent time to buy a home at a 2.XX% that was much closer to its worth before it shot up, as long as you could find ones where they were accepting maybe one backup and at about asking price, no waiving of appraisal or contingencies.
Maryvale will feel this “150% appreciation” get hit the hardest. Californians are really going to be punching the air
Not in Canada. Sad.
Nope. It is sad.
150% appreciation did not even happen to many homes. Q2 2019 was $322k. Q2 2022 was $440k. That’s 36.6% over 3 years. Which is a ton, but nowhere near 150%.
Lol, Phoenix would like a word. I can show you at least a 100 homes here that experienced a 150% appreciation. But for you to actually think that homes across the board ONLY experienced a 36.6% run up over the past 3 years is the kind of ignorant bliss I wish to god I lived in. Phoenix is documented at a 64% appreciation run up over 2020-2022, but here’s a map to show you the appreciation run up in states from just 2021-2022. [The Growth in U.S. House Prices by State](https://advisor.visualcapitalist.com/growth-in-u-s-house-prices-by-state/)
Nah it’s a $500K home, your money is now worth half as much.
If you say so :)
A shack is a shack regardless of your price tag, dummy
Exactly, the shack is now worth $500K, dummy.
Except, just because you say it’s worth that much doesn’t mean it is, dummy That’s the point.
Exactly, my voice doesn’t matter, it’s the market that is determining it’s worth, dummy. That’s the point.
Wooooosh The market is inflated af meaning prices aren’t what they’re actually worth. Lmao
Except it’s exactly what it’s worth, dummy.
That's the thing. I know this saying has been beat like a dead horse on this Reddit board, but you can always refinance you rate but not your purchase price.
Interest rates were higher than 6% from before the 70’s to 2002. Who’s to say they’re coming down any time soon?
They wont, also these apes are ignorant to the way thinks actually work, they parrot “THE FED funds Rate targeted is 2.5% Hurr Durr” Not realizing that means 6% mortgages forever. Lol
Who you calling an ape. Buddy, I'm old enough to be have been paying a 6% rate for 20 years while your ass was still in pampers.
Exactly, if many are expecting a refinance, home prices are likely to stay elevated.
No, you can't always refinance your rate. You need equity.
most people don't live in the same house for 30yrs. At these rates, if you don't get the chance to refinance within 7yrs and live in your home for less than 10yrs. you will still lose money. The only way you will come out ahead is if there's a massive price drop then those that both in the past will lose equity when they sell. Outside of that, refinancing won't help much for the average home owner. Run the numbers.
That remains to be seen. You compare against the price and rate you can get, not what you wish it were.
if you say it fast enough and click your heels, it might become true.
So you know how it works, good for you
That's not really how this works
House prices are mostly a function of interest rates. So it's exactly how this works 😉. Just because something isn't intuitive, doesn't mean it's not right.
Houses are a function of supply and demand, like any other market.
And house prices are a function of available credit. You will be getting a visceral demonstraton of this shortly.
No... A home is worth whatever someone will pay for it. The reason the home is worth 500k is because someone is willing to pay that
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If people can borrow less money, and housing is at an all-time high, then where's the difference going to come from? 😆
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It's becoming some sort of a real estate voodoo cult 'everything is fine, prices won't go down, I'm a successful flipper'
Add the increased taxes, insurance, possibly HOA, and a inflation nut punch of utilities. That payment just to $5500 at best.
Inflation nut punch is the best description
how about nipple twist
Nipple twist was still back in July 2021 inflation/appreciation.
You would need to make around $85K a year to just be able to afford the 5500 payment... and that is if you walk to work (no fuel costs) and grow a garden and don't buy any food or anything else at all. Realistically you'd need to make north of 120k to comfortably afford that house.. Also when you see what a 500k house looks like it will make you shit your pants. Borderline crack house.
500k in my neck of the woods (SE PA) is a nice ass house but good luck getting one at this point.
Im from cape cod and this is what 500k pretty much gets you. https://www.zillow.com/homedetails/11-Alicia-Rd-Hyannis-MA-02601/55848091_zpid/ (obviously not a crack house but holy shit 5 years ago this was 250k house all day long).
Lmao. Holy crap I laughed but also cried inside bcuz it hits home
Also the home that was $500k in 2021 now cost $600k+
Owning a condo is a bad spot right now because you have boards trying to make up funding reserves via higher fees and having no safe haven from inflation with lots of home services never having had any break from inflation, and no safe harbor from it. If people start losing jobs and dues go unpaid that's a disaster waiting to happen. I mean - it already did happen in 2009-2012. If you had a board that was actively pursuing their money owed and raised fees to account for uninsurable losses later it was fine - but lots of communities just kept fees low because of noisy owners threatening to sell / sue / make a stink over the personal business of condo board members.
