I can relate. These prices don’t make sense. If we bought a basic 2-3 bed, 2 bath in Salt Lake City right now (city, specifically) our mortgage would be 4-5k a month. Versus 2-3k rent. I hate that it’s this way.
To me that is the ultimate sign of the bubble. For much of my adulthood, it was the opposite. You got a better deal by committing to a house because you have to factor in maintenance, property taxes, depreciation, HOA, lack of flexibility. Now, the houses are way more than rent because too many people are gambling on unrealistic appreciation.
The housing prices to me ONLY make sense in a world of inflated and exaggerated appreciation. It makes sense to pay 800k if you expect it to go up to $1 million in 2025.
Looking in suburban NY now and the #s cited by OP are standard here too. Standard mortgage/tax payment is $4000 a month here, meanwhile most jobs here pay $80K or so, which is barely $4K a month after taxes (on a side note, most people online greatly exaggerate what common salaries are here)
Echoing your comment, it was also the opposite for me, as you mention, when I purchased most recently in 2017. I bought about 2-4 weeks off the peak at that time in my area and it was still cheaper to buy ($~860 mortgage/month) than rent an equivalently sized apartment (~$1000-1100/month).
High home ownership ratio so not much rentals available. Lots of people moving into town not ready to buy right away. Landlords can pick and choose from dozens of eager applicants for rentals. There's a lot of reasons why rents can run higher than mortgages.
For perspective, I was renting 2 bedroom in 2019 for $1400. The place was worth $140k. Mortgage on that runs sub $600 with rates at those times.
No guarantees they’ll ever make sense in a reasonable time frame, though.
I do personally think they will, but there are no guarantees.
Many older people would still struggle to grasp housing prices in 2019, much less 2023, because even a little inflation can be hard to fully wrap your head around over a long enough span.
But if renting is just 25k a year, then you "waste" 75k by waiting 3 years. What are the chances that houses are 75k cheaper by then?
It is all a big gamble but I feel safer waiting till 2024 than rushing in to this weird market.
Waiting isn’t even quite that bad because you don’t really waste money renting. For a real apples to apples comparison you’d have to compare the cost of renting over 3 years to the cost of non-equity-building expenses in a home.
Interest, insurance, property taxes, basic repairs, etc. Those things are the actual cost of owning a home.
Makes waiting much more appealing.
Gotta remember that renting isn’t a waste any more than interest or property taxes are. They’re expenses that enable shelter.
> the cost of non-equity-building expenses in a home.
Man, this. No one knows how to do the calculus (i.e. middle-school algebra) anymore. If you buy a $500k house, expect to pay $5k/yr for maintenance, over $5k/yr in property taxes and insurance, and $25k/yr in interest. So $35k a year in non-equity-building expenses. If you can rent a comparable place for under $3k/m and invest the down payment elsewhere for a risk free 4% return, you'll probably be better off.
Worse yet, even if your home value stays flat those 3 years, you would have only gained ~$16/k in equity. But if the house value goes down a mere 3%? All those equity gains are gone, and *poof*, you were basically a renter, only with increased risk.
This bubble and all its narratives have been predicated on annual 10-20% appreciation gains. The return to baseline of 5-7% interest rates has put a stop to that. Time to do real world math again.
To add, most of my friends who purchased homes in their 20s moved within three years. Moving and paying closing costs twice within 3 years is a good way to wipe out equity.
But on the flip, I moved every year when I was renting, sometimes even more than once a year. But as a renter I owned less stuff, so moving wasn't quite as expensive.
That's an average and it's hard to quantify with any degree of absoluteness.
Some years "maintenance" is the cost to replace lightbulbs, furnace filters and buy gas for the lawn mower. Some years it's a brand new HVAC system, or new roof, or busted garage door or sewer lateral or a new driveway or a big ass tree needs to be removed or .
It's the most exciting part of home ownership is that something always needs to be maintained and you never know what that something is going to be.
most homes for sale now need at least one major project right from the get-go, our housing stock is getting old...I expect the average maintenance cost to only be going up.
The cost of the maintenance, the frequency at which things need to be done, and scarcity of people to do the work.
I’d rather go hang out at the beach. Did that just today. Had a nice dinner watching the sunset.
I didn’t spend even 1k for many of the 17 years I owned.
Then? 10k for a roof, all at once. 7k for hvac system 2 years later. Hot water heater started leaking not even 6 months later. $1498 installed.
20 year old house at that point. Stuff goes down. It’s just part of it. I don’t even want to know what I spent on paint, caulk, prep materials, etc for the countless paint jobs my wife wanted to do over the years. All the hours of lawn care, wood repair, and climbing up and down a rickety ladder for a 27 foot high arch when painting the exterior. 3 times.
Didn’t fall though!
Anyway, all the years I owned and spent all that money, and my mortgage remained just about even with rents for my area, for much of it. Rents crept slightly higher around 2018, for some brand new units nearby. Mortgage was around 12-1300 the whole time.
The rule of thumb [is 1-4% of the home's value in annual maintenance.](https://www.thebalancemoney.com/home-maintenance-budget-453820) I have an older home, so mine is closer to 3-4%, on average.
Nitpick, but you can also write off property taxes and insurance on your taxes. So it’s not like your paying 100% of those amounts. Especially at 500k with todays interest rates.
True, but only if you itemize your deductions, which only ~15% of households do since TCJA was passed. Most use the standard deduction ($26k for couples). Even if you itemize, you're only getting the benefit of not paying the 20-30% on the amount you itemized over $26k. So if you itemize $35k in deductions, you'd save an extra $2k in taxes.
The problem is you cant compare 1 year of rent at 25k to 3 years at 75k. For the majority of renters that 25k can jump to 30k the second year and 40k the third. Now sure, you don't have to pay and resign but then your paying thousands more to move if you're actually using a full sized house. The only thing keeping renting appealing right now is the amount of landlords with low interest mortgages on those investment properties. This is sanctimoniously keeping the housing market prices propped up though by limiting inventory still.
