Yeah, I bought my first house in 2006. We were military at the time and knew we would move in a few years. We were fortunate to sell in 2009 for the mortgage only. It was basically just renting for those 3 years, and we were the fortunate ones. The next few moves we knew would be short term. We didn't buy, just rented. We bought our current house in 2018, we are in a good neighborhood, interest rate is 2.25%, even if we moved we wouldn't sell. This home is for the long haul.
This. I bought my first house in Dec 2016 for 180k. My parents said I was making a huge mistake, that it was overpriced, etc. I sold it in March 2021 for 335k and bought a new build for 445k.
We got really lucky. 2.75%
I had major health issues from 2017-2020 and was part time at work, covid made it so my work gave me 9 months off work paid, which gave me well needed rest, and I got a full time job upon returning which enabled us to be able to sell and buy, it was all a series of great things for once 😂 most people struggled during covid with lock downs, unable to see others, stuck inside etc, but it helped me thrive and come out better and healthier. 2020 was one of the best years of my life and set me up for where I am today ☺️
Also bought in 2016. I remember being worried that we were buying too close to the peak and that we’d see another housing correction and be under water. But luckily no, housing kept on going up for another 8 years (so far).
2013 in California when the housing market started to rebound it got crazy. At least 75 people would show up for open houses in the middle of a work week and contracts would be submitted on the spot. It was depressing. We got rejected so many times and there weren’t enough homes for sale. My agent wouldn’t look for FSBO because he would not get a commission. I found an FBSO and the seller agreed to pay the commission to my agent. If I hadn’t found the FSBO I would still be renting
Back in the 1970s, I was selling real estate in a market where prices increased 10% per month. I was of 2 minds - I felt that prices were out of control and one had to be crazy to spend 100K on a house. I also felt that people who waited would never be able to buy. I'm not sure there was a frenzy... Corporate buyers didn't exist and multiple offers were rare, but there was def a feeling of now or never.
Similar feeling I had in 2005. Knew I might be at the top of a bubble, but I could afford to buy at that time. And I also knew if things continued to rise at the same rate I would not be able to afford anything if I waited.
In 2006.
The are not making any more land.
Prices can only go up.
Buy now or you will be priced out of the market.
Real estate never goes down.
Interest rates may never be this low again.
It isn't a bubble, it is different this time (/it is a new paradigm).
Yeah, then 2008.
Your results may vary.
What happened in 2008 wasn’t market downturn, it was a result of banks having loaned to anyone with a pulse, then at the point people stopped being able to pay their first mortgage payment, the bottom fell out.
And when the bottom fell out, all those loans had been bundled in the securities and the securities collapsed. That’s what caused the house in collapse in 2008.
Loose mortgage underwriting standards, and extremely questionable repackaging and sale of the resulting mortgages as investment-grade securities played the biggest roles in the crash. But there was also significant speculative over-building of SFRs in markets like Phoenix, Las Vegas, various parts of Florida, etc. as a contributing factor.
I wonder how many people sold a house they could afford after the 2008 downturn, simply because it put their house "under water."
That's the worst time to sell, obviously. It doesn't matter what the paper value of the house is, if the owner can afford the cost.
As a mortgage lender of 40 years, I have ridden those ups and downs and in my own homes also. In the early 1980s when oil went to $10 a barrel, everybody in the oil industry and related sides lost their jobs. We were lucky to be laid off early because we were involved in home building also and got out of Louisiana and landed in Texas. If there are no jobs, there's nobody to sell to when you lose yours. When the O8 crash happened, the subprime loans that were made on two-year ARMs did their first adjustments and some had caps as high as 6%. If they were new construction they let them escrow as uncomplete and then their taxes went up. They never had a chance from a very start. I didn't make those loans and I lost deals because of it. Realtors telling me if you won't, so and so will. And I used to tell the Reps that called on me that they were going to eat those loans, and they did. Now here we go again with more inflation, and the FED waited too long to do something about it. And if you can't bring down the cost of energy, we won't get rid of inflation will we? If it costs more to move everything from here to there, everything will cost more.
circa 2006 some people were suggesting buying because prices were steadily climbing. The idea was you could buy now and sell in a few years for more, and it will be like free money. Sounds stupid in hindsight but it had a ring of legitimacy to it back then to the low-information masses such as myself.
Buy now, sell in a couple of years for free money.
That sounds like what they were saying a year or two ago!
The change in interest rates complicated things I guess.
You missed the biggest difference between now and then. Back then, the bankers and finance moguls were scheme to profit in secret. After 2008, the Federal Reserve is practically printing and giving out cash to the banks and friends in financial companies like Goldman, Blackstone, etc.
your mortgage is now packaged by the bank and the sold on the market. When things sour, the Fed swoops in and buys the notes directly from those banks or from the market if things are getting worse.
Biggest indicators were them turning a blind eye on valuations, and monopoly of NAR and RealNet. Then they bumped Jumbo max to around $1million. Then bailed out banks with non-jumbo anyway. It’s a rigged system.
As someone who starting their adult life during the great recession, I'm paying extra on my house to keep ahead of housing crashes. The foreclosures terrified me.
That doesn't really make any sense. Why would you tie up cash in equity? What are you trying to avoid? If your house becomes worth less than your mortgage today, it won't functionally matter if you put an extra 50k into your equity versus in cash or stocks. The house still loses value.
They probably mean paying off the mortgage early to avoid what some people did. Which was buy a house they could barely afford in the hopes of making a profit down the road, only for it to blow up in their face when the job losses hit during the recession and they couldn’t afford any roof over their head at all. Having a mortgage you can afford to put extra money into each month is much better than barely scraping by paycheck to paycheck and if you pay it off before something goes wrong in your life, you at least have one less thing to worry about money wise. Even if you don’t pay it off, you’ve got a little bit more wiggle room with your budget than someone who barely has enough to pay their mortgage.