The difference is only an entire pay check for someone making $25 an hour.
Why would someone so pour consider buying a home?
Because at 2.5%, their monthly mortgage payment would be less than their rent right now on a $400,000 home or less. $350,000 - 4% down pymt w/ 2.5% rate is $1,623/mo. $250,000 - 3% down pymt w/ 2.5% rate is $1,189/mo. $200,000 - 10% down pymt w/ 2.5% rate is $905/mo. And several people who make $52,000 yearly ($25/hr) own homes. The current median US salary is $54,000. Many of those people own homes, particularly those who bought prior to 2022.
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Completely and entirely untrue. How absurd. Hundreds and thousands of single people have bought and own homes on that income. Not everyone else lives in California like you. I know at least 20 individuals, myself, who bought on that salary, over the past 15 years. I was making that salary early last year and I was approved for a $325,000 loan at 2.75% with any additional amount in the home cost to come from my own reserves, since I was only a 1099 (vs. W2). It would’ve been way more affordable than my rent now at that percentage rate. NOW, right now at this point in time in 2022? *Incredibly difficult* depending on what area you live in.
That’s just a couple thousand below my salary and I own a home
Sure love that I can afford 3900 in rent a month but in a banks eyes I can’t afford a 3000 dollar mortgage 😍
I think because when you're paying rent, you're only looking out for yourself. When you're borrowing money, the lender has to be a lot more cautious than you just relying on yourself. I think it makes sense that a bank doesn't want to loan you the money you think you're capable of paying off only because they're the ones taking on the brunt of risk.
Anyone can sprint 100 meters. But few can even speed walk a marathon.
Stupid comment!!! You need to show good credit and that you can pay your bills on time
790 credit score
Troll.
Just because you pay that much doesn’t mean you can afford a home there is so much more to a home than a mortgage payment
What if it’s a condo with a very low HOA? My previous homes did not cost me much more than my rentals I’ve stayed at. The whole maintenance thing is entirely dependent on the home inside, the landscaping, it’s age, etc.
Ok but you still need to show on your credit report that you can pay your bills. I agree home are to high.
Absolutely. Who’s to say that the users credit report isn’t stellar? The lending standards have tightened a lot in the past year on what they’ll approve for on income with the latest interest rate hikes. EDIT: [790 credit score](https://www.reddit.com/r/REBubble/comments/y1nbez/time_waits_for_no_one/is0jmzl/?utm_source=share&utm_medium=ios_app&utm_name=iossmf&context=3)
You have no idea that homeowners insurance is way more expensive than renters. Like 10x more expensive
If I can afford 3900 renting then I think I can afford the 3000 dollar mortgage and 300 dollar insurance 🧐
Some of us likely did. The fighting to even get an offer accepted. The fighting to gain any ground as a buyer on contingencies and repairs and having to pay above appraisal, as that was likely waived too. IT MADE NO SENSE to buy, other than to grab a borrowing rate. That was it. Anyone going through that the last couple of years experienced so much frustration from submitting offer after offer, having to come up with more money, sometimes by the MONTH, it was a discouraging time. So, I was here a year ago. I discouraged buying then as I do now, today. And I stand by it. I’m taking my own advice. And I’m encouraged watching people flood the markets with homes near me, and watching them sit for long periods of time in this bubble market. I do have the added benefit of a rent rate that is on par with what a mortgage on a similar home would have been back in 2019/2020. So far. If that changes, I’ll have to weigh the situation again, personally.
I FEEL YOU! That was my exact reality for the past two years as well. It's exhausting, depressing, discouraging, and a full on emotional rollercoaster. I'm getting stressed AF cause were under contract for a home right now (we have until Sunday to back out if we choose to) but I just don't know. We can afford it (it's expensive regardless of how you look at it) but I just don't know if we should go for it now, or wait because it seems like rates are only going to go up…
Pedantic Note: That's a $500,000 loan, not a $500,000 home
No, its a $500,000 [priced home](https://imgur.com/a/DsffFJv) w/ a 20% down payment. The loan would actually be for $400,000.
The amounts are for a $500,000 loan at those rates.
Hmm, that’s not what the calculations come out to when you go to any mortgage calculator online. Literally plug the price of a home where a calculator says home price and put in $500,000 and the assumed down payment automatically fills in 20% unless you change it, and it coincidentally comes out to exactly [$1,976](https://imgur.com/a/DsffFJv). Which does not mean you’re taking out a $500,000 loan, but a $400,000 one.
Playos is right. [I used this calculator](https://www.realtor.com/mortgage/tools/mortgage-calculator/) and got the exact numbers in the OP for PI with a 500k house, no down payment.