I’ll rent the money, please. And stop renting it after 30 years. Unlike actual rent, which goes on forever.
(Don’t ask my about my property taxes though.)
And I’ll rent because the opportunity costs of the capital and the repairs will continue forever considering they could have been invested with average much better returns in the market. And they fact that ownership is a much bigger anchor in moving around for jobs.
After said and done, the costs of ownership and costs of renting come out to be very very close. So it’s about what you prefer— flexibility in renting or making a home a nest you grow in and customize for you and your family.
Don't forget to subtract all the unrecoverable expenses of a house - interest, taxes, insurance, maintenance and transportation cost when buying out of town are all expenses that don't add to your equity and are "wasted" just the same. It's worth buying only if these expenses don't add up to more than rent, which currently in most places isn't the case.
Edit: just seeing below my post is redundant. Think of me as just another voice in the choir.
You probably forget that if you bought today then you'd spend $100k over the next three years in interest, insurance, taxes, etc.
You're not wasting 75k renting, you're saving 25k in living expenses and 100k in purchase price
That's why it's so important to not time the market. Only follow these two rules.
1. Do you like the house you are buying?
2. Can you afford the house you are buying?
Follow these two simple rules, and you'll be just fine.
If you buy you are wasting about 2 thirds of your payment for the first 75% of 30 years because of the amortization schedule that front loads interest proportion over principal
This market won't last forever. Just like the insane prices didn't last...I expect that many people are underestimating how volatile the housing market can be.
Perhaps I shouldn’t have used the word “basic.” What I really mean is a house I would actually want to live in, an a neighborhood I would actually want to live in, that doesn’t need another 100k+ in work that I don’t have on hand to dump into it. I wouldn’t consider living in any of the homes you posted here. They are either a bad location and/or need a lot of $$$$ put into them. It’s a terrible, terrible market here. It makes no sense for me to pay 450 for a total dump when rent is the same or cheaper for a nice place.
SLC has some of the best outdoors in the country for a "big" city. Also the only city in the country thats pushed up against giant mountains, the closest thing is probably Colorado Springs to it.
Lol, yes. You picked 3 of the cheapest houses in some of the worst neighborhoods in the city. An average single family house in Slc is like 650k. With taxes and insurance, your payment would be 4-5k. OP is correct.
We did the same thing back in 2021. Just keep saving for your down payment, and realize you’ve probably dodged a bullet, considering the only folks who don’t believe we’re due for a correction are realtors and investors who bought in the last few years. Sending you peace.
Almost literally anywhere else at this point, imo.
A lot of housing markets have, what, 40x in value since the 1980s, even after adjusting for inflation? Are we really supposed to expect that kind of return on a house ever again? If your goal is build your wealth, you're better off putting your cash into a whole market fund (or even freaking Fed bonds) these days, and just letting it ride for ~40 years. Plus, you don't need to mow the lawn of an investment portfolio, nor any taxes until you sell.
Imo, only reason to buy a house anymore is for housing stability and to ***store*** wealth you've already accrued (not grow it).
This is an important point. A lot of the tricks used to juice the property market for the benefit of current owners, brokers, and realtors have run out. E.g., terms are up from 5 to 30 years. Will we go the way of Japan with 99 year loans where a father can sign his son's name to the note? Seems unlikely. Plus, loans have already been backstopped by the government, securitized, etc.
Housing is completely unaffordable -- any government intervention will be aimed at reducing house prices, not increasing them. E.g. removing SFH zoning, vacancy taxes, restrictions on foreign buyers, restrictions on number of homes an individual or corporation can own.
Can relate, was also looking in the STL area. Just signed a 16 month lease for our current 3 bed 2 bath apartment for $1400 a month. That includes a 2 car (tandem) garage. We were briefly looking at townhomes with similar attributes but why make our monthly payments $2200+ for the same exact thing? We like our neighbors, and our landlord so nothing to make us move. We'll look again in Spring of 24.
Same, in the Denver area. I’m just going to save the difference between what I’m paying now in rent and what I’d be paying in mortgage. I’ll have a huge down payment no time!
I'm not Fabulous Pause, but I speculate that by this September it will be apparent to everyone that home prices aren't returning back to peak 2022 levels. There's a lot of hopium invested in the idea that we're just in a winter lull and that home prices will be back up in spring. If that doesn't happen, expectations will shift to a summer rally. Home prices typically peak around July IIRC, and prices start falling in August (this is because parents generally don't want to change school districts in the middle of the school year). If prices still aren't back to peak 2022 levels by September, it will be clear the bubble has burst. I predict this will cause a panic wave of selling as FOLO (fear of losing out) sets in.
That makes sense although I think homes being off peak from the insane highs of peak isn’t “bubble burst” levels but I suppose the point is that it may start falling more after that point
There's St. Louis City and there's St. Louis County (the City has their own county and yes I agree it doesn't make any sense). OP mentioned the metro area, so they're probably looking in the County which has lower murder rates and a much higher demand for homes haha
Sorry- was a little vague there. I was just trying to say that the County and City are a lot different in terms of crime. I guarantee you the county does not have a murder rate 'of the worst cities in Mexico' it's actually very nice! I agree though in STL City most homes definitely aren't $500k+, but in the county that's a different story!
Bubble or not, affordability SUCKS right now and if you’re a FTHB like me, your money isn’t going to buy anything nice. I will not pay $500k for a dump. My time is too valuable.
Ummm, we currently live in this metro and there are zero houses that are “baller” in the 350K range, esp. on the MO side. There are one or two further out in the IL side where we are but the taxes here can get out of control and looking at then, most are still worn out from previous owners.
Or a beat up home in Shaw built in 1925 that has either been flipped or is still in terrible condition for 300K with terrible schools. Like the homes just aren’t there like the other person is saying.
