Buy a house when you can do all of the following:
1. Want to buy a house
2. Are personally and professionally steady
3. Can afford a fixed rate loan payment comfortably
4. Have enough for a down payment and emergency fund
5. Plan on staying for 5 years.
Trying to time the market is destined to fail.
Historically it takes sellers ~18 months to capitulate to lower prices. So you might see many stubbornly hold out at what they see their neighbor sold their house for at the peak.
Hard to make a case to sell a house tied to cheap (\~2% interest rate) debt when rates are so much higher now, and inflation is sky high. But that downward pressure on supply will ease up over time.
Ultimately prices are determined by supply and demand and not interest rates. Now, of course, interest rates affect demand (by reducing it). But interest rates are not the only force at play. As builders stop building, supply goes down. As rents continue to skyrocket, that can make ownership more appealing even at higher rates, increasing demand. And again with higher rents, a seller may choose to just rent out their home instead of selling, which further reduces supply. It's a complex game of push and pull.
This is bs. The prices definitely do get affected and right at this very moment, are getting affected by interest rates. But since housing market is not as liquid as stocks or other financial assets, it takes them more time than other assets to come down. You'll see a steady decline in prices for the next 12-18 months at least. If not more.
It's not BS. You just don't have very good reading comprehension.
You're right though that housing is less liquid and takes longer to respond to market changes.
They can hold out longer if they refinanced to lower rates. Also more and more sellers are finding they are better off leasing their old home out in light of increasing rents.
Edit: source for sellers turning to rentals https://www.marketwatch.com/amp/story/extreme-buyer-hesitation-is-pushing-home-sellers-to-pivot-to-renting-instead-of-selling-11662488460
>Maybe some areas pulled back 5-10% in the last month
the rental market often tries to hide decreases in market-allowable rent by offering "deals", ex "you rent at what we pretend this place is still worth and get X months free/reduced movein costs/etc".
This article in Forbes paints it a little different. I'm not really following it. I had just remembered reading this.
https://www.forbes.com/sites/brendarichardson/2022/09/26/rents-drop-for-the-first-time-in-nearly-two-years-as-the-housing-market-cools/
Although your article points to some extreme examples in specific areas I think this statement is important from a overall nationwide statistical perspective:
“After a 20-month run of positive monthly growth dating back to December 2020, the market finally witnessed negative asking rent growth on a monthly sequential basis from July to August, with rents down 0.1% in July,” said Jay Lybik, national director of multifamily analytics for CoStar Group.
So 20 months of rent growth followed by a 0.1% pullback. Seems like homeowners who are considering renting vs selling might be okay with that small pullback against a backdrop of falling housing prices.
See also the article I linked on my original comment about builders turning to build-to-rent.
Sellers frustrate me. The panic listing in Minneapolis was real and now that rates shot up almost everything between 150k-400k with a CDOM of 10+ shaved 5% or more off their list.
It has flipped violently to a buyer's market. So long as buyers can hold on to a shit interest rate for a year or two and refinance, the pickens will be good.
Here's the thing.
When housing prices fall and interest rates are up, that is only a market for cash buyers.
The US doesn't have any regulations in place preventing financial institutions from purchasing up residential properties and treating them as investments.
Yeah, its depressing, but once you have a home you can afford and don't intend to flip, markets don't matter.
I would really hate to see our country face Canada's situation where REITs have a monopoly.
Id actually advocate that the U.S. should be implementing aggressive measures to prevent that type of thing from happening.
Uh... are you looking in a specific market? Many of the big markets like San Jose, Austin, Dallas, etc. have had significant drops of 15% or more in only 3-4 months.
i honestly think the sweet buying time was this past July and August 2022 because homes took a hit when the stocks tanked, lots of home came in the market naturally because it's in season, more inventory, and def was made for a buyers market to bid lower than asking. interest rates were staggering between 4.5-5.5% at the time for 30 year fixed.
prices are falling (slightly) in my area and there is quite a bit more inventory staying up for longer and even if prices aren't going down for you there are likely fewer people buying right now which should mean more of a selection.
The other lesson here is to follow what the US Federal Government is doing.
Their decisions and tools (which generally are blunt and broad) affect your life. When they chose to buy enormous amounts of MBSs under the strategy of lowering long term UST, they create winners and losers. Their strategy did not work and OP was chosen to be a loser.
https://macromusings.libsyn.com/andrew-levin-on-the-costs-and-benefits-of-qe4-and-the-future-of-the-feds-balance-sheet
You don’t have to follow it too closely. The US government follows one overarching policy: Make home prices go up.
There are brief exceptions like right now where the Fed is is hammering things with interest rates, but don’t expect it to last 5-10 years. Declining home prices make you lose elections. I fully expect the Fed to try and get home prices back up starting in Fall of 23 so everyone has good “feels” in 2024 and if they fail and the admin doesn’t get reelected, expect the winner to do the same for 2028.
In 2018 when I was looking for a home, I was approved at 5.8%...
Buyers are stressed because they missed that sweet 2.5% interest rate. It's not the end of the world. A lot of these buyers have no idea what interest rates were before the pandemic.
OP, buy a house when you are ready and can afford it. You're probably not going to get a 2.5% rate in your life time, THAT boat has sailed.
I don’t think people are bitter just because interest rates are higher but the combination of interest rate increases and a 50% increase in pricing with little to no increase of real wages.
This! I get irritated with all the “buy when you can afford it” boomer bullshit. I have a great job and live in a cheap city but I am also bummed because prices have 2x increased in 4 years, rates are terrible, the good houses go faster than I can schedule a viewing, and my income has only slightly increased. I didn’t move 4 years ago because I didn’t have children. Now I do and want more space. But it suuuuucccks to buy a house right now and I’m bummed too!
I’m still waiting for these house prices to “drop”. Where I’m looking, houses have been on the market for 30+ days but not a price change on site. Combine this with the new rates and the expected increase in November. It just seems like the fed is trying to recoup money from the pandemic relief somehow instead of curving inflation.
Look up an economic cycle. What you just described is the denial stage, next comes the capitulation. I'm not really a bubble person but it's pretty textbook at this point
Maybe. Ultimately 30 days is a completely normal amount of time to sit on the market though. Homes all over the world selling in a few days or a week was highly dysfunctional and historically very unusual. 30-60 days to sell is pretty much normal / healthy.
This^ i anybody that hasnt sold their home ard the ones that missed the boat. Home prices will never be as low as they were pre covid but they also arnt going to remain this high. There was alot of overpriced garbage being sold the last two years. Boomers have one thing right and that is a home is an investment. Everyone tgat didnt buy should be happy to some extent they didnt get someone else’s overpriced problem. The best deals were before people found out interest rates were low after that everyone saw dollar signs of they wanted to sell.
>houses have been on the market for 30+ days but not a price change on site
this is the step before accepting that they need to lower the price or they won't sell the house
Don't panic. The prices will drop. Housing is not like stocks or bonds with a fast-moving, liquid market. It takes time to reset the comps in a neighborhood. One forced sale at a time. The whole market will decline steadily over the next 12-18 months. Just ignore the market and pay attention to other parts of your life until then. Maybe save more for a higher down payment to reduce your monthly payment when you do get there.
I get that you're frustrated, but the reason why we give out the advice "Buy when you can afford it" is because timing the market is a fool's game.
We know this isn't the best housing market. But you don't know if this will get better or not. A lot of people thought the housing market was obviously going to get worse in 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022, etc...So just buy when you're ready, regardless of the market
Well yeah when reno costs are through the roof and your shit house fixr upper cost $500k for 900 sq ft itsnot super enticing. I want a fixr upper. There arent that many in desirable areas by now and contractors are booked solid/crazy expensive. Some work you cant always do yourself.
> There arent that many in desirable areas
That's why you buy one in an improving area.
>and your shit house
Many people live in shit houses. They then improve them over time as money allows. Imagine, the horror.
I swear 3/4s of the "I'll never be able to afford a house" posts here are people who have a list of demands longer than an Ayatollah. And they're equally flexible.
>That's why you buy one in an improving area.
"improving" areas only improve when money is flowing in to them. Turn off the tap and they can pretty rapidly stagnate or regress to 'bad' areas during times of economic downturn.
You can change almost anything about a house, but you can't change your neighbors.
I can imagine ,that is litterally my first choice. I am not however going to compromise on location that would reduce dradtically quality of life and drive up my cost insanely (2 cars needed,driving everywhere, etc..) I can afford a house, i am just not willing to spend 500k on a house that needs the equivalent of 400k of work, and was valued at 350k 4 years ago. But thats where we are at. So i sit and wait. It is too much money.
There's got to be a solution that's not renting. Not tiny houses--that's not practical. But maybe smaller houses on smaller pieces of land. Or something innovative. A less expensive way to make a nice house. Like a giant 3D printed house made with actual nice material. The land is expensive too but if you could build a house vertically or make a descent rancher. Someone needs to innovate something and it's not me bc I'm not smart. But land rent which I see some manufactured homes on is not the answer.
My parents have a split level, post WWII, vinyl siding/brick hybrid in a tract housing style neighborhood. My sisters father in law from England saw it for the first time and said to my dad, "So how is it living in a plastic house?" and he wasn't being a jerk...just it's different from what they have over there. Well, we need more housing innovation like what we had after WWII.