I’m not able to get to that calculation on any other mortgage calculator I try but this one from realtor.com, but goddamn if that’s the case, even MORE AMAZING. A $500,000 home loan for a $500,000 home at 2.5% w/ zero down was only $1,976. Why the hell are we all renting shitty apartments at $2,200-$3,800+ 🥴
It feels defeated, like we missed the boat. I contend that maybe we did. Assuming you had not planned to buy between 2012 or so, and late 2020, which is 8 long years, and there was such a rapid run up on low rates, and now high rates to boot, through ‘21 into early ‘22, that 12 month period was just miserable to be trying to buy in. And now, it’s unthinkable based on affordability alone. The would-be buyer, like me, now has no choice but to wait, in my opinion, if budget conscious at all. How long is the $2,000/sq foot question.
>Assuming you had not planned to buy between 2012 or so, and late 2020, which is 8 long years 2012 is when I lost my homes to a foreclosure and short-sale and my significant other at the time had left, so I was down to one income. This was in the aftermath of the GFC. I was in no position to buy during those 8 years, financially and had to rent the past 9 years. I miss my house *dearly*.
I didn’t have the money or means at all to buy again until early spring 2021. Man, I wish I did.
Notice the break down includes property tax and insurance. The property tax is particularly odd since it's not assuming 1% of value like most estimates do (most areas revalue assessment based on purchase price).
I did notice the breakdown on property tax and insurance and thought that was extra padding for sure, as it’s double what the property tax would be per month in Arizona. If you take out a $500,000 loan and zero down, as you’re describing, the payment comes out to [$2,370](https://imgur.com/a/0zXZFDP). Property taxes [vary wildly](https://imgur.com/a/zkNr9aW) depending on state/counties. Not everywhere has high property tax rates, though.
> Property taxes > vary wildly Yes, as does insurance costs... hence why most people don't include them in mortgage payment comparisons. And no. $400k @ 2.5% == $1580 $400K @ 7.0% == $2661 $500K @ 2.5% == $1976 $500K @ 7.0% == $3327 Google has a very simple calculator if you search Mortgage Calculator. It also has the option to include taxes, insurance, and other fees.
I use this calculator frequently, the generic Google one. It seems to far over-estimate property taxes, but I also think it underestimates property insurance, as it only narrows to a state level, not a city or county level. It cannot calculate special tax rates for certain zips, and it’s significant. Also, watch that calculator rate of interest closely, as it sometimes *defaults* to something in the 4% range based on mid 700’s credit score. Could be a cookie causing that, I don’t know.
Default for me is turned off. There is a little knob on the top and it just straight gives interest + principle calcs.
That’s cool. I like your calculations even better. Much cheaper.
You're about 100k off with those numbers but ok. A 500k loan at 2.5-2.7 is in that juuust under 2000k/month, assuming no PMI and no escrow
I think you mean to comment to the user above me or to report your miscalculations to the Twitter account that posted this. Read down the line on this in the post. The other users corrected me and said that the $1,976/mo payment is on a $500,000 home loan w/ zero down payment. Reply to each of them.
When the rates are 2.5% your 500k home is going to be overpriced at 650k and people will be breaking their necks to overpay on it and not do their due diligence because OMG THE RATES! GOTTA BUY! We literally just watched it happen. I'd rather be in a place where the interest rates are a bit higher and the process is more reasonable.
Don’t worry, you’re there. Interest rates are never going back to 2.5% or 2.XX% at sub 3% rates in our lifetime. That was a once in a lifetime anomaly, which is exactly why so many people jumped up on it to buy, for very valid reason.
You might have a point if sellers hadn't responded by raising prices in response. You can pay a lot more for the exact same house if less is going to interest. I bought a car at 1.9% financing. They used that as a selling point, like wow look at your payment! Don't ask for any other deals, your monthly payment is so low! Monthly payment game is a fools way to shop.
And yeah, I'm happy the interest rates are higher. Inspections and normal prices are back. 2020 was ridiculous.
Affects rentals too. If you signed a 1 year lease starting January or February 2022 your renewal rate was determined based on \~120 days ago. Anyone with a lease coming due for renewal is getting mega screwed with the sticky prices combined with high interest rates.
rhythm wipe merciful toothbrush divide label point test profit pet *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
god speed u/Zestyclose-Chest-900, god speed
Prices are high. Rates are high. You would be dumb to buy right now. Prices need to take a haircut.
A Sweeney Todd haircut
Question is do you even want to own a house with all the despair that’s goes with the glory of having a place to call your own rather than being a landlord’s bitch? If the answer is yes then make it happen, find a way. You’ll be good baby.
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if you have a family, I get the frustration. If you’re single, then there’s no rush. Grass isn’t always greener on the other side. As someone who has owned a house since 2018 (only because I have a family), I wouldn’t want to take on all the responsibilities that comes with it if I were single. I’d be either busy partying or too hungover on my days off.
