Since the election I’ve kinda buried my head in the sand to try and stay sane, so I’m not sure what projections are looking like for the real estate market. Unfortunately I need to move pretty ASAP and I’m having the worst luck with rentals.
So, anyone have any advice or an idea of the outlook in the next few months?
I’m in the process of buying a new house.
I think “good time” is just kind of luck. I’m buying now because circumstances make it the best choice. Interest rates are kind of high (mine is 7%) and if that drops a few, I’ll refinance to get a better rate.
I looked for houses that had a space easily convertible to a MIL suite cut off from the rest of the house. My plan is to get the house payment down as quick as possible with a renter in the MIL suite.
Landlord eh? On .ml? I must be seeing things.
There is rarely a “good” time to buy a house. You need to do what makes financial sense for you. If it makes sense financially to buy a house right now, then I’d say do it.
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An interesting perspective I heard about is “affordability”. To describe that with my own words: if your income is stable or will grow compared to your housing costs, and housing costs are not burdensome to you, housing is affordable to you. Owning a house rather than having a lease should make your housing costs vary less, so if housing costs will go up in the future it might be useful to buy a house (but if housing costs will go down in the future it might not be useful to buy a house). I found some graphs for “Affordability”: https://dqydj.com/historical-home-affordability/ https://fred.stlouisfed.org/series/FIXHAI
I have also heard that it’s hard to find people to do repair work in some places, and that people there charge a lot of money for their services. If you have trouble finding someone who you can pay just to produce a quote for a roof repair, the actual cost of housing will probably be higher than in other places.
I had a thought after looking at this post: I expect that it’s better to own land in places that are more likely for people to want to move to or work near.
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Oh yes yes yes. I am absolutely going to do that
Imo, yeah, probably. Home prices are fucking divorced from reality, but anyone telling you that we’re in a housing bubble is selling you a bridge. We basically stopped building housing in 2008- that’s almost twenty years now you ancient millennial* fucks- and what housing has been built has been small batches of single family homes where they don’t build more until that small batch sells. On top of that, you’ve got housing having been transformed into an investment (read that in a tone of disgust, please) with vacation rentals, REITs, and the landlord hustle further restricting supply. All that to say that the big fundamental difference between 2008 and now is that we’re massively short on supply. For there to be a price crash, we’d either need people to just stop needing a place to live on a massive scale or we’d need to start plunking down a commie block in every small or larger city a week for years (spoiler alert, not gonna happen)
I’m working with Strong Towns and some other groups trying to push the city to build a lot more housing and make our city more affordable to live in by breaking car dependency. With any luck, we’ll be able to unwind the absurd price of housing over years. I’d plunk down commie blocks of I could, but I can’t, so slowly deflating home prices over decades is the most realistic thing I can probably hope for. In other words, if you do buy, you’re unlikely to end up underwater by much.
* Am a millennial, am old fuck
It is (almost) always a good time to buy a house because it will (almost) always be good to own a house tomorrow.
Remember the alternative is throwing away approximately the same amount of money every month and never seeing that money again.
You gotta judge the market in that area. I saw people buy at the wrong time, during a bubble.
Maybe, but in another, more civilized country than the US.
I made the decision to buy at a bad time, and it turns out the mortgage rates went much higher than what I bought at. I have no idea if that will happen again, but my mental health absolutely benefited from owning my house over the stress of renting and waiting to find out if I need to move every year again.
Same, mortgage rates were near record high when I purchased but the circumstances were otherwise right. Mortgage ended up being a little over half the cost of renting and won’t go up every damn year, and homes aren’t getting cheaper. Plus there’s the option to refinance in the future if rates drop enough.
I’m honestly really surprised that your mortgage is about half the cost of renting. That has not been my experience in recent years at all. That’s how things used to be, but in post 2020 times, monthly mortgage payments often seem to surpass rent payments in my area, making the whole thing kind of a hard pill to swallow. Idk. Maybe I was looking at things wrong. I’m not a real estate expert. I just know that buying my place increased my monthly bills a bit instead of decreasing them like that. It seemed that would have happened with any property I looked at.
Yeah, mortgages around here are a lot higher than rent. But rent is going up at a rate of about 10% per year, so it probably makes sense to buy, even with a more expensive mortgage. Eventually you’ll come out on top.
The caveat is that “circumstances were right” meant a sizable down payment among other things. Without the down payment, a mortgage would have approximated rent at the time. I was at the end of a lease though, and the jump to renew in a craphole apartment was enough to tip the scales. Bills are approximately the same, thankfully. I did take a hit on convenience in location, but the house was a tremendous deal.
Mortgage was always higher than rent where I live, in the past, because people were renting houses they bought a long time ago so even with the profit in there it just worked out that way. Then rents exploded here, and buying was cheaper but then prices of houses exploded and now renting is cheaper again.
No one knows.
But, if rates suddenly drop you can always refinance.
The Trump administration had a few ideas on how to fix the market, which boiled down to removing regulations. The Harris administration had a more complete plan that addressed housing costs at different angles including regs but we no ont be getting that plan anytime soon.
Don’t forget refinancing is not free, often $10000 usd+ to refinance with application, origination, title, and other fees
There’s a saying that goes along the lines of: “The best time to buy a house was 10 years ago. The second best time is now”. Rates are bad but you can refinance down the road. I was also on the fence because I wasn’t 100% sure yet if we’ll still be in our city in 5 years, but our lease was ending and I was getting tired of moving with ever increasing rent. Back in my home country, you typically buy a house and live there forever, so it was also a culture shock for me to learn that the average homebuyer in the US lives in their house for only 7 years before moving on. So I had to change my mindset, and we bought a house earlier this year.
It’s always a good time to buy if you are confident that you will live there for 3-5 years. Even pre 2008 crash, homes recovered in about 5 years.
The important part is avoiding becoming house poor. The payment you can qualify for and the payment you can afford are very different. There’s plenty of online calculators that can show you what a payment would look like. In many states taxes can increase dramatically after the first year, so be prepared to pay more in the future. For a down payment, 20% is ideal but often unrealistic for a first time buyer. More is better, but don’t clean out your entire account. You can put as little as 3% down, but that’s a good sign you can’t afford it if anything goes wrong
You can test drive a payment level while watching the market. Pick the price bracket that you think might be your max and calculate the payment. Then set up an automatic recurring transfer from your checking to a savings account for the amount of the theoretical house payement with escrow - current rent. This will help you see if you can manage a higher payment or if you will feel too house poor. Those savings transfers can be earmarked for the downpayment too.
When figuring out how much of a downpayment you can afford, don’t forget to reserve money for closing costs which can be thousands of dollars. You will also need to reserve some emergency funds, and expect to buy a significant number of tools in the first few years. Yard care tools, ladders, etc. really add up.
If you look at places that need a little work, do your best to arrange to have all that work done before you move in. For example I wish we had our floors refinished before we moved in. To do that now would be a lot like moving twice.
Not answering your question. But if you do buy, don’t listen to the realtor or loan officer about how big a loan you can afford. Both are incentivized to sell you the biggest house/loan. Neither will care when you’re struggling to pay for it.
You’re monthly payment plus insurance plus taxes should be something you could safely pay for six months while unemployed. If that’s impossible, get a small house. The worst possible situation is being house poor.
Trying to work out house price trends is like trying to catch a falling knife. My advice would always be that you should just buy when you have the deposit and know you can make the mortgage payments.