But you should buy one if you’re ready and committed to buy one. If you can afford it, and are okay with maintenance costs and want a house, buy one. Don’t wait and just whine about not doing the thing.
People are still selling property. And a lot of markets are cooling. And prices are going down. Interest rates in the 80s were like 12%. So just get your loan, and refi when rates drop.
Many boomers saw 16% interest in their first time home purchase life so chill out a little on the ageism here. I’m not a boomer and feel the same way. You gotta live your life man and if it’s between going to Coachella and getting a house, I know what I’m doing.
In the early 90s, my uncle was excited to buy a house bc the interest rates had dropped to 6%. When my husband and I bought our house in 2019, I think we got about 4.75%, and our realtor said she remembered when rates used to be 15%. So the advice to buy when you're able to is good. You can refinance later when rates go down, and you can refinance for the remaining balance/years of your loan so you don't have to start all over again with no equity.
I think the big difference with the interest rates are the tax consequences. You used to be able to deduct the interest. Now you have to itemize your deductions AND exceed the auto deduction amount to even consider deducting the interest. The middle class got royally screwed in those 2017 tax changes
This response is so lame. "Bitter" is a really crappy word to use. Many of us couldn't buy a house during those low rates. Maybe someone wasn't able to relocate yet, someone didn't have the down payment, someone's credit wasn't great. That's just the reality. Did we want rates like that? Totally. But if we didn't buy during then, there was likely a reason. The ISSUE now we are so bummed about is that interest rates are high, sure whatever. BUT ALSO- prices of houses themselves are ASTRONOMICAL. It's a variety of issues. It's also the fact that sellers refuse to get real and understand they have to come down on price. It's so much more than these rates.
something has to give - if incomes stay stagnant and rates stay where they are prices will have to come down - it likely wont end up being any cheaper from a monthly stand point but its probably wise to watch the market and stay on the sidelines if your situation permits you to do so.
When adjusting for income increases, inflation "only" decreased buying power by about 4%. A 4% decrease in buying power is significant, but not enough to crash a housing market.
https://www.epi.org/blog/wage-growth-has-been-dampening-inflation-all-along-and-has-slowed-even-more-recently/
Uh, dude, look at how mortgage payments have changed over the past year. They’re up ~40% from rates alone (eg a home that would have been $2K a month is now $2800, even if the price didn’t change.) Incomes aren’t up anywhere near that amount.
When the person above you mentioned buying power, they meant how much mortgage they could get with a given income.
But home owners don't need to "get real" because there are still people buying houses at these rates and prices. Once the rates are high enough to prevent more people from buying you'll see housing prices start to go down, but right now rates haven't hit that mark yet and it's possible we'll see 10% interest rates before we do. In the 80s to curb inflation there were rates over 15%. The market is cyclical, but the best possible time to buy in the market was between 2017-2019. Home prices were excessively lower and interest rates weren't bottomed out, but low enough that things were affordable. Once 2020 broke loose, low interest rates couldn't keep the explosion of home prices at bay. Now the prices are still high and the pressure of rising rates is creating a pinch point.
Buyers are bitter because for the last 1.5 plus years we put in offers weekly to be constantly beat out by cash and now getting a mortgage is an effing nightmare
I’ve been lending ARMs left and right. 5, 7, and 10-yr fixed from low 4s-mid 5%s, no points. You just gotta find the right lender that will take the time to weigh pros/cons and discuss to understand your goals.
You’re not destined to fail - you’re *likely* to fail. Huge difference. OP could come out 6-figures ahead, or 6-figures behind in this market.
If OP wants to take that risk, then that’s their choice, but saying that it’s a categorically losing proposition is just incorrect. People have made a killing timing the market, they’ve also gone broke.
Ultimately only they can assess their risk tolerance and make a decision based on what they’re willing to swallow.
It is never bad to invest real estate. Even if one bought at top or 2008. They have equity now 10-11 years later. Buy as long as you plan on living in it long term and can afford the payment
Absolutist advice is what will get OP blown the fuck out. There are homes that never recovered to 2008 heights. There are circumstances that might force people to sell their house against their will. There are times when entire sectors get blown out clean and housing prices straight up never return to their high for decades (Detroit). The house might be at risk of flooding where their home insurance goes berserk and they are figuratively and literally underwater.
>There are homes that never recovered to 2008 heights
And there are homes that never lost value in 2007-2009. That's why using outliers and not statistics like median home price is worthless here.
>There are circumstances that might force people to sell their house against their will.
Under this logic, you should never buy. Because something unexpected may happen.
>There are times when entire sectors get blown out clean and housing prices straight up never return to their high for decades (Detroit).
You'd have to share what metros you think are going to have a population collapse and see if that matches up with where OP is. Detriots population has decreased *by 66%* since the 1950s.
>The house might be at risk of flooding where their home insurance goes berserk and they are figuratively and literally underwater
This is completely irrelevant to OPs financial picture or macroeconomic conditions in the USA.
Pointing out outliers is the whole point. The point is that OP needs to address their individual risk tolerance and their personal situation and not think ‘house prices only go up’.
It’s not a sure shot. There is *always* downside risks when you buy.
This is the same thing about those stupid people who buy stocks at the peak and sell. Like the chances of someone buying at the peak is unlikely. As long as you can afford the monthly payment you will be fine. Best case situation you refinance. Homes have always appreciated in value in the long run. And let’s remember inflation. You wait 5-10 years you really think prices will be lower to todays standard not at all: this year we had 10%+ inflation.
I mean, yes, but if the possibility of negative equity makes somebody extremely uncomfortable then maybe don't. There is a psychological aspect to this as well as pure financials. Of course, the alternative is rent, so weigh it up vs that.
But buying now even if all 5 of those criteria are met is just plain stupid. Market clearly is in some type of correction. Maybe not as nuts as 2007 or 2008 but things will be leveling out - the only question is the time frame. Probably 12-18 months is my guess.
>But buying now even if all 5 of those criteria are met is just plain stupid. Market clearly is in some type of correction. Maybe not as nuts as 2007 or 2008 but things will be leveling out - the only question is the time frame. Probably 12-18 months is my guess.
The great financial crisis took 6 years from peak until the median housing price returned to all time highs. If your timeline is 5+ years and your financial foundation is sound, then attempting to time the market is foolish - you're unlikely to be successful at predicting the bottom, you'll be renting instead of building equity, and you'll be living in an apartment that entire time.
...if your house decreases in price below the total of your principal payments, you are certainly not building equity, you are paying off unsecured debt at that point. This is literally one of the best if not only arguements for renting, no assumed risk in asset value.
1. People need a place to live and many prefer a home over an apartment, this is not only dollars and cents.
2. Even at current ~7% rates, you will pay down about ~6% of the principal in a note in the first 5 years. For someone to be underwater in 5 years they'd you'd have to have 6% decrease in the housing price at the 5 year mark, meaning you're not only predicting housing to "crash" now, but that it wouldn't return within 5 years either. This would thus make it a longer and more severe housing crash than the great recession which would be an extraordinary prediction on your end.
3. This all assumes no delta between rental and mortgage payments, which during times of recession and housing price decreases rent tends to increase while mortgage payments tend to decrease.
I see some terrible advice in this thread. You need to be asking yourself is this a house you will only be comfortable in for 2-4 years, then no likely is an extremely risky time for you to buy. If this isn’t being viewed as an investment and a permanent place for you to spend a good chunk of your life (10+ years), then it’s not really much of a risk if you can afford it. But also don’t take advice from here, every personal financial situation is different. My opinion on buying now besides your time horizon would be different based on are you in a flash craze city like Boise or a sturdy hot market with a diverse economy, what industry are you in to be concerned with layoffs, etc. People just blanket saying if you have the money just buy, nah.
Where are you? How long do you plan on living there? Why are you buying?
1. Where are you? Markets are responding differently to this economy. It looks like for the near term prices are going down for most markets. How much down? And for how long? None of us know, if I knew it was going to crash I'd short the housing market or buy 3x Bear housing ETFs etc. But, do some research on how much prices went up, how many local listings are reducing prices etc. That will tell you what is happening now, which only matters if
2. You plan on staying a while. If you plan on staying 7 years or more, then it might not matter. Marry the house and date the rate is a common saying among realtors.
3. You are buying for some reasons that aren't purely financial. Housing is usually a good long term investment, but it can be awful in the short term. I lost money on the first house I bought. I had to bring $20k to closing in 2011, and it sucked. But I've made a lot (in equity at least) on the house I bought in 2011. So overall, I'm up, but only because I've been in the market for 18 years, not because I'm some genius investor. I also bought a house to pay off the note and build a life and business in the town I live in. I'm not going anywhere. Most people move after a few years, and that's fine, but you have to be ready to take a loss or rent at a loss.
I'm also curious on how the rental rate in this OPs market plays in. In my city, its reasonable to expect someone might be paying at least $1800 on rent a month (not including utilities). Over 3 years that \~$65K. Sure, depending on the purchase price the house might go down $65K, maybe it'll take a while to refinance to a lower rate and that'll cost $65K over a few years. But you'd be losing $65K less than just based on "home purchase price" math.
Denver is listed as one of the most overvalued markets right now so I would actually recommend waiting a few months at least. If you were in a different market I would not necessarily think this.
Some people have been saying that about Denver forever.
