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?
No but its only gonna get more expensive so do it if you can swing it.
I know your pain. I had the same problem in 2013.
Everyone said it was a horrible time to buy a house, “The rates/prices are too high, wait a bit” but I also couldn’t afford to get an apartment that wasn’t a roach motel for less than $1k per month, so I bought a house anyways. Now I’m laughing with my $750 USD mortgage while the idiots who kept telling me it was a horrid time to buy a house are bitching about their apartment leases that keep going up each year and paying out 1.5k to 2k per month in rent.
Renting really only makes sense if you know you are going to be moving a good distance frequently over the next several years. If you have a steady job you are planning on staying at for a while, better to buy. You can always rent it out if life changes your plans for you.
Set a time frame by which you want to move in, and a budget roughly 2 times but not more than 4 times your annual gross income and see what you can find for that in that time frame.
When my wife and I bought our house I was making roughly $50k a year, so we were looking at the $100k-$150k price point but wound up finding our home at $90K. Not a palace by any stretch and it needed a new roof, but it’s been a great house. Basing our budget off just my income and aiming for the lower side of 2-4x income has allowed us to stay in our home even when me or my wife was out of work for a bit.
Look and see if there are any programs for first time home buyers in your area also. I forget exactly what program we qualified for but we were able to get our mortgage for $0 down at the added expense of mortgage insurance. It cost me more per month (and over all) than it would have if I had had the traditional 20% down but TANSTAFL.
Make sure you get a fixed rate mortgage though and not an adjustable rate one. I’ve a sneaking suspicion that rates may wind up going back up in a few years and such a roller coaster has cost more than one person I know their home.
You’re gonna have to specify an area, and you’d be better off asking people from that area
Ah you’re right. I figured the US overall would kinda answer the question. But I guess NW Washington state is where I’m looking.
If you can afford it and plan on staying a while, buying is the way to go. I’m in NW Oregon and waited to buy because I was nervous and thought I “needed 20% down to avoid PMI” and essentially missed out on an extra 1000sqft for the same price by waiting. Putting 10% down, my PMI was $40 a month, which is chump change in the grand scheme of things, and has already been removed due to increased value and payments.
Even still, buying in 2019 when I did, I’m in so much better shape now than if I’d continued renting. Rent would probably be $500-$1000 more each month, and I wouldn’t be gaining equity on top of that.
Of course nobody has a crystal ball to make it 100% risk-free, but this is still a pretty solid strategy, and you live in an in-demand area in case you ever wanted or needed to sell, so you should be fine. If the interest rates go down substantially, refinancing is also a good idea.
I’m neutral on the housing market right now. People buying houses are generally living in them (or renting them), there’s very little house flipping like in 2005-06. There’s also no interest-only mortgages, so people actually have the cash flow to stay. Rates are probably not going up, but they might come down a little. If they do drop, I think prices will go up proportionately such that the monthly payment is the same either way. New housing is being built, but not fast enough to make a major impact on demand in the near term.
Altogether, I think housing in the US is “fairly” valued on a supply/demand basis at the moment. If we get a recession, prices might dip, but I would be very surprised to see another crash like 2007-09. However, I also don’t expect to see prices go up quickly from here other than in response to lower interest rates. So, if I were making a new purchase decision today, I’d be thinking about the following:
- Do I plan to stay 5+ years (the longer, the better)
- Can I comfortably afford to pay the mortgage (or is it at least comparable to rent)?
- Can I afford a major repair bill? Especially if any of the big ticket items will hit their typical end of life in the next 5 years.
Here are some of my major home maintenance expenses from the last 10 years:
- Water supply line to the house failed (polybutylene): $2.5k
- Tankless hot water unit failed: $3.5k
- Wildlife exclusion due to rats in the attic and crawlspace: $2k
- Electrical repairs due to rats in the crawlspace chewing on wiring: $3.4k
- Totally gut and rebuild kitchen & bathroom due to plumbing failure: $2k deductible, plus my homeowner’s insurance increased every year since
- Replaced failed mini-split HVAC system: $3.5k
- Dig up and repair sewage line that was clogged with roots: $3.5k
- New sod to repair the lawn after the plumbers dug it up: $1.5k
Those are the big items I recall that I had little choice in. I also replaced my way past end of life 2 zone HVAC system for about $30k. I could have kept the old one running longer and I could have gotten a cheaper replacement (maybe $22k), but the old system was struggling and couldn’t keep the house comfortable anymore. I seem to recall hearing a good rule of thumb is to set aside 1-2% of your home’s value every year for major maintenance and that seems about right from my experience.
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.
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.
Maybe, but in another, more civilized country than the US.
I went with buying raw land out of the city, for me it’s a 30 minute drive and no traffic, my “rent” is under $200 for the year of property taxes. I own the land for less than 1 year of rent.
I can live in an RV, and I can build a house or convert a shed to live in so it’s super affordable, plus I have room for a garden to feed my family.
For anyone considering this, check your zoning laws. Years ago, to save money, I wanted to buy some land and put a trailer on it so I could save up to build something more permanent.
The laws did not permit that. Nor living in an RV. Or living in your car. We had to fight to get tiny houses here IIRC, but the cost savings for those isn’t as big as I would have hoped. (And being disabled, being able to do a lot of the work to save money wasn’t an available option.)
Yes the county rules are very important, there’s only a few counties that allow this. I moved to a state that allows us to live in an RV and to build our own house out of almost any materials.
I’m not trying to step on your comment, but I read this as unrealistic? It sounds like you bought land, but don’t actually live on it currently. Like, you CAN live in an RV, but what are you actually doing with it now? Again, not trying to be a dick. I actually considered the exact same, but once we started crunching numbers on what we wanted, just buying the land and building on it was out of our budget.
It really really depends on the county and it’s rules, there are a few counties near here that have permits to live in an RV, the county I am in is a bit more restrictive and requires a building permit to have an RV.
Right now we are camping in the car as we wait for the septic, since it’s holidays things are a bit slow now.
I really doubt the guy who loves low interest rates, looks to be trying to devalue the dollar purposefully, and is a corporate landlord himself will make a lot of moves that purposefully deflate the price of housing. He may do it accidentally, but I kind of doubt that too. If Trump gets his way and deports a bunch of people, welp…guess what a lot of the construction labor pool is? A mortgage is essentially a long-term bet that the dollar will be worth less than it is today. If you can afford to get one at current mortgage rates, I would pull the trigger. If rates drop again you can refinance, but what you will never be able to do is get a 2025 offer accepted on a house that’s now worth much more in 2030. My main regret in buying my place–in the pants-shitting part of the early pandemic–was not doing it earlier.
You’re not gonna see a huge drop in prices. You might see better rates, but you can refinance. Presuming you’re not trying to sell the house in the next few years, now is as good a time as any to buy. Housing will continue to be more expensive, except in the case of market crash, but even then the prices will continue to go up after leveling out.
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.
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.
You gotta judge the market in that area. I saw people buy at the wrong time, during a bubble.
How safe do you feel in your area?
Since 2008 the best time to buy has been when you have the money and find something appropriate. It’s no different now. Millennials have been hoping for a housing crash they could take advantage of for 16 years and it hasn’t materialized. Prices just keep going up and historical evidence suggests that will continue until another crash at an indeterminate point in the future. Trying to time that point is only going to leave you as a permanent renter.