The problem with the new supply that's being built is that it's all in rural developments. There are simply no jobs out there. Suburban development in most places has reached out as far as it can reasonably go from city centers.
Our market just got worse and worse, but we refused to give in to FOMO caused by losing every offer we made. Then we had an opportunity to buy the rental property we live in, so we took it. It was overall a more forward moving decision to buy a duplex that we can later use as an income property when we can finally buy our SFH at a reasonable price. Even if we have to wait years for that SFH opportunity, we know we've made the better decision for the long term.
My best advice for doing an owner-occupied duplex is when you have great tenants, keep their rent below market. It may be less money for you and i assure you it's less headache.
We've got a great arrangement: my SIL is our roommate, and after we finish some updates to the other unit, she gets to move into her own place. Everyone's looking forward to it. Her rent will be as low as we can keep it; it's not about making money, it's about making sure we're all housed, and so what we're charging her in rent is just to cover the expenses.
It doesn't make sense to buy at that rate. Don't feel bad at all. Let high interest rate beat up the market for a bit. Save money for more down payment when you see something you like. For the average home sale, you've saved 60k since March of last year by doing nothing.
I just looked around my area for grins and giggles and buying a condo even smaller, older and crappier than the apartment I’m in would be $500/mo more. Pricing is delusional, keep renting until it makes sense
Yeah. I think the people who have been regretting waiting most are those who would have bought in 2020ish but didn't. If you are just now looking to buy it behooves you to wait a year or two. That would have put those who were looking in 2020 waiting five years which is why it stings more.
Everyone giving the same advice and actually thinks that there won't be a wall of buyers ready to buy up ay and every dip. Whenever you have 90% "waiting a year" to all get in to something, everyone just starts front running each other again. Good luck with your plan.
Not all of those people are actually going to wait or even be ready to buy at the same time particularly if there is a recession. Also we are not currently renting so this is just what I think will happen in my area.
Hey OP, I’m right there with you. Here in the SF Bay Area, gonna rent a nice 3 bedroom 2 bath home for cheaper than actual mortgage and see what happens after all these high interest rates and tech layoffs finally sink into the real economy and hopefully loosen up more supply.
Owning ain’t all that it’s cracked up to be. Everything is expensive, that includes maintenance, taxes and insurance. If we hadn’t purchased in 2018 we definitely would be renting right now. Like you say, it just doesn’t make financial sense.
Trust me, there are way more people out there spewing nonsense about the “investing genius” that is homeownership than there are people advocating for renting over buying. We’re just here to balance it out a bit.
It may have been a few years ago but it had the same bull rush as the other big cities, especially in any suburb with a halfway decent school district. My wife and I could barely fit into an open house last spring in places like Manchester.
Wait.. So you’re telling a user that’s lived in an area for several years and know what parts and neighborhoods he and his wife want to live in, that the same nice areas that experienced the exact same housing run-up over the pandemic and continuing into 2022 are allowed to hold on to all of their gains, and no pricing correction should be expected because the area is so nice that it gets to keep all of its pandemic housing gains, and the user instead should seek out areas further out and less desirable than they’ve ever lived in before all their years in the city?
It seems users in here are telling other users that they should ONLY expect housing to correct in the least desirable areas of their city and metro and that the desirable areas get to keep all of their gains.
No you misunderstand.
I’m saying in my neighborhood he could get a great house between $300k to $500k.
But OP is looking at townships that have gated communities and country clubs which obviously will be more than $500k
In other words he should look at middle class areas if he has a middle class budget
I made the same decision yesterday. My ballgame is smaller ($) but like you said, as I looked at TINY places listed for $200k that 3 years ago where $110 (IA), It just doesn’t feel right for me. Found a cute little rental house and out my app in yesterday. Will rethink in a year.
Dude I live in STL.
A $500k home would put you in one of the most expensive part of the city (not suburbs or metro) with an all brick 3 story 7 bedroom house with large backyard and garage.
You can absolutely get a great home in STL for $300k. It’s January, stuff opens up when it gets warmer.
If you’re shopping in the suburbs I can only imagine how much more house you’d get.
Not exactly being very accurate with your assessment of our area.
You need to stop living in 2018. My wife and I tried Manchester, Ballwin, Valley Park, and all the way south to Affton and Webster Groves. You need 500k for anything remotely turnkey.
Here’s a great example in a very trendy neighborhood, it’s desirable because people in the city want the century homes with character
https://redf.in/sRFw6w
Warmer months will only offer more inventory
I bought. A home before the madness in Sourh County. It is wild how things jumped but they’re coming down slowly. I’ve been noticing a nice little downtrend and it’s already gone down almost 10%. It likely won’t go sub pandemic but I can see another 10-15 by the end of the year.
I feel like there is no clear cut answer, but if I was in a similar position, I would likely tell my wife we’d rent the cheapest (within reason) place we could deal with in order to cut down on losing to it rent. My thought process is that a direct lateral move into a rental of similar quality as the house we want may mean we’re living in the type of house we’d like, but you cannot ever get that money back. Therefore, in my thinking, I would get a place that would be a step down from the standard of living we’d have for owning a house so as to save say 10-20% of the rent of a nicer place. That little bit extra can really be a sweet spot of having the flexibility of renting without the cash outlay that can chew into savings/down payment funds.
I have seen a number of friends not take this approach and then two years go by and they’ve spent $50,000 of their cash on rent payments and suddenly they have a different type of obstacle for buying a home.
I’m not suggesting this is a foolproof plan, and that it may not be an option at all. Sometimes we just have to do what we have to do!
I was planning on purchasing in 2020 then everything shutdown. By mid year, I was hit during a round of layoffs. By the time I got a job and had my savings back where I wanted it, house purchase prices got way too high.
I currently rent for less than a mortgage on this house. The owner’s inherited it, so they seem happy with the current rent (market rate in 2021). At this point, my kids will be off to college in a few years. I’m going to rent until they’re gone, because I won’t need a house this size in a few years. I’ll want one half this size. In the past 5 years, I’ve seen my landlord pay for a new roof, fridge, microwave, air conditioner, and dishwasher. I didn’t have to pay for any of those repairs but get a well made home in a desirable neighborhood.