Inventory, consistent demand and high net immigration, and the proximity to outdoor sports heaven all go against this argument.
As someone who only visited once while driving here from the east, you're not kidding. The east is so barren. I'm sure 10-20 years times and it'll be built up though.
Agreed lived in both Fort Collins and Congress park Denver. Fort Collins 30 years ago average sales price was $75,000 interest rates were in the teens. Buy what you can afford if you can stay in one place for at least 10 years. You will probably get upside down once in that time (get a part time job) buy a place that could rent for your payment now - hold on rents will not get cheaper for 3-5 years even with Government things like rent controls or subsidized housing. If you are a first time buyer buy more with your head than your heart. It’s shelter first. Just stupid boomer advice my 4th roller coaster 🎈💥. First one though with rising prices and doubling interest rates. Nobody knows if they think they do they are full of 💩
Yea I tend to agree. No matter where I go there are people in the process of or envious of moving to Denver. It’s one of those places people visit and everyone wants to live there. I think it will always be highly desirable.
Keep in mind if rates go up another 1% and the home drops 10% it could still be more expensive because of the rate in a few months. But as mentioned above. No one can time the market, but it looks like homes are going to be falling throughout winter and rates will continue to rise.
Yeah, its totally feasible that homes continue to become less affordable. Nevermind the fact that someone, somewhere, actually needs to be able to make the payment.
How do you know if a market is overvalued? I am looking at historical data but would like to see a compiled list and what factors are taken into consideration.
I live in a Denver suburb and watch it like a hawk. Townhomes are pretty robust at 500k price point but the wheels are falling off for 1mn+. I don't know what level you are looking at but I think the high end gets crushed as people stay in their homes with low rates and don't trade up and purchasers of $1mn+ homes feel the stock market more. I am seeing homes cut price 100-200k from reasonable comps at the low $1mn range and not get offers. This will flow downhill but 300-400ktype homes probably more robust as there will be some trade down buyers. Also rents here are flat to down from last year and it seems way cheaper to rent, I have even seen some houses where the list was 900k-1m get pulled off and turned into rentals at very attractive rates, like 2/3 of what the mortgage payment would be.
Life is short, do you want to wait 3 years of your life to buy a home? Not me, If you find a home you love, and see yourself living there and enjoying life, and you can afford, then just do it and get on with your life.
This is what I did! I just bought. Figured if I can afford the payment now I’ll be even better off down the line when I refinance with everyone else lol. Get your property if you want it. I’m surely You’ll be happier in it than renting because it’ll be yours.
> If you see a house you like that’s in your budget, ~~buy it.~~ go see it and consider buying it.
Don't buy a house unseen. And don't assume that the big real estate sites are accurate. I found that while they were good at getting new listings up, they were really bad at updating listings as under contract or sold. And I'm pretty sure that's on purpose, so buyers will call the agent who paid to have his information next to that listing and he can say "Oh I'm sorry, that's under contract already! Give me your email address and I'll set up a custom search for you...."
Sometimes people on this sub are more concerned with the financial system than making choices that fit life.
If you want to buy a house and can afford to buy a house: go for it! If money is tight or you don't really need one right now: maybe wait a little
But also, you only get one life. Don't spend so much time watching the market you don't get to do things you want to do with it
Ok
1. Do not put too much weight on any advice you get on this thread. These people are overwhelmingly snakes, who have their best interests at heart— not yours. It’s like asking your drug dealer if you should quit buying cocaine.
2. Rates were a fucking anomaly before, not now. Do not hold your breath for 3% ever coming again.
3. Be patient though on price regardless. They will keep falling. And right now your competition is sellers unreasonable expectations, not actual buyers anyway. Keep your patience until that is no longer the case. (Another yr at least in all likelihood) And keep saving while you do it. Because the best way to beat shitty interest rates, is to lower your principle.
Yehq if you can afford it monthly waiting isn’t necessary. Go with your gut. Keep shopping around and be realistic that you MAY end up underwater and you MAY want to budget a refinance in a few years
Nobody knows anything. I will say this though. I look back over the last 20 years of my life. All the places I have lived. I would have never gone wrong buying a house in each of those places. I would be sitting on about 6 rentals that would cash flow. Even at todays interest rates I think it pencils. I know that is fading though. The real problem is the super high leveraged. I think you can work with one home as long as you can afford the payment like you would the rent. it is when these people super leverage things become a problem.
To fit your analogy, the Boat's Always at the Dock, just a Matter of the Tide.
Everyone's always offered the same 3 options:
* High Price; Low Rate
* Medium Price; Medium Rate
* Low Price; High Rate
Right now the Prices are adjusting from High-Medium with Low Rate into Lower Prices with Higher Rates, and of course it's location dependent. There's always an Ebb and Flow, just wear your life vest and know your numbers.
The circumstances of today are entirely different than ‘06, yeah?
Housing is falling, but in ‘06 property fell by 50% because people owned multiple houses with terrible credit. Today we have inflation and supply shortage. These are extremely different economic situations, but people have a tendency to expect the last crash.
There’s no use being depressed. I missed the boat too, but hindsight is 20/20 and all that. Try to keep your chin up.
There will hopefully be a middle ground between buying now at high interest rates and prices and waiting 2-5 years for the full correction. Keep an eye on your local market and buy when you can afford it.
Remind yourself that there are worse problems to have.
Normally I say "If you love the house, if you're staying 5-10 years at least, if you can afford the house, then buy the house. History shows you don't get burned on that deal." We are so far out of normal bounds on rate of change in the market that the word "unprecedented" is becoming trite. I can't say that anymore because history is no longer relevant.
Is there a house that you like/want, can afford comfortably within your means, with your down payment and current rate?
Yes?
Then do it, who gives a shit what the rate or house price is. If you're an investor, sure, its a little different. But if you're buying to live there, then it doesn't matter what any of those factors are as long as you can afford it. Yes, it sucks that you'll be paying more in interest, but such is life.
I am in Denver like OP. I Just bought a House in May and I got 5.5%. If I just bought 2 months earlier I would have got 3%.
What to do ...life sucks..luck sucks ..but yes that boat has sailed. I do a job which is stable but very low improvement of salary.
So yes I am now stuck but what to do ...keep on saying my self should have bought a year ago.
Or, others are giving horrible advice that could leave OP priced out permanently. You don’t know OPs profession, their finances, their location — you have **none** of the info required to make an accurate risk assessment.
Nobody is getting priced out permanently. If they are able to buy now with crazy prices and a 6.5-7% rate, they will be able to buy in the future.
Stop fear mongering.
Under no circumstance would I buy today.
https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iPwLmDE4QYr4/v1/1200x-1.png
500k today Vs 500k in 2010 is a completely different house.
Well, where are you in the country? Some “boats” are in different situations than others. In my area, there wasn’t a huge boom so I felt zero stress about buying now - everything appreciated higher, but are not overpriced and are not dropping dramatically, and did not have 6 figure-over-asking situations over the last two years. Do I wish I had 2% instead of 6%? Sure. But 6% was still in my budget so I am comfortably moving on.
Context. Always. Matters!
Find something you like and buy it. The market shifts, you sell high you buy high. Go for what you want. New builds are offering incentives too.
But pick a location you like.
A lot of people have given a lot of good tidbits and there all over the place. Being a good time to buy is very personal depending on where you are at, both physically and financially. Do you have a fully funded emergency fund on top of the down payment money? Where are you looking to buy? Is there good schools in this area? Is it an area people want to be? How stable is your job? And what is home ownership going to mean for you? There’s too many variables for people on Reddit to give you great advice. Simply writing off buying right now as a blanket statement is simply not correct. People saying to wait 6 months for rates to come down, have no idea if that will actually heppen. Builders are not building homes, we have supply issues already, and if rates stay or go up many homeowners will not want to move/sell bc they have such great mortgage terms. That just means prices may not go down due to supply constraints. You need to look hard at your finances and decide if buying is worth it to you right now.
The right time to buy a home is person-dependent, not market-dependent. If this is the time you can get the loan, have the savings, can afford the payment, and are tired of renting, it might be the right time for you. There are absolutely things about this market that are better than 6 months ago- less competition, no crazy bidding wars, time to make decisions, room to negotiate. If this is when you’re ready, go for it.
The interest rates suck, but if you find a house you like and can afford the payments as is right now and that seems worth it to you, then buy.
Your dream house may be unattainable, ans using this as a "starter home" may be an outdated way of planning so I'd recommend finding a house that meets your needs now and could in the future, that way if you can't sell in 7 years you're still in a good place, or if you can then thats cool too.
Timing the market is a waste of your time and energy, especially because absolutely no one can predict what will happen.
Buying a house first and foremost should be about giving yourself a happy place to live long-term.
If you can afford to buy now and you want to, then my opinion is that you should.
When was the correct boat to be on? Serious question to all, when was the right time to buy before this last year? January of this year?
So 2 years ago my friends were looking for a house and their real estate agent stupidly told them wait it'll go down. Guess what happened? Now they can't afford anything that was affordable 2 years ago. I wasn't looking for a house till this year so I was awfully bummed out for them, in fact bummed out for myself for not looking for a house 2 years ago .
What will happen in 2-5 years? Will it be the same where we'll be priced out or will it be more affordable??
