Should I wait to buy a house?

[S.Clancy]

I'm in your position currently. I believe we are in a housing bubble fuled by historically low interest rates. In my opinion, if rates start to go up (BIG if) demand for housing will drop precipitously as most folks are as money stressed as they've ever been. Personally, I'm very hesistant to purchase a single family home, but If I can get into a rental property I would do that. My .02$

 

[darcytribe]

Housing prices right now in many metro area markets are exponentially higher than the inflation adjusted 100 year average. I’m a novice macro economics student but I’m see a very large correction in prices in large market contexts. Commercial real estate defaults are going through the roof and I’d predict residential will soon follow. If you wait for this to happen you should be able to pick up that home at a huge discount. I feel interest rates will remain very low even in the face of the housing market crash, for a little while. But they will be going up sharp after a few years.

 

[wind gypsy]

I know one thing, it's a damn good time to be selling in the minneapolis metro area. Crazy low inventory on the market and buyers are very aggressive. I just sold my house in a shitty neighborhood, schools rated 2 or 3 out of 10.. Realtor priced house higher than I would have guessed and I had 4 offers over asking price the first day on market. A buddy listed his house within the last year and pulled it off the market after seeing limited interest. It got relisted today and has 16 showings on the first day on market..

If you are going to keep it for a while you have to think about what you're spending on rent and how interest rates might impact real cost of a house in the future.

 

[Jimmy]

Locally we are seeing about 50% of what normal number of home sales would be. But home values are up and interest rates are still low.

If you can afford the monthly payments, buy now.

 

[NDGuy]

If you can afford it it's a pretty good time with rates so low. We refinanced from a 30 to a 20 year and dropped from 4.625% to 2.625% our payment is the same but our principal with each payment doubled.

The rates and buying market aside, I would highly recommend waiting unless you have the savings and income for emergency expenses.

My wife and I bought 2.5 years ago..since then we have:

-Painted every room
-Redid 2 bathrooms (one cosmetic one mold issue that inspection missed)
-Replaced an A/C that shit out
-Replaced 3/4 appliances that shit out
-All sorts of yardwork and landscaping

We've probably put in 15-20k in improvements/fixes since buying and it really drained out monthly saving power. Unless you can write a $1000-3000 emergency expense check comfortably tomorrow I would hold off. Just my $.02 mixed with personal experience with Dave Ramsey whispering in my ear.

 

[Dos Perros]

Rates are going to be low for some time. And home values are coming down. We just can't have persistent 10% unemployment and home value growth.

 

[NDGuy]

Rates are going to be low for some time. And home values are coming down. We just can't have persistent 10% unemployment and home value growth.

Stocks and house prices only go up though?

 

[Dos Perros]

Stocks and house prices only go up though?

They certainly do until they don't!

I bought a house in 2006 so maybe I'm still bitter.

 

[Mike Islander]

Rates are as good as they will ever be. In the long run, that will bring you the best return. Buy now!

 

[MattB]

With the high amount of sovereign debt globally, rates are going to be held at artificially low levels for the foreseeable future.

Now is a great time to sell a home in many markets, not such a great time to buy. In the markets I am familiar with, inventory is tight and low rates are bringing people who formerly couldn't afford to buy into the market and adding competition.

 

[SonnyDay]

My money is on some softening in home prices over the next few years. Especially if we get a second wave of COVID-19 deaths/lockdowns—which we seem fairly hell-bent on. I’d sit tight.

To be clear: I have owned three homes and have always had really good outcomes in selling houses. But the world is in a wacky state right now with some pretty strong bubble indicators.

Either way... good luck!

 

[Reburn]

Maybe my family and I are just property whores, but, The only property I ever regretted is the ones that I didnt buy. I just bought one at a 3.0% 30 year fixed. Its basically free money once you consider inflation rates. I'm in a different market though even 2008-2009 in central Texas wasn't that bad. Some other areas of the country got hammered though.

 

[nrh6.7]

In my area it is a seller's market, for sure. We are wanting to move but are torn over the current costs to buy again, even though we would sell high.

My advise to everyone that asks me about buying a house is to buy in a neighborhood you can comfortably afford the payment on a 15 year term, 20 year max. That of course includes escrow. I cannot stand 30 year notes due to the amount of interest you pay on the front end. Plus, if you end up moving within 5 years you've basically been a renter, because unless your house greatly appreciates, you won't have paid down any principle.

Here are two examples to prove my point. $150k house on 30 & 15 year note at 5% & 3% respectively. Yes, home prices and rates may vary.

30 year payment: $805.23
Sum of all payments (360): $289,884
Total interest paid: $139,884

15 year payment: $1,035.87
Sum of all payments (180): $186,457
Total interest paid: $36,457
Difference in int payments: $103,427!!!