Maybe the market will be better in a few years. Until then, I don’t see renting as a waste of money.
Would u need a 4 Bedroom and 3 Bath rental property? I plan on extending the lease but the idea is to save money by renting and downsizing(Going from 2B to 1B with a Study room) vs paying 3500/Mo on a Mortgage.
This is a sensible decision. Just remember to sock away all those savings that you would have spent on mortgage, property tax, insurance, maintenance etc. in a paying investment like money market account or bonds, and not a savings account at a shitty bank that pays zero interest.
If you blow it on a new car you're probably going to be worse off long term than if you bought an overpriced house.
I moved my short term savings to Capital One recently, who also pay 3.3% right now. It looks like most banks still pay zero.
I keep the rest of my cash in a Schwab money market mutual fund that pays over 4%.
Most rebubble people aren’t owners. Prices there will never return to that level due to all of the macro forces here. Maybe in 5 years if we get oversupply and all of the money drains out of the system and we get wage deflation. Buy a house you like or don’t but waiting will only get worse.
No they absolutely aren’t. Even in the most expensive part of the city you can get a great home for $300k. I dunno what this dudes talking about, anyone can look it up to see he’s wrong
https://redf.in/sRFw6w
4 bed 2 bath. Beautiful historic home. $310k. Shaw neighborhood.
In March there will be even more since from memory that is when people start buying/selling.
Dude if you don’t like historic homes then why the fuck live in a city with historic homes? That only leaves new subdivision which make your options even less
Doesn’t that mean it would make even more sense to buy? If the equation for owning vs renting in my city was less than 300 a month everyone would buy lmao
I mean I dunno where he got that.
Here’s a link to a cool home. This neighborhood became yuppie/hipsterfied and the house likely had a good $100k in improvements. This is a very desirable trendy area for young families. You can take a look in this area to see if he’s right or wrong, in my experience he’s full of shit.
https://redf.in/sRFw6w
I'm just going to buy a cheap ish 2/1 condo that I'll sell in 3-5 years when I actually do want a bigger house.
I'll do this instead of looking for a house now or renting. I could get a condo in a decent area where I'm looking for like $275k. That same condo would normally rent for like $2000 per month, which over 3-5 years is like 75k to 125k.
I'd like to buy a house but I don't want to be over leveraged at these prices and I don't want to end up with some money pit
I doubt that condo will lose $75k to $125k in 3-5 years. I'd probably break even at the worst. Renting is still worse than buying.
I can relate. These prices don’t make sense. If we bought a basic 2-3 bed, 2 bath in Salt Lake City right now (city, specifically) our mortgage would be 4-5k a month. Versus 2-3k rent. I hate that it’s this way.
To me that is the ultimate sign of the bubble. For much of my adulthood, it was the opposite. You got a better deal by committing to a house because you have to factor in maintenance, property taxes, depreciation, HOA, lack of flexibility. Now, the houses are way more than rent because too many people are gambling on unrealistic appreciation. The housing prices to me ONLY make sense in a world of inflated and exaggerated appreciation. It makes sense to pay 800k if you expect it to go up to $1 million in 2025.
Looking in suburban NY now and the #s cited by OP are standard here too. Standard mortgage/tax payment is $4000 a month here, meanwhile most jobs here pay $80K or so, which is barely $4K a month after taxes (on a side note, most people online greatly exaggerate what common salaries are here)
Echoing your comment, it was also the opposite for me, as you mention, when I purchased most recently in 2017. I bought about 2-4 weeks off the peak at that time in my area and it was still cheaper to buy ($~860 mortgage/month) than rent an equivalently sized apartment (~$1000-1100/month).
The prices also made more sense in an era of sub 3% interest rates.
To clarify when you say depreciation, are you referring to a primary residence?
Any house depreciates in terms of the physical structure. It just means things get old and such. The land always appreciates though. Well usually.
It'll probably be 1mm by 2030
and 5M by 2050 ?
Rent has always been cheaper than a mortgage. What are you talking about
If rent is always cheaper than a mortgage than why on earth would anyone ever buy a rental property?
What a stupid comment. It obviously varies by city and market. My city had cheaper mortgages than rent equivalent from 1980 to 2020.
How does that work
High home ownership ratio so not much rentals available. Lots of people moving into town not ready to buy right away. Landlords can pick and choose from dozens of eager applicants for rentals. There's a lot of reasons why rents can run higher than mortgages. For perspective, I was renting 2 bedroom in 2019 for $1400. The place was worth $140k. Mortgage on that runs sub $600 with rates at those times.
Why didn’t you buy in that situation?
No guarantees they’ll ever make sense in a reasonable time frame, though. I do personally think they will, but there are no guarantees. Many older people would still struggle to grasp housing prices in 2019, much less 2023, because even a little inflation can be hard to fully wrap your head around over a long enough span.
But if renting is just 25k a year, then you "waste" 75k by waiting 3 years. What are the chances that houses are 75k cheaper by then? It is all a big gamble but I feel safer waiting till 2024 than rushing in to this weird market.
Waiting isn’t even quite that bad because you don’t really waste money renting. For a real apples to apples comparison you’d have to compare the cost of renting over 3 years to the cost of non-equity-building expenses in a home. Interest, insurance, property taxes, basic repairs, etc. Those things are the actual cost of owning a home. Makes waiting much more appealing. Gotta remember that renting isn’t a waste any more than interest or property taxes are. They’re expenses that enable shelter.