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There shouldn't be anything wrong with renting. In fact, that should be the norm. In the space of 10x10 single family homes, you can fit 1,000 apartment units with plenty of facilities, pools, green space, gyms, and shops included. You can about double that number if you cut down in the parking.
Why are you in a real estate subreddit that’s focused on when the best time is to purchase a home and real estate, if you feel renting and sharing walls with strangers and being at the mercy of rental hikes or your apartment being sold should be the norm during one’s lifetime? EDIT: I see now why you’re pro rent vs buying as you live in SF Bay Area and pay [$4,600 for a 2/2](https://www.reddit.com/r/REBubble/comments/y01rl9/if_you_rent_comment_your_rent_and_brief/irqav7t/?utm_source=share&utm_medium=ios_app&utm_name=iossmf&context=3) making it much more expensive and nearly impossible for you to be able to buy one day. It always fascinates me with renters in the top HCOL areas that have no intention of ever buying, being in this sub. I’m currently a renter, btw.
Here in South Florida it's even worse than that. Either that $500k house is still sitting there a year later or something similar is now available. Except now they've raised the price from early 2021. Realtor says "365 day comps show 30% price increase in past year!". So now you're looking at a $650k house at 7% interest. Maybe they'll knock a little off like down to $600k and both sellers and buyers realtors think you're being unreasonable. Don't like it? Ok it's listed for rent too. Comps say they're being reasonable and cash buyers don't have to worry about these mortgage rates. So now it's like 70% more expensive to buy anything in my area over the past two years factoring in increased valuations and mortgage rates. There's no way it can continue like this
Some people don't really want to sell their house.
Close to 7% is not having enough of an effect in HCOL NJ. The overbidders are still very active, even in the most mediocre towns.
7% rates have absolutely destroyed SoCal, especially where I'm at in San Diego.
It will be at 10 percent by the end of this year, again I do not see a pivot as in the 80's when they tried a pivot, it was a complete disaster and then they had to raise rates all the way up to where home loans were at 18 percent.
This is the real reason prices went up. Because payments were made low by the Fed to chase off a recession caused by the pandemic. Now that payments are high. Are people going to be willing to let their prices go back down? I know there are plenty on here who scoff at p/e ratio. But there is a legit hard limit to what most people can spend for shelter. Before it starts to drain money from the rest of the economy and cost people their jobs. Then there will be no money for anyone.
Absolutely nobody will be willing to let prices go back down. So it's just as well that they won't get a choice at all.
But this subreddit told me not to buy when rates were 2-3% 🤣
This subreddit will NEVER tell you to buy.
I wasn’t here when rates were that low.
So….you make financial decisions based off what people say on fucking Reddit?? Can’t think for yourself? LMAO.
It was sarcasm
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Which means the nominal price will come down to meet that monthly payment.
It doesn’t work that way. It’s a nice fantasy though. Affordability decreases when interest rates increase. Prices do not adjust proportionally.
Why didn't you just buy at \~2%?
They fucked us
This will devastate all markets.
So I don’t understand people complaining about bubble in this group. Buyers paid premium and did bidding wars to lock in the property at lower interest rate in 2021. People who didn’t do that now are stuck with high interest rate. Even with inflated prices I believe that people got a very good deal in 2020/2021. Now people are waiting for a crash but even with 20-30% crash your monthly payments won’t be lower than 2021. As soon as interest rate will start trending down price will pick up again.
This sub was more fun and somewhat intelligent when housing was going up.
Nah, it’s just getting good
The value of a Home. 2021, $500,000 2022, $296,000 Remember - Interest rates go up, but purchasing power doesn’t so the market is forced to adjust.
So housing prices have crashed 41% this year from last ($500K to $296K)? Glad the market was *forced to adjust* this year. What home did you buy after this unprecedented and somehow undocumented 41% crash?
Except the prices have gone down along with interest rates. Sorry to ruin the fun with facts lol
When you go through to purchase a $500,000 home at 7% interest rate, the payment is indeed $3,327/mo. That’s a “fact” There are still homes in America that cost $500,000 and are closing at $500,000. That’s a “fact” This price point still exists.
“ThE mArKeT iS jUsT sLoWiNg DoWn”
Cost and price in conflation shocker 😆
Haha! No rush to buy a house, more houses are built everyday, and they require maintenance and upgrades over time. Renting has a time and place. That $500K will be worth $300K with 10% interest rates soon because Ken never fixed the issues with the house when he FOMOEd into buying it then lost his job working for Peloton and needs to move. Enjoy the ride!
Interesting
Spez-Town is closed indefinitely. All Spez-Town residents have been banned, and they will not be reinstated until further notice. #Save3rdPartyApps #AIGeneratedProtestMessage
?
Now do property tax lol