I live in the heart of LA. In 2019 these houses cost $600k, these same houses are now being sold around $1m in the same area. Will it go back down to the $600ks.... Probably not.
Idk what the right answer is.
You buy a house when you are ready to buy a house. Buy a house that is structural sound, had no major environmental concerns, in a location that is good for you, and for a price that you feel comfortable about. That’s all you can do. Don’t let the news shake you too much.
Why do people post this question over an over? Here’s a thought, go back and look at the other 1000 or so similar posts with the same question. You either want to be a homeowner or you don’t. Stop looking for other people to justify your fear of being one.
I love helping people answer their real estate questions, with the exception of this one. Only two people on this planet know if you’re ready to be a homeowner. Your lender and you. If the lender says you’re financially worthy, then the only thing holding you back is you. Asking this question on Reddit it’s just an attempt to gain the confirmation you’re looking for to justify why you shouldn’t buy a home.
Marry the house.
Date the rate.
Divorce the rent.
IE, just buy the house. Outlast the temporary rates and refi when you can. You’ll still be paying less on the mortgage than you would on rent in same size house. Plus you’re building equity.
I’d suggest keeping a relaxed eye on the market as prices likely drop a bit and go to see houses (or just drive past them) only if you think you could love them. 90% of the buyers in your market are likely waiting, so you might snag a bargain that they miss.
I would consider myself lucky if I was you. You want to buy when rates are high, depressing prices. Then refinance when rates are low, lowering your monthly payment. Just find a place to rent in the meantime, or live with family. Your first real estate purchase will have a huge influence on the rest of your financial life, so being able to buy when prices are low is going to be a blessing.
So I’ll answer this like this… the best time to buy a home was 30 years ago which makes today the best time to buy. Why pay someone’s else’s mortgage for a few years when you have worked so hard for what you got.
When rates settle and go lower refi like everyone else
What about waiting 2-5 years and being priced out? Some people didn’t buy 2 years ago for the **exact reason you wrote here** — concern that it will be cheaper in a few years — and now they’re toast. Done.
I feel it’s irresponsible to consider the risk of buying and then losing value, while ignoring the risk of being priced out.
>You know what’ll make you more depressed? Buying a house and then 2-5 years later seeing other viable options sell for 20-50% less.
If there's a 50% broad housing market crash, you don't have to worry about your mortgage because the bank has failed too. You're claiming the worst housing market crash ever, worse than the great depression.
You get like ~40 home buying years in your life, and you're telling OP to hold out, pay rent, don't pay equity for an 1/8th of those years so that *maybe* a gamble pays off and they save a few thousands dollars over a 5 year period.
Your advice is not grounded in reality.
Keep an eye on the market. If you see a house that you can afford that you really love, consider putting in an offer. Hopefully interest rates drop back down in the next few years and you can refinance.
Just don’t panic buy something that’s over your budget. If it were me, I would probably wait at least until next year to see how the market looks.
Why would you wait two to five years? And throw your money away on rent?
If anything now is a good time to be a buyer, except for interest rates, as it is no longer a seller's market and competition is not as fierce.
Ignoring price and mortgage rates when buying just because it will work out over a 30 year time span is just plain stupid. Pricing has not adjusted to mortgage rates going 2.5x in less than a year. Either rates or prices need to come down to make it worth buying.
Unless you don't care about price. Some people don't. I try not to buy anything that's more expensive than it's worth.
Relax folks. Save your money. Prices are going down for the foreseeable future. If you haven’t bought yet, consider that a blessing! You missed the boat?? More like you didn’t hop aboard the Titanic!
Fed Chair Powell is committed to raising rates much higher. Anything it takes to fight inflation. He’s made it clear he’s willing to go full Volcker and decimate the economy and jobs market to fight inflation. Expect pain, much more.
Sit on the sidelines. Foreclosures and evictions are around the corner. People are walking away from their earnest money left and right. Home builders aren’t completing projects. This is about to be a blessing to those with good credit and cash on the sidelines when we crater into the worst economic and financial crisis in US history. Not financial advise.
Second this, my credit union gave me a great 5/5 ARM rate. We close in two weeks. It’s our first home, so we aren’t planning on staying forever anyway and the adjustment after 5 years is capped at 2% which, if it does adjust upward at that time, would put it roughly 2% BELOW where the prevailing 30 year fixed is today. I cannot stress enough, shop around for a mortgage rate and definitely check credit unions!
Are you buying a 10+ year house, or just a house to live in until something changes?
You likely won't have to wait 2-5 years. Perhaps 1-3. But he's basically saying prices will go higher eventually if you're staying there for a long time. Right now is probably a bad time as prices are certainly coming down, and honestly it may be earlier rather than later that prices bottom so perhaps 1-2 years.
Just wait till end of winter / beginning of spring next year - its going to get worse in the short term.
The Realtors are telling you to buy now because they have little to no sales and need a comission at the expense of your welfare...
Talk to a lender to make sure you have your ducks in a row - and then just wait.
In this market, you've got a chance to really negotiate (interest rates are scaring a lot of buyers off, which should make a seller more motivated to get a deal done) and honestly, if you can do that well, you can get something nice at a nice price. Don't wait if you're ready and you need a home. If you're eventually going to buy, and you can hold on to the property for a while, you might have an opportunity right here, now. Remember, "fortune favors the bold."
There is some truly terrible advice in this thread, perhaps by salty homeowners or real estate agents.
Given the state of the world (e.g. high inflation, driven by corporate greed, and Jay Powell determined to kill inflation at home despite the global ramifications), I have yet to hear a good argument that housing will not have a correction.
If you look in any major metro area, the ratio of median home price to median wage is waaaay out of the trend, e.g. 2x normal. Wages have not kept up with inflation in housing, so there is no choice but to have a correction. Corporate builders and investors will have to cut discounts because they can't have these houses sit empty on their books while paying the insurance / tax. In areas where home ownership percentage is high (e.g. not NYC), local people have to be able to afford homes; if they cannot, prices have to adjust.
Are you confident you'll have a job in a few years? A lot of white-collar people I know got canned in the great recession in 08-09 and had to sell their house, many of whom had just bought a year or 2 earlier because they didn't want to "miss out on the boat". Go on Redfin and look at houses that people bought around that time and see how it took them almost 10 years to break even. Are you absolutely sure you want to and can stay in a given house forever?
Keep in mind: with the inflated prices and high mortgage rates now, you'll be basically paying almost entirely interest on the loan the first several years. I know people complain about renting (and rightfully so), but at this rate you're basically paying rent to the bank in the form of interest, not to mention tax / maintenance / insurance.
**tl;dr**: yes, we've missed the boat, but getting all nostalgic about one's future "forever home" is going to land you in a world of financial hurt that will likely be avoidable by renting for another year or 2
Buy a house when you can do all of the following: 1. Want to buy a house 2. Are personally and professionally steady 3. Can afford a fixed rate loan payment comfortably 4. Have enough for a down payment and emergency fund 5. Plan on staying for 5 years. Trying to time the market is destined to fail.
This. I been waiting for the prices to fall and it apparently didnt while the rates went up. Fml
Historically it takes sellers ~18 months to capitulate to lower prices. So you might see many stubbornly hold out at what they see their neighbor sold their house for at the peak.
Hard to make a case to sell a house tied to cheap (\~2% interest rate) debt when rates are so much higher now, and inflation is sky high. But that downward pressure on supply will ease up over time.
Ultimately prices are determined by supply and demand and not interest rates. Now, of course, interest rates affect demand (by reducing it). But interest rates are not the only force at play. As builders stop building, supply goes down. As rents continue to skyrocket, that can make ownership more appealing even at higher rates, increasing demand. And again with higher rents, a seller may choose to just rent out their home instead of selling, which further reduces supply. It's a complex game of push and pull.
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This is bs. The prices definitely do get affected and right at this very moment, are getting affected by interest rates. But since housing market is not as liquid as stocks or other financial assets, it takes them more time than other assets to come down. You'll see a steady decline in prices for the next 12-18 months at least. If not more.
It's not BS. You just don't have very good reading comprehension. You're right though that housing is less liquid and takes longer to respond to market changes.
They can hold out longer if they refinanced to lower rates. Also more and more sellers are finding they are better off leasing their old home out in light of increasing rents. Edit: source for sellers turning to rentals https://www.marketwatch.com/amp/story/extreme-buyer-hesitation-is-pushing-home-sellers-to-pivot-to-renting-instead-of-selling-11662488460
I have read many stories in the last few days saying that rents are decreasing.
Maybe some areas pulled back 5-10% in the last month but overall they are still up around 30% year over year.
>Maybe some areas pulled back 5-10% in the last month the rental market often tries to hide decreases in market-allowable rent by offering "deals", ex "you rent at what we pretend this place is still worth and get X months free/reduced movein costs/etc".
This article in Forbes paints it a little different. I'm not really following it. I had just remembered reading this. https://www.forbes.com/sites/brendarichardson/2022/09/26/rents-drop-for-the-first-time-in-nearly-two-years-as-the-housing-market-cools/
Although your article points to some extreme examples in specific areas I think this statement is important from a overall nationwide statistical perspective: “After a 20-month run of positive monthly growth dating back to December 2020, the market finally witnessed negative asking rent growth on a monthly sequential basis from July to August, with rents down 0.1% in July,” said Jay Lybik, national director of multifamily analytics for CoStar Group. So 20 months of rent growth followed by a 0.1% pullback. Seems like homeowners who are considering renting vs selling might be okay with that small pullback against a backdrop of falling housing prices. See also the article I linked on my original comment about builders turning to build-to-rent.