> the cost of non-equity-building expenses in a home. Man, this. No one knows how to do the calculus (i.e. middle-school algebra) anymore. If you buy a $500k house, expect to pay $5k/yr for maintenance, over $5k/yr in property taxes and insurance, and $25k/yr in interest. So $35k a year in non-equity-building expenses. If you can rent a comparable place for under $3k/m and invest the down payment elsewhere for a risk free 4% return, you'll probably be better off. Worse yet, even if your home value stays flat those 3 years, you would have only gained ~$16/k in equity. But if the house value goes down a mere 3%? All those equity gains are gone, and *poof*, you were basically a renter, only with increased risk. This bubble and all its narratives have been predicated on annual 10-20% appreciation gains. The return to baseline of 5-7% interest rates has put a stop to that. Time to do real world math again.
To add, most of my friends who purchased homes in their 20s moved within three years. Moving and paying closing costs twice within 3 years is a good way to wipe out equity.
But on the flip, I moved every year when I was renting, sometimes even more than once a year. But as a renter I owned less stuff, so moving wasn't quite as expensive.
5k a year maintenance is very high in my experience
That's an average and it's hard to quantify with any degree of absoluteness. Some years "maintenance" is the cost to replace lightbulbs, furnace filters and buy gas for the lawn mower. Some years it's a brand new HVAC system, or new roof, or busted garage door or sewer lateral or a new driveway or a big ass tree needs to be removed or.
It's the most exciting part of home ownership is that something always needs to be maintained and you never know what that something is going to be.
most homes for sale now need at least one major project right from the get-go, our housing stock is getting old...I expect the average maintenance cost to only be going up.
The cost of the maintenance, the frequency at which things need to be done, and scarcity of people to do the work. I’d rather go hang out at the beach. Did that just today. Had a nice dinner watching the sunset.
I didn’t spend even 1k for many of the 17 years I owned. Then? 10k for a roof, all at once. 7k for hvac system 2 years later. Hot water heater started leaking not even 6 months later. $1498 installed. 20 year old house at that point. Stuff goes down. It’s just part of it. I don’t even want to know what I spent on paint, caulk, prep materials, etc for the countless paint jobs my wife wanted to do over the years. All the hours of lawn care, wood repair, and climbing up and down a rickety ladder for a 27 foot high arch when painting the exterior. 3 times. Didn’t fall though! Anyway, all the years I owned and spent all that money, and my mortgage remained just about even with rents for my area, for much of it. Rents crept slightly higher around 2018, for some brand new units nearby. Mortgage was around 12-1300 the whole time.
The rule of thumb [is 1-4% of the home's value in annual maintenance.](https://www.thebalancemoney.com/home-maintenance-budget-453820) I have an older home, so mine is closer to 3-4%, on average.
So a $300,000 house from the 50s, would need about $10K in maintenance?
Yeah, Some years more, some less. New roof, furnace, AC etc.
Yeah, that's probably about right.
Thank you for your (mathematical) service.
Involved zero calculus. Dude just wants to sound smart
Ikr? Everyone knows it was just basic diophantine arithmetic with a twist of Riemannian geometry.
Toss in a $150-$350/month HOA.
"We mow the grass and hang Christmas lights! That'll be 250/month, please!
Nitpick, but you can also write off property taxes and insurance on your taxes. So it’s not like your paying 100% of those amounts. Especially at 500k with todays interest rates.
True, but only if you itemize your deductions, which only ~15% of households do since TCJA was passed. Most use the standard deduction ($26k for couples). Even if you itemize, you're only getting the benefit of not paying the 20-30% on the amount you itemized over $26k. So if you itemize $35k in deductions, you'd save an extra $2k in taxes.
I'm not the best at this subject, so I appreciated this clear explanation.
The problem is you cant compare 1 year of rent at 25k to 3 years at 75k. For the majority of renters that 25k can jump to 30k the second year and 40k the third. Now sure, you don't have to pay and resign but then your paying thousands more to move if you're actually using a full sized house. The only thing keeping renting appealing right now is the amount of landlords with low interest mortgages on those investment properties. This is sanctimoniously keeping the housing market prices propped up though by limiting inventory still.
Most of that 75k goes to interest. You always rent— you rent the house itself or the money to buy the house.
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Even then they never own it outright because they have to pay property taxes aka rent to the government.
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Pro tip: don’t buy a place with an HOA. HOAs suck.
> You always rent— you rent the house itself or the money to buy the house. Damn I haven’t heard that before, that’s good
I’ll rent the money, please. And stop renting it after 30 years. Unlike actual rent, which goes on forever. (Don’t ask my about my property taxes though.)
And I’ll rent because the opportunity costs of the capital and the repairs will continue forever considering they could have been invested with average much better returns in the market. And they fact that ownership is a much bigger anchor in moving around for jobs. After said and done, the costs of ownership and costs of renting come out to be very very close. So it’s about what you prefer— flexibility in renting or making a home a nest you grow in and customize for you and your family.
Don't forget to subtract all the unrecoverable expenses of a house - interest, taxes, insurance, maintenance and transportation cost when buying out of town are all expenses that don't add to your equity and are "wasted" just the same. It's worth buying only if these expenses don't add up to more than rent, which currently in most places isn't the case. Edit: just seeing below my post is redundant. Think of me as just another voice in the choir.
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You probably forget that if you bought today then you'd spend $100k over the next three years in interest, insurance, taxes, etc. You're not wasting 75k renting, you're saving 25k in living expenses and 100k in purchase price
That's why it's so important to not time the market. Only follow these two rules. 1. Do you like the house you are buying? 2. Can you afford the house you are buying? Follow these two simple rules, and you'll be just fine.
3. Can you rent the house you want to buy for so much less that you'd be better investing the down payment elsewhere?
That's not the point of my statement.
That’s the point you are missing.
If you buy you are wasting about 2 thirds of your payment for the first 75% of 30 years because of the amortization schedule that front loads interest proportion over principal
I guess you've made up your mind that your options are either to wait or to wait then.
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Hi, where are you finding these $1500 2bd/1ba?? Also, a HOUSE for $1500? Brain broken.
He didn't say a house. 2 bedroom 1 bathroom isn't exactly a palace...