Then if you factor in bi-monthly payments you could pay off that 15 year note in just over 12 years while keeping the same monthly cash outlay. You could do the same on the 30 year and get down to around 25 years, but the numbers don't lie on the shorter term. Leave some room for insurance and taxes increases, as your payment will invariably move up as they do. Plus, if you have to move in 5 years you now have a crap ton of equity because you've actually been paying toward principle. If you decide to stay you have a paid off house or a great down payment when you buy a larger home. Or turn it into a passive income by renting it out.

 

[bobr1]

I'd take everyones recommendation with a grain of salt. If anyone was actually able to accurately predict the housing market then they would be billionaires and everyone one would wait to buy or sell. It really depends on the specific area. I live in a super hot market right now, and my wife and I decided we wanted to set roots before we got priced out. Covid luckily stalled the market for only a few weeks and we found a rare property with 10 acres next to the mountains and locked in at 2.5% interest. Historically this area never really drops during a housing market down turn, just flattens for a little bit then picks right back up. One thing is still true, world population is growing but land is not.

 

[CHWine]

We are listing a house in Cody WY soon, and our realtor says there's lots of action there now. Lots of out of area investors (which is what we are) wanting their piece of the west. We've seen prices edge up in the last 18 months in Cody.....and actually everywhere we've been watching.

I'd say buy now and get started.

 

[TheLoamRanger]

I think everyone needs to look at their own financial situation and lifestyle as the main factors. Nobody can perfectly predict the market. If you are wanting to buy a house then go for it! Just be realistic and don't put yourself at risk by overextending.

I was hesitant about buying a house a few years ago, but I hated how much money I was throwing away each month on rent. I went for it and don't regret it yet. The intangibles are tough to factor into the financial picture, but they shouldn't be forgotten about. Being in my own house is more peaceful, I don't have to think about moving every year, I can customize however I want, I can have pets without issue, and so on.

 

[Crusader]

No numerical analysis or stats here, just an observation. Kind of mirrors wind gypsy's comment about buying a home. Here in the St. Louis metro area (suburbs), it is an incredible seller's market due to low interest rates and low inventory. I have a couple nieces/nephews in the market and here's how it works. Realtors are not even allowing individual/discrete offers that would be evaluated as they are offered. They have a home listed for a short time, maybe a week. Listing states that bids must be submitted by such and such a date. After that, they will select the high bidder. Some homes have >100 bids and the homes ALWAYS go for well above list. No one gets a "deal."

That's how it is here but my point is, the buying situation is region-specific and that part of the buying decision depends on how it is in your region. If you are in a super competitive area be prepared to pay over list and in that case, maybe buying isn't so attractive (assuming the other discussed factors are considered, too). Maybe more rural areas with less competition are different, I don't know.

 

[Johnboy]

...I have a couple nieces/nephews in the market and here's how it works. Realtors are not even allowing individual/discrete offers that would be evaluated as they are offered. They have a home listed for a short time, maybe a week. Listing states that bids must be submitted by such and such a date. After that, they will select the high bidder. Some homes have >100 bids and the homes ALWAYS go for well above list. No one gets a "deal."

This pretty much describes the situation here in Waukesha County, except I think houses get a dozen or so offers, not 100+ (that's insane!). The house I looked at last night was priced at $345k, a 1600 sq ft ranch with 8' ceilings on .5 acres, 3 small bedrooms, 1.9 baths (one was a coffin), had recently been "remodeled" (painted everything, re-carpeted some areas). It was nice enough for me, but not 345k-nice. I suspect it'll sell for 360+. No thanks!

I've considered building, but a new house can't be touched here for under $200/sq ft without building out of paper mache. I'm kicking around the idea of generaling a build myself, but I might be in over my head with that approach.

 

[Michael Rankin]

It sounds like you are currently sharing an apartment with a roommate.

Have you thought about buying a house, and offer to rent a room to your current roommate? If the apartment roommate is paying $700, tell them $800 to rent a room in your new house. You already live with that person and are ok with staying if you don’t buy a house.

You could take advantage of the low mortgage rates and collect nearly $10,000 per year in rent from a roommate that you are already familiar with. That is a pretty good hedge against any price drops.

I bought my first house at the age of 20, and had 2-3 roommates that were friends for the first 8-9 years.

20 years later that was probably one of the best things I ever did.

Bought that first house for $140k, sold in 2012 (13 years later)after housing crash and values still hadn’t risen a lot in the Portland Oregon area for $270k.

Took my equity from that sale and bought a house for a rental in 213 that was only 2 years old for $300k. I rent it out for $2000 per month and it is now worth around $460k.

At the same time I bought the rental house, I purchased the home I live in for $419k, with is now with around $640k.

Long term I personally believe you can’t lose on a home.

Like others have said, if you would be selling in 3-5 who knows if it will work out. If you could see your self there in 10-15 years from now... no brained to buy now.

 

[JJMoody]

If you buy in a hot market, close your eyes to the “values” on the ups and downs. Remember, a high tide raises ALL ships, low tide, well you get the point.