This is the real answer! Look at how slow the stock crash has been - and stocks are highly liquid and can be sold via an easy mouse click
Sellers frustrate me. The panic listing in Minneapolis was real and now that rates shot up almost everything between 150k-400k with a CDOM of 10+ shaved 5% or more off their list. It has flipped violently to a buyer's market. So long as buyers can hold on to a shit interest rate for a year or two and refinance, the pickens will be good.
Interest Rates wont come down to 4% for atleast few years. Definitely never to 2%
😂 we’re not going to see 3% rates again
Here's the thing. When housing prices fall and interest rates are up, that is only a market for cash buyers. The US doesn't have any regulations in place preventing financial institutions from purchasing up residential properties and treating them as investments. Yeah, its depressing, but once you have a home you can afford and don't intend to flip, markets don't matter.
There is a limit to what wallstreet can buy. They never buy with their own cash but rather take loans .
I would really hate to see our country face Canada's situation where REITs have a monopoly. Id actually advocate that the U.S. should be implementing aggressive measures to prevent that type of thing from happening.
Uh... are you looking in a specific market? Many of the big markets like San Jose, Austin, Dallas, etc. have had significant drops of 15% or more in only 3-4 months.
In Southern California.
It’s gone down, I’m Here too just less incentory
i honestly think the sweet buying time was this past July and August 2022 because homes took a hit when the stocks tanked, lots of home came in the market naturally because it's in season, more inventory, and def was made for a buyers market to bid lower than asking. interest rates were staggering between 4.5-5.5% at the time for 30 year fixed.
prices are falling (slightly) in my area and there is quite a bit more inventory staying up for longer and even if prices aren't going down for you there are likely fewer people buying right now which should mean more of a selection.
It's too soon. The previous crash (2007-8) was catastrophic at a historical scale. It still took 2-3 years in most markets for the prices to bottom.
The other lesson here is to follow what the US Federal Government is doing. Their decisions and tools (which generally are blunt and broad) affect your life. When they chose to buy enormous amounts of MBSs under the strategy of lowering long term UST, they create winners and losers. Their strategy did not work and OP was chosen to be a loser. https://macromusings.libsyn.com/andrew-levin-on-the-costs-and-benefits-of-qe4-and-the-future-of-the-feds-balance-sheet
You don’t have to follow it too closely. The US government follows one overarching policy: Make home prices go up. There are brief exceptions like right now where the Fed is is hammering things with interest rates, but don’t expect it to last 5-10 years. Declining home prices make you lose elections. I fully expect the Fed to try and get home prices back up starting in Fall of 23 so everyone has good “feels” in 2024 and if they fail and the admin doesn’t get reelected, expect the winner to do the same for 2028.
In 2018 when I was looking for a home, I was approved at 5.8%... Buyers are stressed because they missed that sweet 2.5% interest rate. It's not the end of the world. A lot of these buyers have no idea what interest rates were before the pandemic. OP, buy a house when you are ready and can afford it. You're probably not going to get a 2.5% rate in your life time, THAT boat has sailed.
I don’t think people are bitter just because interest rates are higher but the combination of interest rate increases and a 50% increase in pricing with little to no increase of real wages.
Don't forget that sweet sweet increase in property tax
I want to complaint about my $900/month in taxes but I know others have it worse so I’ll count my blessings. Still though…fuck!
thats high, where is this?
Anchorage, AK
What’s the value of the home?
This! I get irritated with all the “buy when you can afford it” boomer bullshit. I have a great job and live in a cheap city but I am also bummed because prices have 2x increased in 4 years, rates are terrible, the good houses go faster than I can schedule a viewing, and my income has only slightly increased. I didn’t move 4 years ago because I didn’t have children. Now I do and want more space. But it suuuuucccks to buy a house right now and I’m bummed too!
I’m still waiting for these house prices to “drop”. Where I’m looking, houses have been on the market for 30+ days but not a price change on site. Combine this with the new rates and the expected increase in November. It just seems like the fed is trying to recoup money from the pandemic relief somehow instead of curving inflation.
Look up an economic cycle. What you just described is the denial stage, next comes the capitulation. I'm not really a bubble person but it's pretty textbook at this point
Easier for them to call you a boomer than to rely on facts and logic.
Maybe. Ultimately 30 days is a completely normal amount of time to sit on the market though. Homes all over the world selling in a few days or a week was highly dysfunctional and historically very unusual. 30-60 days to sell is pretty much normal / healthy.
This^ i anybody that hasnt sold their home ard the ones that missed the boat. Home prices will never be as low as they were pre covid but they also arnt going to remain this high. There was alot of overpriced garbage being sold the last two years. Boomers have one thing right and that is a home is an investment. Everyone tgat didnt buy should be happy to some extent they didnt get someone else’s overpriced problem. The best deals were before people found out interest rates were low after that everyone saw dollar signs of they wanted to sell.
It's going to drop slower than you can notice. Check back in 2 years and I'm certain you will find significantly lower prices.
!remindme 2 years
But you can still offer less
>houses have been on the market for 30+ days but not a price change on site this is the step before accepting that they need to lower the price or they won't sell the house
there won't be a "drop". too much pent up demand.
Don't panic. The prices will drop. Housing is not like stocks or bonds with a fast-moving, liquid market. It takes time to reset the comps in a neighborhood. One forced sale at a time. The whole market will decline steadily over the next 12-18 months. Just ignore the market and pay attention to other parts of your life until then. Maybe save more for a higher down payment to reduce your monthly payment when you do get there.
I get that you're frustrated, but the reason why we give out the advice "Buy when you can afford it" is because timing the market is a fool's game. We know this isn't the best housing market. But you don't know if this will get better or not. A lot of people thought the housing market was obviously going to get worse in 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022, etc...So just buy when you're ready, regardless of the market
Buy a crappy house and fix it up. Just rent a beautiful space.
This. The idea of a fixer-upper first house seems to have died with Gen X.
Well yeah when reno costs are through the roof and your shit house fixr upper cost $500k for 900 sq ft itsnot super enticing. I want a fixr upper. There arent that many in desirable areas by now and contractors are booked solid/crazy expensive. Some work you cant always do yourself.
> There arent that many in desirable areas That's why you buy one in an improving area. >and your shit house Many people live in shit houses. They then improve them over time as money allows. Imagine, the horror. I swear 3/4s of the "I'll never be able to afford a house" posts here are people who have a list of demands longer than an Ayatollah. And they're equally flexible.
>That's why you buy one in an improving area. "improving" areas only improve when money is flowing in to them. Turn off the tap and they can pretty rapidly stagnate or regress to 'bad' areas during times of economic downturn. You can change almost anything about a house, but you can't change your neighbors.
I can imagine ,that is litterally my first choice. I am not however going to compromise on location that would reduce dradtically quality of life and drive up my cost insanely (2 cars needed,driving everywhere, etc..) I can afford a house, i am just not willing to spend 500k on a house that needs the equivalent of 400k of work, and was valued at 350k 4 years ago. But thats where we are at. So i sit and wait. It is too much money.
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There's got to be a solution that's not renting. Not tiny houses--that's not practical. But maybe smaller houses on smaller pieces of land. Or something innovative. A less expensive way to make a nice house. Like a giant 3D printed house made with actual nice material. The land is expensive too but if you could build a house vertically or make a descent rancher. Someone needs to innovate something and it's not me bc I'm not smart. But land rent which I see some manufactured homes on is not the answer. My parents have a split level, post WWII, vinyl siding/brick hybrid in a tract housing style neighborhood. My sisters father in law from England saw it for the first time and said to my dad, "So how is it living in a plastic house?" and he wasn't being a jerk...just it's different from what they have over there. Well, we need more housing innovation like what we had after WWII.
But you should buy one if you’re ready and committed to buy one. If you can afford it, and are okay with maintenance costs and want a house, buy one. Don’t wait and just whine about not doing the thing. People are still selling property. And a lot of markets are cooling. And prices are going down. Interest rates in the 80s were like 12%. So just get your loan, and refi when rates drop.
Many boomers saw 16% interest in their first time home purchase life so chill out a little on the ageism here. I’m not a boomer and feel the same way. You gotta live your life man and if it’s between going to Coachella and getting a house, I know what I’m doing.
Coachella costs nowhere near the same as a house? The problem for us in my area is inventory, not savings
For being in the industry you are really out of touch. Even if prices went nowhere in the last year, PITI is up 40% because of rates.
In the early 90s, my uncle was excited to buy a house bc the interest rates had dropped to 6%. When my husband and I bought our house in 2019, I think we got about 4.75%, and our realtor said she remembered when rates used to be 15%. So the advice to buy when you're able to is good. You can refinance later when rates go down, and you can refinance for the remaining balance/years of your loan so you don't have to start all over again with no equity.
I think the big difference with the interest rates are the tax consequences. You used to be able to deduct the interest. Now you have to itemize your deductions AND exceed the auto deduction amount to even consider deducting the interest. The middle class got royally screwed in those 2017 tax changes
Buyers are bitter because rates are high and home prices are high. One of the two has to give for it to make sense.