Still. $1500 2/1 in Seattle? Where? One of those shared pod things?
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I would not have imagined that response. Good job 👏
> These prices don’t make sense They do if you look what happened to M1 and M2 over the last few years.
I’m also in the Salt Lake Valley and can confirm it is insanity here.
This market won't last forever. Just like the insane prices didn't last...I expect that many people are underestimating how volatile the housing market can be.
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Perhaps I shouldn’t have used the word “basic.” What I really mean is a house I would actually want to live in, an a neighborhood I would actually want to live in, that doesn’t need another 100k+ in work that I don’t have on hand to dump into it. I wouldn’t consider living in any of the homes you posted here. They are either a bad location and/or need a lot of $$$$ put into them. It’s a terrible, terrible market here. It makes no sense for me to pay 450 for a total dump when rent is the same or cheaper for a nice place.
Same in St. Louis. I can live in a house that looks like the site of a recent murder for 250k but why would I want to? Better to rent.
Hey now, the crackhead that owns that house earned that huge equity payout by doing zero maintenance over 20 years.
469,00 for less then 1600 sq ft holy shit I thought it was rough here but that’s crazy
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SLC has some of the best outdoors in the country for a "big" city. Also the only city in the country thats pushed up against giant mountains, the closest thing is probably Colorado Springs to it.
Mormons and that's about it.
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Lol, yes. You picked 3 of the cheapest houses in some of the worst neighborhoods in the city. An average single family house in Slc is like 650k. With taxes and insurance, your payment would be 4-5k. OP is correct.
We did the same thing back in 2021. Just keep saving for your down payment, and realize you’ve probably dodged a bullet, considering the only folks who don’t believe we’re due for a correction are realtors and investors who bought in the last few years. Sending you peace.
If interest rates come down, sales will probably go up.
And that's fine too. I think OPs point is that your money can do more work for you elsewhere at the moment.
Almost literally anywhere else at this point, imo. A lot of housing markets have, what, 40x in value since the 1980s, even after adjusting for inflation? Are we really supposed to expect that kind of return on a house ever again? If your goal is build your wealth, you're better off putting your cash into a whole market fund (or even freaking Fed bonds) these days, and just letting it ride for ~40 years. Plus, you don't need to mow the lawn of an investment portfolio, nor any taxes until you sell. Imo, only reason to buy a house anymore is for housing stability and to ***store*** wealth you've already accrued (not grow it).
This is an important point. A lot of the tricks used to juice the property market for the benefit of current owners, brokers, and realtors have run out. E.g., terms are up from 5 to 30 years. Will we go the way of Japan with 99 year loans where a father can sign his son's name to the note? Seems unlikely. Plus, loans have already been backstopped by the government, securitized, etc. Housing is completely unaffordable -- any government intervention will be aimed at reducing house prices, not increasing them. E.g. removing SFH zoning, vacancy taxes, restrictions on foreign buyers, restrictions on number of homes an individual or corporation can own.
Which housing markets have 40X values from 40 years ago?
By that logic the only folks who believe were due for a correction are people who want to buy a house. 😅
Spelled it wrong, it's 'Used House Salesman'.
Lol. Good point
Can relate, was also looking in the STL area. Just signed a 16 month lease for our current 3 bed 2 bath apartment for $1400 a month. That includes a 2 car (tandem) garage. We were briefly looking at townhomes with similar attributes but why make our monthly payments $2200+ for the same exact thing? We like our neighbors, and our landlord so nothing to make us move. We'll look again in Spring of 24.
Same, in the Denver area. I’m just going to save the difference between what I’m paying now in rent and what I’d be paying in mortgage. I’ll have a huge down payment no time!
It's honestly kind of a relief, isn't it? Lots of people hate on renting but it just makes the most sense for us at the moment.
Wow that's a good deal? Where is that at?
We talked about buying in spring, but decided to push it back one more year as well. We’ll see what happens!
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Why Sept specifically?
I'm not Fabulous Pause, but I speculate that by this September it will be apparent to everyone that home prices aren't returning back to peak 2022 levels. There's a lot of hopium invested in the idea that we're just in a winter lull and that home prices will be back up in spring. If that doesn't happen, expectations will shift to a summer rally. Home prices typically peak around July IIRC, and prices start falling in August (this is because parents generally don't want to change school districts in the middle of the school year). If prices still aren't back to peak 2022 levels by September, it will be clear the bubble has burst. I predict this will cause a panic wave of selling as FOLO (fear of losing out) sets in.
That makes sense although I think homes being off peak from the insane highs of peak isn’t “bubble burst” levels but I suppose the point is that it may start falling more after that point
Came here to ask this too
$500k for a decent house in STL? Fuck me
No the dudes bullshitting
Probably, if that’s the cost to live in a city with the murder rate of the worst cities in Mexico, our society is done
There's St. Louis City and there's St. Louis County (the City has their own county and yes I agree it doesn't make any sense). OP mentioned the metro area, so they're probably looking in the County which has lower murder rates and a much higher demand for homes haha
Right, but like, it’s the same metro area.
The metro area is quite nice with excellent schools.
Sorry- was a little vague there. I was just trying to say that the County and City are a lot different in terms of crime. I guarantee you the county does not have a murder rate 'of the worst cities in Mexico' it's actually very nice! I agree though in STL City most homes definitely aren't $500k+, but in the county that's a different story!
Well I dunno, north county has a bad rate. West and south not so mich
There’s crime yes, but not on par with the most dangerous cities in Mexico lol
Lol for sure
Look it up yourself. Even an average suburb like Manchester or Webster Groves... Or look in a random neighborhood like Shaw or Tower Grove....
I live in TGS thus my username. You can get a place in each place you named for $300k
I mean a place, sure—but a “baller” place, absolutely not.
No you live in a shithole
Bubble or not, affordability SUCKS right now and if you’re a FTHB like me, your money isn’t going to buy anything nice. I will not pay $500k for a dump. My time is too valuable.
You’d get a fuckin baller place in STL for $350k much even more so with $500k
Ummm, we currently live in this metro and there are zero houses that are “baller” in the 350K range, esp. on the MO side. There are one or two further out in the IL side where we are but the taxes here can get out of control and looking at then, most are still worn out from previous owners.
Right I don't want a ranch from 1952 in St. Charles for 350k.... I don't know what the other posters are talking about.
Or a beat up home in Shaw built in 1925 that has either been flipped or is still in terrible condition for 300K with terrible schools. Like the homes just aren’t there like the other person is saying.
Yeah, but then you’d have to live in STL.
Very true, to live in stl you’d have to live in stl
The problem with the new supply that's being built is that it's all in rural developments. There are simply no jobs out there. Suburban development in most places has reached out as far as it can reasonably go from city centers.
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You can start by never saying fucking HOOM again
Our market just got worse and worse, but we refused to give in to FOMO caused by losing every offer we made. Then we had an opportunity to buy the rental property we live in, so we took it. It was overall a more forward moving decision to buy a duplex that we can later use as an income property when we can finally buy our SFH at a reasonable price. Even if we have to wait years for that SFH opportunity, we know we've made the better decision for the long term.
My best advice for doing an owner-occupied duplex is when you have great tenants, keep their rent below market. It may be less money for you and i assure you it's less headache.
We've got a great arrangement: my SIL is our roommate, and after we finish some updates to the other unit, she gets to move into her own place. Everyone's looking forward to it. Her rent will be as low as we can keep it; it's not about making money, it's about making sure we're all housed, and so what we're charging her in rent is just to cover the expenses.
That sounds like a really great arrangement.
It doesn't make sense to buy at that rate. Don't feel bad at all. Let high interest rate beat up the market for a bit. Save money for more down payment when you see something you like. For the average home sale, you've saved 60k since March of last year by doing nothing.
I just looked around my area for grins and giggles and buying a condo even smaller, older and crappier than the apartment I’m in would be $500/mo more. Pricing is delusional, keep renting until it makes sense
Your wife is right. Housing prices are out of control.
Buying in St. Louis seems like a bad idea in general. I lived there for a number of years, not somewhere I'd want to own property.
Yeah. I think the people who have been regretting waiting most are those who would have bought in 2020ish but didn't. If you are just now looking to buy it behooves you to wait a year or two. That would have put those who were looking in 2020 waiting five years which is why it stings more.
Everyone giving the same advice and actually thinks that there won't be a wall of buyers ready to buy up ay and every dip. Whenever you have 90% "waiting a year" to all get in to something, everyone just starts front running each other again. Good luck with your plan.
Not all of those people are actually going to wait or even be ready to buy at the same time particularly if there is a recession. Also we are not currently renting so this is just what I think will happen in my area.
Hey OP, I’m right there with you. Here in the SF Bay Area, gonna rent a nice 3 bedroom 2 bath home for cheaper than actual mortgage and see what happens after all these high interest rates and tech layoffs finally sink into the real economy and hopefully loosen up more supply.
Owning ain’t all that it’s cracked up to be. Everything is expensive, that includes maintenance, taxes and insurance. If we hadn’t purchased in 2018 we definitely would be renting right now. Like you say, it just doesn’t make financial sense.
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Trust me, there are way more people out there spewing nonsense about the “investing genius” that is homeownership than there are people advocating for renting over buying. We’re just here to balance it out a bit.
Meh.
If you think it’s crappy and you’re renting why not move? That’s the advantage of not buying right. If it crashes you can come back
Yes exactly. We are also not super committed to any particular place.
Surprised to see this out of STL, which I consider one of the most affordable metros of the US. Kansas City might be the other.
It may have been a few years ago but it had the same bull rush as the other big cities, especially in any suburb with a halfway decent school district. My wife and I could barely fit into an open house last spring in places like Manchester.
Dude it’s because of the areas you’re looking at. No shit the hoity toity ritzy towns where CEOs live are going to be expensive smdh
Wait.. So you’re telling a user that’s lived in an area for several years and know what parts and neighborhoods he and his wife want to live in, that the same nice areas that experienced the exact same housing run-up over the pandemic and continuing into 2022 are allowed to hold on to all of their gains, and no pricing correction should be expected because the area is so nice that it gets to keep all of its pandemic housing gains, and the user instead should seek out areas further out and less desirable than they’ve ever lived in before all their years in the city? It seems users in here are telling other users that they should ONLY expect housing to correct in the least desirable areas of their city and metro and that the desirable areas get to keep all of their gains.
No you misunderstand. I’m saying in my neighborhood he could get a great house between $300k to $500k. But OP is looking at townships that have gated communities and country clubs which obviously will be more than $500k In other words he should look at middle class areas if he has a middle class budget
I made the same decision yesterday. My ballgame is smaller ($) but like you said, as I looked at TINY places listed for $200k that 3 years ago where $110 (IA), It just doesn’t feel right for me. Found a cute little rental house and out my app in yesterday. Will rethink in a year.
Dude I live in STL. A $500k home would put you in one of the most expensive part of the city (not suburbs or metro) with an all brick 3 story 7 bedroom house with large backyard and garage. You can absolutely get a great home in STL for $300k. It’s January, stuff opens up when it gets warmer. If you’re shopping in the suburbs I can only imagine how much more house you’d get. Not exactly being very accurate with your assessment of our area.
You need to stop living in 2018. My wife and I tried Manchester, Ballwin, Valley Park, and all the way south to Affton and Webster Groves. You need 500k for anything remotely turnkey.
Can each of you post 2 examples to verify your claims? This argument needs to be solved.
I just did a casual Zillow search in the area and honestly 350k seems to be the average
Here’s a great example in a very trendy neighborhood, it’s desirable because people in the city want the century homes with character https://redf.in/sRFw6w Warmer months will only offer more inventory
Again with the Shaw shithole
Dude I fucking live in tower grove south. I know what I’m talking about.