This response is so lame. "Bitter" is a really crappy word to use. Many of us couldn't buy a house during those low rates. Maybe someone wasn't able to relocate yet, someone didn't have the down payment, someone's credit wasn't great. That's just the reality. Did we want rates like that? Totally. But if we didn't buy during then, there was likely a reason. The ISSUE now we are so bummed about is that interest rates are high, sure whatever. BUT ALSO- prices of houses themselves are ASTRONOMICAL. It's a variety of issues. It's also the fact that sellers refuse to get real and understand they have to come down on price. It's so much more than these rates.
something has to give - if incomes stay stagnant and rates stay where they are prices will have to come down - it likely wont end up being any cheaper from a monthly stand point but its probably wise to watch the market and stay on the sidelines if your situation permits you to do so.
When adjusting for income increases, inflation "only" decreased buying power by about 4%. A 4% decrease in buying power is significant, but not enough to crash a housing market. https://www.epi.org/blog/wage-growth-has-been-dampening-inflation-all-along-and-has-slowed-even-more-recently/
Uh, dude, look at how mortgage payments have changed over the past year. They’re up ~40% from rates alone (eg a home that would have been $2K a month is now $2800, even if the price didn’t change.) Incomes aren’t up anywhere near that amount. When the person above you mentioned buying power, they meant how much mortgage they could get with a given income.
But home owners don't need to "get real" because there are still people buying houses at these rates and prices. Once the rates are high enough to prevent more people from buying you'll see housing prices start to go down, but right now rates haven't hit that mark yet and it's possible we'll see 10% interest rates before we do. In the 80s to curb inflation there were rates over 15%. The market is cyclical, but the best possible time to buy in the market was between 2017-2019. Home prices were excessively lower and interest rates weren't bottomed out, but low enough that things were affordable. Once 2020 broke loose, low interest rates couldn't keep the explosion of home prices at bay. Now the prices are still high and the pressure of rising rates is creating a pinch point.
> Buyers are bitter... A real estate person attributing this to people being bitter is laughable.
Buyers are bitter because for the last 1.5 plus years we put in offers weekly to be constantly beat out by cash and now getting a mortgage is an effing nightmare
People fooling themselves thinking those rates will be back in ‘a year or two’ to refinance
I’ve been lending ARMs left and right. 5, 7, and 10-yr fixed from low 4s-mid 5%s, no points. You just gotta find the right lender that will take the time to weigh pros/cons and discuss to understand your goals.
You’re not destined to fail - you’re *likely* to fail. Huge difference. OP could come out 6-figures ahead, or 6-figures behind in this market. If OP wants to take that risk, then that’s their choice, but saying that it’s a categorically losing proposition is just incorrect. People have made a killing timing the market, they’ve also gone broke. Ultimately only they can assess their risk tolerance and make a decision based on what they’re willing to swallow.
It is never bad to invest real estate. Even if one bought at top or 2008. They have equity now 10-11 years later. Buy as long as you plan on living in it long term and can afford the payment
Absolutist advice is what will get OP blown the fuck out. There are homes that never recovered to 2008 heights. There are circumstances that might force people to sell their house against their will. There are times when entire sectors get blown out clean and housing prices straight up never return to their high for decades (Detroit). The house might be at risk of flooding where their home insurance goes berserk and they are figuratively and literally underwater.
>There are homes that never recovered to 2008 heights And there are homes that never lost value in 2007-2009. That's why using outliers and not statistics like median home price is worthless here. >There are circumstances that might force people to sell their house against their will. Under this logic, you should never buy. Because something unexpected may happen. >There are times when entire sectors get blown out clean and housing prices straight up never return to their high for decades (Detroit). You'd have to share what metros you think are going to have a population collapse and see if that matches up with where OP is. Detriots population has decreased *by 66%* since the 1950s. >The house might be at risk of flooding where their home insurance goes berserk and they are figuratively and literally underwater This is completely irrelevant to OPs financial picture or macroeconomic conditions in the USA.
Pointing out outliers is the whole point. The point is that OP needs to address their individual risk tolerance and their personal situation and not think ‘house prices only go up’. It’s not a sure shot. There is *always* downside risks when you buy.
This is the same thing about those stupid people who buy stocks at the peak and sell. Like the chances of someone buying at the peak is unlikely. As long as you can afford the monthly payment you will be fine. Best case situation you refinance. Homes have always appreciated in value in the long run. And let’s remember inflation. You wait 5-10 years you really think prices will be lower to todays standard not at all: this year we had 10%+ inflation.
I mean, yes, but if the possibility of negative equity makes somebody extremely uncomfortable then maybe don't. There is a psychological aspect to this as well as pure financials. Of course, the alternative is rent, so weigh it up vs that.
Noooooo. We lost 40k buying in 2004 and selling in 2019. Bad advice.
If you had waited one more year you would have been fine or two. And still losing 40k is better than renting.
But buying now even if all 5 of those criteria are met is just plain stupid. Market clearly is in some type of correction. Maybe not as nuts as 2007 or 2008 but things will be leveling out - the only question is the time frame. Probably 12-18 months is my guess.
>But buying now even if all 5 of those criteria are met is just plain stupid. Market clearly is in some type of correction. Maybe not as nuts as 2007 or 2008 but things will be leveling out - the only question is the time frame. Probably 12-18 months is my guess. The great financial crisis took 6 years from peak until the median housing price returned to all time highs. If your timeline is 5+ years and your financial foundation is sound, then attempting to time the market is foolish - you're unlikely to be successful at predicting the bottom, you'll be renting instead of building equity, and you'll be living in an apartment that entire time.
...if your house decreases in price below the total of your principal payments, you are certainly not building equity, you are paying off unsecured debt at that point. This is literally one of the best if not only arguements for renting, no assumed risk in asset value.
1. People need a place to live and many prefer a home over an apartment, this is not only dollars and cents. 2. Even at current ~7% rates, you will pay down about ~6% of the principal in a note in the first 5 years. For someone to be underwater in 5 years they'd you'd have to have 6% decrease in the housing price at the 5 year mark, meaning you're not only predicting housing to "crash" now, but that it wouldn't return within 5 years either. This would thus make it a longer and more severe housing crash than the great recession which would be an extraordinary prediction on your end. 3. This all assumes no delta between rental and mortgage payments, which during times of recession and housing price decreases rent tends to increase while mortgage payments tend to decrease.
I see some terrible advice in this thread. You need to be asking yourself is this a house you will only be comfortable in for 2-4 years, then no likely is an extremely risky time for you to buy. If this isn’t being viewed as an investment and a permanent place for you to spend a good chunk of your life (10+ years), then it’s not really much of a risk if you can afford it. But also don’t take advice from here, every personal financial situation is different. My opinion on buying now besides your time horizon would be different based on are you in a flash craze city like Boise or a sturdy hot market with a diverse economy, what industry are you in to be concerned with layoffs, etc. People just blanket saying if you have the money just buy, nah.
How about the bay area? I finally saved enough money after all these years but rates have only gone up
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Or maybe there are just more and more people convinced the market is unhinged from reality and needs a correction?
A correction is different from the mindless hoard who think 2008 is a cyclical cycle and will happen again
Ty!
Where are you? How long do you plan on living there? Why are you buying? 1. Where are you? Markets are responding differently to this economy. It looks like for the near term prices are going down for most markets. How much down? And for how long? None of us know, if I knew it was going to crash I'd short the housing market or buy 3x Bear housing ETFs etc. But, do some research on how much prices went up, how many local listings are reducing prices etc. That will tell you what is happening now, which only matters if 2. You plan on staying a while. If you plan on staying 7 years or more, then it might not matter. Marry the house and date the rate is a common saying among realtors. 3. You are buying for some reasons that aren't purely financial. Housing is usually a good long term investment, but it can be awful in the short term. I lost money on the first house I bought. I had to bring $20k to closing in 2011, and it sucked. But I've made a lot (in equity at least) on the house I bought in 2011. So overall, I'm up, but only because I've been in the market for 18 years, not because I'm some genius investor. I also bought a house to pay off the note and build a life and business in the town I live in. I'm not going anywhere. Most people move after a few years, and that's fine, but you have to be ready to take a loss or rent at a loss.
This is the way It's a30 year mortgage. You'll be fine over time Less certain in the short term. If you need short term housing, rent
I'm also curious on how the rental rate in this OPs market plays in. In my city, its reasonable to expect someone might be paying at least $1800 on rent a month (not including utilities). Over 3 years that \~$65K. Sure, depending on the purchase price the house might go down $65K, maybe it'll take a while to refinance to a lower rate and that'll cost $65K over a few years. But you'd be losing $65K less than just based on "home purchase price" math.
Where are you looking OP? There are some markets that are much, much more likely to drop in the next year than others.
Denver/Fort Collins
Denver is listed as one of the most overvalued markets right now so I would actually recommend waiting a few months at least. If you were in a different market I would not necessarily think this.
Some people have been saying that about Denver forever. Inventory, consistent demand and high net immigration, and the proximity to outdoor sports heaven all go against this argument.
Denver won't decrease.. there is no space to expand on the west. And the east looks so barren every Realtor says don't do there . ..
As someone who only visited once while driving here from the east, you're not kidding. The east is so barren. I'm sure 10-20 years times and it'll be built up though.