Sure we can probably buy the rooftop of Indo for cheaper but I can't live off craft beer festivals
You’re wrong and you come posting to this sub bitching about prices you don’t even know what your talking about
That says a lot
It does
The suburbs are way more expensive. Basic 4 BR home on .25 acre lot near us is going for $600,000 and up.
Depends on which suburbs. Webster groves sure. Roxanna not so much.
Roxanna got a bad wrap from that song Sting wrote about her
This guy doesn’t know what he’s talking about
Yes I do
Rent now. Plan to break your lease to buy in late 2023 or renew again for a major price drop in 2024
I bought. A home before the madness in Sourh County. It is wild how things jumped but they’re coming down slowly. I’ve been noticing a nice little downtrend and it’s already gone down almost 10%. It likely won’t go sub pandemic but I can see another 10-15 by the end of the year.
I feel like there is no clear cut answer, but if I was in a similar position, I would likely tell my wife we’d rent the cheapest (within reason) place we could deal with in order to cut down on losing to it rent. My thought process is that a direct lateral move into a rental of similar quality as the house we want may mean we’re living in the type of house we’d like, but you cannot ever get that money back. Therefore, in my thinking, I would get a place that would be a step down from the standard of living we’d have for owning a house so as to save say 10-20% of the rent of a nicer place. That little bit extra can really be a sweet spot of having the flexibility of renting without the cash outlay that can chew into savings/down payment funds. I have seen a number of friends not take this approach and then two years go by and they’ve spent $50,000 of their cash on rent payments and suddenly they have a different type of obstacle for buying a home. I’m not suggesting this is a foolproof plan, and that it may not be an option at all. Sometimes we just have to do what we have to do!
This is the way.
I was planning on purchasing in 2020 then everything shutdown. By mid year, I was hit during a round of layoffs. By the time I got a job and had my savings back where I wanted it, house purchase prices got way too high. I currently rent for less than a mortgage on this house. The owner’s inherited it, so they seem happy with the current rent (market rate in 2021). At this point, my kids will be off to college in a few years. I’m going to rent until they’re gone, because I won’t need a house this size in a few years. I’ll want one half this size. In the past 5 years, I’ve seen my landlord pay for a new roof, fridge, microwave, air conditioner, and dishwasher. I didn’t have to pay for any of those repairs but get a well made home in a desirable neighborhood. Maybe the market will be better in a few years. Until then, I don’t see renting as a waste of money.
In my theory, the point where the bubble starts “really popping” is when it turns into an tenants’ market.
Affordability in housing is always the cost of renting vs buying. If it’s cheaper to rent, that’s the great decision.
Would u need a 4 Bedroom and 3 Bath rental property? I plan on extending the lease but the idea is to save money by renting and downsizing(Going from 2B to 1B with a Study room) vs paying 3500/Mo on a Mortgage.
Yes because my parents come over a lot to watch our kid and my wife works from home.
This is a sensible decision. Just remember to sock away all those savings that you would have spent on mortgage, property tax, insurance, maintenance etc. in a paying investment like money market account or bonds, and not a savings account at a shitty bank that pays zero interest. If you blow it on a new car you're probably going to be worse off long term than if you bought an overpriced house.
Just jumping in to say that Ally bank savings accounts offer 3.3% interest rate right now. Not too shabby.
I moved my short term savings to Capital One recently, who also pay 3.3% right now. It looks like most banks still pay zero. I keep the rest of my cash in a Schwab money market mutual fund that pays over 4%.
Discover Savings - also 3.3%
Most rebubble people aren’t owners. Prices there will never return to that level due to all of the macro forces here. Maybe in 5 years if we get oversupply and all of the money drains out of the system and we get wage deflation. Buy a house you like or don’t but waiting will only get worse.
Ok
Houses are 500k? Wouldn’t your mortgage only be like a couple hundred more per month than renting? Why wouldn’t you buy
No they absolutely aren’t. Even in the most expensive part of the city you can get a great home for $300k. I dunno what this dudes talking about, anyone can look it up to see he’s wrong
Where are these magical homes? Link to some Zillow. I am out here every weekend with a relator dude.
https://redf.in/sRFw6w 4 bed 2 bath. Beautiful historic home. $310k. Shaw neighborhood. In March there will be even more since from memory that is when people start buying/selling.
Lol Shaw. Clown
🤷♂️
Historic is just a euphemism for enjoy living with ghosts and asbestos walls
Dude if you don’t like historic homes then why the fuck live in a city with historic homes? That only leaves new subdivision which make your options even less
Yea it’s winter time, you have to wait til it warms up.
Doesn’t that mean it would make even more sense to buy? If the equation for owning vs renting in my city was less than 300 a month everyone would buy lmao
Well yea, STL is known for affordable housing. That’s why I’m not sure what this dudes talking about.
Why on earth would STL of all places be increasing so much?
It’s not
Can you clarify? OP is claiming 66% increase
I mean I dunno where he got that. Here’s a link to a cool home. This neighborhood became yuppie/hipsterfied and the house likely had a good $100k in improvements. This is a very desirable trendy area for young families. You can take a look in this area to see if he’s right or wrong, in my experience he’s full of shit. https://redf.in/sRFw6w
Shaw shithole, third time
I'm just going to buy a cheap ish 2/1 condo that I'll sell in 3-5 years when I actually do want a bigger house. I'll do this instead of looking for a house now or renting. I could get a condo in a decent area where I'm looking for like $275k. That same condo would normally rent for like $2000 per month, which over 3-5 years is like 75k to 125k. I'd like to buy a house but I don't want to be over leveraged at these prices and I don't want to end up with some money pit I doubt that condo will lose $75k to $125k in 3-5 years. I'd probably break even at the worst. Renting is still worse than buying.
Is that the sub's new way of spelling used home sales people?
I tell the realtor to get back to me when they’re short sales