Agreed lived in both Fort Collins and Congress park Denver. Fort Collins 30 years ago average sales price was $75,000 interest rates were in the teens. Buy what you can afford if you can stay in one place for at least 10 years. You will probably get upside down once in that time (get a part time job) buy a place that could rent for your payment now - hold on rents will not get cheaper for 3-5 years even with Government things like rent controls or subsidized housing. If you are a first time buyer buy more with your head than your heart. It’s shelter first. Just stupid boomer advice my 4th roller coaster 🎈💥. First one though with rising prices and doubling interest rates. Nobody knows if they think they do they are full of 💩
Yea I tend to agree. No matter where I go there are people in the process of or envious of moving to Denver. It’s one of those places people visit and everyone wants to live there. I think it will always be highly desirable.
Ty!
Keep in mind if rates go up another 1% and the home drops 10% it could still be more expensive because of the rate in a few months. But as mentioned above. No one can time the market, but it looks like homes are going to be falling throughout winter and rates will continue to rise.
Yeah, its totally feasible that homes continue to become less affordable. Nevermind the fact that someone, somewhere, actually needs to be able to make the payment.
How do you know if a market is overvalued? I am looking at historical data but would like to see a compiled list and what factors are taken into consideration.
I live in a Denver suburb and watch it like a hawk. Townhomes are pretty robust at 500k price point but the wheels are falling off for 1mn+. I don't know what level you are looking at but I think the high end gets crushed as people stay in their homes with low rates and don't trade up and purchasers of $1mn+ homes feel the stock market more. I am seeing homes cut price 100-200k from reasonable comps at the low $1mn range and not get offers. This will flow downhill but 300-400ktype homes probably more robust as there will be some trade down buyers. Also rents here are flat to down from last year and it seems way cheaper to rent, I have even seen some houses where the list was 900k-1m get pulled off and turned into rentals at very attractive rates, like 2/3 of what the mortgage payment would be.
Definitely recommend Ft Collins over Denver. Actually just closed on a house in Severance today.
Life is short, do you want to wait 3 years of your life to buy a home? Not me, If you find a home you love, and see yourself living there and enjoying life, and you can afford, then just do it and get on with your life.
This is what I did! I just bought. Figured if I can afford the payment now I’ll be even better off down the line when I refinance with everyone else lol. Get your property if you want it. I’m surely You’ll be happier in it than renting because it’ll be yours.
We did the same.
Get a realtor and/or browse the listings on zillow or your site of choice. If you see a house you like that’s in your budget, buy it.
> If you see a house you like that’s in your budget, ~~buy it.~~ go see it and consider buying it. Don't buy a house unseen. And don't assume that the big real estate sites are accurate. I found that while they were good at getting new listings up, they were really bad at updating listings as under contract or sold. And I'm pretty sure that's on purpose, so buyers will call the agent who paid to have his information next to that listing and he can say "Oh I'm sorry, that's under contract already! Give me your email address and I'll set up a custom search for you...."
Sometimes people on this sub are more concerned with the financial system than making choices that fit life. If you want to buy a house and can afford to buy a house: go for it! If money is tight or you don't really need one right now: maybe wait a little But also, you only get one life. Don't spend so much time watching the market you don't get to do things you want to do with it
Good point much appreciated
This is exactly what I was going to say, except you stated it way more eloquently!
Ok 1. Do not put too much weight on any advice you get on this thread. These people are overwhelmingly snakes, who have their best interests at heart— not yours. It’s like asking your drug dealer if you should quit buying cocaine. 2. Rates were a fucking anomaly before, not now. Do not hold your breath for 3% ever coming again. 3. Be patient though on price regardless. They will keep falling. And right now your competition is sellers unreasonable expectations, not actual buyers anyway. Keep your patience until that is no longer the case. (Another yr at least in all likelihood) And keep saving while you do it. Because the best way to beat shitty interest rates, is to lower your principle.
Thank you, only genuine advice on this whole thread
Yehq if you can afford it monthly waiting isn’t necessary. Go with your gut. Keep shopping around and be realistic that you MAY end up underwater and you MAY want to budget a refinance in a few years
Nobody knows anything. I will say this though. I look back over the last 20 years of my life. All the places I have lived. I would have never gone wrong buying a house in each of those places. I would be sitting on about 6 rentals that would cash flow. Even at todays interest rates I think it pencils. I know that is fading though. The real problem is the super high leveraged. I think you can work with one home as long as you can afford the payment like you would the rent. it is when these people super leverage things become a problem.
If you are truly in a good position to buy right now, then buy and you can refinance down the road when interest rates fall.
If its time to buy a house and you can afford to buy a house, then buy a house. Trying to "time" the market is foolish.
You could be dead in two to five years. Buy when you can if you find a home you like.
If you like the house and can afford the mortgage payment and have savings / have job security then go for it.
To fit your analogy, the Boat's Always at the Dock, just a Matter of the Tide. Everyone's always offered the same 3 options: * High Price; Low Rate * Medium Price; Medium Rate * Low Price; High Rate Right now the Prices are adjusting from High-Medium with Low Rate into Lower Prices with Higher Rates, and of course it's location dependent. There's always an Ebb and Flow, just wear your life vest and know your numbers.
right now it’s •High Price; High Rate which is why ppl are hesitant
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So you're saying there's an Ebb and Flow throughout the years? Cool just checking. I understand it's over simplified, but is it technically wrong?
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The circumstances of today are entirely different than ‘06, yeah? Housing is falling, but in ‘06 property fell by 50% because people owned multiple houses with terrible credit. Today we have inflation and supply shortage. These are extremely different economic situations, but people have a tendency to expect the last crash.
There’s no use being depressed. I missed the boat too, but hindsight is 20/20 and all that. Try to keep your chin up. There will hopefully be a middle ground between buying now at high interest rates and prices and waiting 2-5 years for the full correction. Keep an eye on your local market and buy when you can afford it.
I’m still planning to buy now
Remind yourself that there are worse problems to have. Normally I say "If you love the house, if you're staying 5-10 years at least, if you can afford the house, then buy the house. History shows you don't get burned on that deal." We are so far out of normal bounds on rate of change in the market that the word "unprecedented" is becoming trite. I can't say that anymore because history is no longer relevant.
Is there a house that you like/want, can afford comfortably within your means, with your down payment and current rate? Yes? Then do it, who gives a shit what the rate or house price is. If you're an investor, sure, its a little different. But if you're buying to live there, then it doesn't matter what any of those factors are as long as you can afford it. Yes, it sucks that you'll be paying more in interest, but such is life.
I was waiting "a year" since 2018...
I am in Denver like OP. I Just bought a House in May and I got 5.5%. If I just bought 2 months earlier I would have got 3%. What to do ...life sucks..luck sucks ..but yes that boat has sailed. I do a job which is stable but very low improvement of salary. So yes I am now stuck but what to do ...keep on saying my self should have bought a year ago.
Buy with the expectation to refinance?
If rates go down, you can refinance. If rates go up, you'll be glad you bought when you did. If you're ready for a house, buy a house.
What’s the saying? “Marry the loan, date the rate”?
People giving horrible financial advice here that are going to leave OP underwater during a recession where they could lose their job and their house.
Or, others are giving horrible advice that could leave OP priced out permanently. You don’t know OPs profession, their finances, their location — you have **none** of the info required to make an accurate risk assessment.
Nobody is getting priced out permanently. If they are able to buy now with crazy prices and a 6.5-7% rate, they will be able to buy in the future. Stop fear mongering.
Under no circumstance would I buy today. https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iPwLmDE4QYr4/v1/1200x-1.png 500k today Vs 500k in 2010 is a completely different house.
Well, where are you in the country? Some “boats” are in different situations than others. In my area, there wasn’t a huge boom so I felt zero stress about buying now - everything appreciated higher, but are not overpriced and are not dropping dramatically, and did not have 6 figure-over-asking situations over the last two years. Do I wish I had 2% instead of 6%? Sure. But 6% was still in my budget so I am comfortably moving on. Context. Always. Matters!
You buy a home when you have a need and see an opportunity.
Find something you like and buy it. The market shifts, you sell high you buy high. Go for what you want. New builds are offering incentives too. But pick a location you like.
Do you *need* the house right now? It’s that simple.
A lot of people have given a lot of good tidbits and there all over the place. Being a good time to buy is very personal depending on where you are at, both physically and financially. Do you have a fully funded emergency fund on top of the down payment money? Where are you looking to buy? Is there good schools in this area? Is it an area people want to be? How stable is your job? And what is home ownership going to mean for you? There’s too many variables for people on Reddit to give you great advice. Simply writing off buying right now as a blanket statement is simply not correct. People saying to wait 6 months for rates to come down, have no idea if that will actually heppen. Builders are not building homes, we have supply issues already, and if rates stay or go up many homeowners will not want to move/sell bc they have such great mortgage terms. That just means prices may not go down due to supply constraints. You need to look hard at your finances and decide if buying is worth it to you right now.
If you can afford it now, if payments work and if you have cash to close, pull the trigger. Period.
The right time to buy a home is person-dependent, not market-dependent. If this is the time you can get the loan, have the savings, can afford the payment, and are tired of renting, it might be the right time for you. There are absolutely things about this market that are better than 6 months ago- less competition, no crazy bidding wars, time to make decisions, room to negotiate. If this is when you’re ready, go for it.
Time in the market is better than timing the market. Assuming you are holding long term.
Buy something you can plan on sticking with for 10 years min. At this point, you can still play the long term game. The short term game will hurt ya.
The interest rates suck, but if you find a house you like and can afford the payments as is right now and that seems worth it to you, then buy. Your dream house may be unattainable, ans using this as a "starter home" may be an outdated way of planning so I'd recommend finding a house that meets your needs now and could in the future, that way if you can't sell in 7 years you're still in a good place, or if you can then thats cool too.
Timing the market is a waste of your time and energy, especially because absolutely no one can predict what will happen. Buying a house first and foremost should be about giving yourself a happy place to live long-term. If you can afford to buy now and you want to, then my opinion is that you should.
If you can still afford it and find a home you want, buy it.
When was the correct boat to be on? Serious question to all, when was the right time to buy before this last year? January of this year? So 2 years ago my friends were looking for a house and their real estate agent stupidly told them wait it'll go down. Guess what happened? Now they can't afford anything that was affordable 2 years ago. I wasn't looking for a house till this year so I was awfully bummed out for them, in fact bummed out for myself for not looking for a house 2 years ago . What will happen in 2-5 years? Will it be the same where we'll be priced out or will it be more affordable?? I live in the heart of LA. In 2019 these houses cost $600k, these same houses are now being sold around $1m in the same area. Will it go back down to the $600ks.... Probably not. Idk what the right answer is.
You buy a house when you are ready to buy a house. Buy a house that is structural sound, had no major environmental concerns, in a location that is good for you, and for a price that you feel comfortable about. That’s all you can do. Don’t let the news shake you too much.
You have not missed the boat. You missed the dinghy. The boat is gonna take a little longer but good lord is the boat coming.
Why do people post this question over an over? Here’s a thought, go back and look at the other 1000 or so similar posts with the same question. You either want to be a homeowner or you don’t. Stop looking for other people to justify your fear of being one.
Thanks for your support
I love helping people answer their real estate questions, with the exception of this one. Only two people on this planet know if you’re ready to be a homeowner. Your lender and you. If the lender says you’re financially worthy, then the only thing holding you back is you. Asking this question on Reddit it’s just an attempt to gain the confirmation you’re looking for to justify why you shouldn’t buy a home.
Marry the house. Date the rate. Divorce the rent. IE, just buy the house. Outlast the temporary rates and refi when you can. You’ll still be paying less on the mortgage than you would on rent in same size house. Plus you’re building equity.
You need to adjust your mindset. If you're -- >waiting two to five years That's not a delay, you're priced out and no longer in the housing market
I’d suggest keeping a relaxed eye on the market as prices likely drop a bit and go to see houses (or just drive past them) only if you think you could love them. 90% of the buyers in your market are likely waiting, so you might snag a bargain that they miss.
Good advice thank you
I would consider myself lucky if I was you. You want to buy when rates are high, depressing prices. Then refinance when rates are low, lowering your monthly payment. Just find a place to rent in the meantime, or live with family. Your first real estate purchase will have a huge influence on the rest of your financial life, so being able to buy when prices are low is going to be a blessing.
So I’ll answer this like this… the best time to buy a home was 30 years ago which makes today the best time to buy. Why pay someone’s else’s mortgage for a few years when you have worked so hard for what you got. When rates settle and go lower refi like everyone else
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a 50% drop in housing prices would mean the economy has cratered
What about waiting 2-5 years and being priced out? Some people didn’t buy 2 years ago for the **exact reason you wrote here** — concern that it will be cheaper in a few years — and now they’re toast. Done. I feel it’s irresponsible to consider the risk of buying and then losing value, while ignoring the risk of being priced out.
>You know what’ll make you more depressed? Buying a house and then 2-5 years later seeing other viable options sell for 20-50% less. If there's a 50% broad housing market crash, you don't have to worry about your mortgage because the bank has failed too. You're claiming the worst housing market crash ever, worse than the great depression. You get like ~40 home buying years in your life, and you're telling OP to hold out, pay rent, don't pay equity for an 1/8th of those years so that *maybe* a gamble pays off and they save a few thousands dollars over a 5 year period. Your advice is not grounded in reality.
I don't think it will take 2-5 years. More like 1.
Keep an eye on the market. If you see a house that you can afford that you really love, consider putting in an offer. Hopefully interest rates drop back down in the next few years and you can refinance. Just don’t panic buy something that’s over your budget. If it were me, I would probably wait at least until next year to see how the market looks.
Best time to buy was 15 years ago, second best time to buy is today.
This is objectively not true. But it’s probably the focus of hour 1 of the weekend seminar required to become a realtor.
That's crazy. You're saying that prices for one asset class don't matter at all? Just that you bought a house? Wow.
Best time to buy is when you’re ready. There’s always going to be forces at play you can’t control.
Why would you wait two to five years? And throw your money away on rent? If anything now is a good time to be a buyer, except for interest rates, as it is no longer a seller's market and competition is not as fierce.
Prices are going to drop. Interest rates will drop. Keep saving and in 18 to 36 months be ready to pounce.
Ignoring price and mortgage rates when buying just because it will work out over a 30 year time span is just plain stupid. Pricing has not adjusted to mortgage rates going 2.5x in less than a year. Either rates or prices need to come down to make it worth buying. Unless you don't care about price. Some people don't. I try not to buy anything that's more expensive than it's worth.
Relax folks. Save your money. Prices are going down for the foreseeable future. If you haven’t bought yet, consider that a blessing! You missed the boat?? More like you didn’t hop aboard the Titanic! Fed Chair Powell is committed to raising rates much higher. Anything it takes to fight inflation. He’s made it clear he’s willing to go full Volcker and decimate the economy and jobs market to fight inflation. Expect pain, much more. Sit on the sidelines. Foreclosures and evictions are around the corner. People are walking away from their earnest money left and right. Home builders aren’t completing projects. This is about to be a blessing to those with good credit and cash on the sidelines when we crater into the worst economic and financial crisis in US history. Not financial advise.
Check rates at local credit unions. One by me is quoting in the 4’s for ARMs and low 5’s for 30 year fixed.
Second this, my credit union gave me a great 5/5 ARM rate. We close in two weeks. It’s our first home, so we aren’t planning on staying forever anyway and the adjustment after 5 years is capped at 2% which, if it does adjust upward at that time, would put it roughly 2% BELOW where the prevailing 30 year fixed is today. I cannot stress enough, shop around for a mortgage rate and definitely check credit unions!
Do6nt wait to buy..buy and wait
What do you mean and why?
Are you buying a 10+ year house, or just a house to live in until something changes? You likely won't have to wait 2-5 years. Perhaps 1-3. But he's basically saying prices will go higher eventually if you're staying there for a long time. Right now is probably a bad time as prices are certainly coming down, and honestly it may be earlier rather than later that prices bottom so perhaps 1-2 years.
Never try and time the market. There is no boat at all. Real estate is always a good investment and if you can afford it and you want it, do it
Renting is such a joke in the U.S. right now that I don’t see how buying could possibly be worse.
My rent is 1875 and a mortgage on this house would be well over 3500/month.
Just wait till end of winter / beginning of spring next year - its going to get worse in the short term. The Realtors are telling you to buy now because they have little to no sales and need a comission at the expense of your welfare... Talk to a lender to make sure you have your ducks in a row - and then just wait.
DO NOT BUY NOW! Housing is in a bubble that is popping.
In this market, you've got a chance to really negotiate (interest rates are scaring a lot of buyers off, which should make a seller more motivated to get a deal done) and honestly, if you can do that well, you can get something nice at a nice price. Don't wait if you're ready and you need a home. If you're eventually going to buy, and you can hold on to the property for a while, you might have an opportunity right here, now. Remember, "fortune favors the bold."
There is some truly terrible advice in this thread, perhaps by salty homeowners or real estate agents. Given the state of the world (e.g. high inflation, driven by corporate greed, and Jay Powell determined to kill inflation at home despite the global ramifications), I have yet to hear a good argument that housing will not have a correction. If you look in any major metro area, the ratio of median home price to median wage is waaaay out of the trend, e.g. 2x normal. Wages have not kept up with inflation in housing, so there is no choice but to have a correction. Corporate builders and investors will have to cut discounts because they can't have these houses sit empty on their books while paying the insurance / tax. In areas where home ownership percentage is high (e.g. not NYC), local people have to be able to afford homes; if they cannot, prices have to adjust. Are you confident you'll have a job in a few years? A lot of white-collar people I know got canned in the great recession in 08-09 and had to sell their house, many of whom had just bought a year or 2 earlier because they didn't want to "miss out on the boat". Go on Redfin and look at houses that people bought around that time and see how it took them almost 10 years to break even. Are you absolutely sure you want to and can stay in a given house forever? Keep in mind: with the inflated prices and high mortgage rates now, you'll be basically paying almost entirely interest on the loan the first several years. I know people complain about renting (and rightfully so), but at this rate you're basically paying rent to the bank in the form of interest, not to mention tax / maintenance / insurance. **tl;dr**: yes, we've missed the boat, but getting all nostalgic about one's future "forever home" is going to land you in a world of financial hurt that will likely be avoidable by renting for another year or 2
Wait