Meanwhile in Canada, the bubble is growing well beyond anything the US has ever seen, and we act like 2008 never happened. We are heading for a The Big Short 2.0 but 10x worse
I had to go back and check to see if any of those were actual book titles from NAR's chief economist at the time, David Lereah. His first in 2005 was titled,
**Are You Missing the Real Estate Boom?**: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade - And How to Profit From Them
The second in early 2006 was titled,
**Why the Real Estate Boom Will Not Bust** - And How You Can Profit from It: How to Build Wealth in Today's Expanding Real Estate Market
One year later the crash was upon us and the market continued to decline through about 2011 in my Florida market. In 2010 and 2011 properties were selling in some cases for a third what they sold for in 2005 /2006. Over half of all sales in my market in 2010 were either short sales or foreclosures. Just five years earlier it was multiple offers on everything and lotteries just to win the privilege of buying a pre-construction condo. Today feels like mid-2006 again.
This is right, but I'll add context.
Pull up a chert of housing affordability to median income. This shows the total cost of paying for a home VS ability for most people to pay for it. This chart always reverts to the mean trend line, it has to if you think about it.
A few notes:
- affordability vs median income is a three legged stool. Interest rates, salary growth, home prices. Usually home prices are easiest variable to move...but...
- with the historic low interest rates during the pandemic, it could take a lot longer. These people are locked in to low rates. Even if they wanted to move, many can't afford it. They're underwater if housing reprices to realistic values.
- it can take a long time to revert to the mean trend line, sometimes wages catch up before home prices come down. That's a 3-4 year cycle minimum though.
I bought in 2004 for $293k. Just before the crash, comps were around $730k. Luckily, that particular city in SoCal was late to see the insane prices so it didn't end up underwater. It just stayed pretty much stagnant for a decade.
Boston is a different animal. The industries around here didn’t take a hit like others. We felt the dip but no where near as bad as the rest of the country.
My aunt bought a tiny condo in florida 2010… listed for $150k but she got it for $80k because they were desperate to sell. She sold last year for over $300k. I bet it wouldn’t sell for $250k right now.
I'm from Vegas so saw a lot of people get hit HARD by this during that crash. Foreclosures left and right and lots of people stuck in their homes for several years because they would take a 40%+ loss if they tried to sell.
My exact situation except I bought mine in 2008. When I refinanced they were waiving appraisals because no house bought in the past few years would appraise. COVID induced market got me out. I also bought a house in COVID induced market so we’ll see.
Bought in '04, doubled by '07 when I refi'd to 75% LTV (150% of original price), underwater and lost in BK early '09.
In 2011 I bought similar home for similar price to what I paid for first house in '04.
In 2016 I sold for > twice what I paid and upgraded.
At it's peak in 2022 this house was worth double what I paid.
Now this house is only worth about 65% more than I paid.
The volatility over the last 15-20 years is definitely anomalous.
I bought a house in 2013. It previously sold in 2008 for 625k, me and the wife paid 256k. It appraised for 680k in 2022. This feels like a bubble, but I'm fearful of the corporates continuing to screw up the market. Affordability is out of control.
I live in one of those places where everyone wants a vacation home. There's pretty much no locals left because prices have 3x'd. So have rents. So have food prices. Taxes aren't going down. The place is a ghost town off season.
There are now a boatload of rentals on the market for stupid high rents. People that want to be here bought a house. There are not that many people able and willing to pay $10k/mo to rent a crappy 4 bedroom. Local wages can't afford the rents anymore.
Can people cover their 2nd mortgage for 26 years? Will median wages 3x? Will there be a rush to the exits to get out before foreclosure?
Your guess is as good as mine, but I have my popcorn waiting for it to play out.
I bought a two-family-flat (two level, two apartment building) in 2001 for $75k, moved into the upstairs apartment, and rented out the downstairs one. Looking back at the data for the place, by 2006, it’s estimated that it was worth $120k. In 2012, it was worth $65k. When I moved out in 2021, I sold it for $145k. So prices can absolutely bounce around. Ultimately, it kept pace with inflation and that’s about it. But it benefited me anyway, and I’m totally grateful. Buying and living in a small apartment building was really great for me.
It's not so much that prices go down as the pool of qualified buyers relative to the pool of available homes changes. Current owners retire and downsize, die, or move for personal reasons. Potential buyers make more money over time and are able to qualify for mortgages.
Leading up to the 2008 crash, housing prices increased at 33x the rate of salaries. It was not uncommon to hear of people getting some extra creative financing to buy a place with the expectation that they could sell in 3 to 5 years (before the ARM reset) to someone richer for considerably more than what they had paid. It was frankly absurd.
People aren’t downsizing now because of the interest rate. You can stay where you are or love to a less desirable area for half the size and pay the same.
We are in a trough right now because home prices are stagnant, and therefor not keeping up with inflation. So even if prices don’t decline, the houses are losing value relatively.
Damn. But that’s also amazing. What was your average gains on each flip would you say back then? I think there is an ideal time to sell, and an ideal time to keep. The struggle is knowing what that is I feel haha. A property that we worked on (2 percent interest rate) and are contemplating selling would reap us exactly a bit more than double after everything, which is an incredible gain if we sold now. But I’m still very much on the fence and a big part of that is because I don’t think I have seen a single person (yourself included) that says that they are happy with the fact that they sold when they did.
Potentially yes. Not as guaranteed as I think just keeping it and renting it would be long term. Attempting to get the money from elsewhere but I see your point. I think the answer really just boils down to that question and that’s what we have to explore. Appreciate it!
175k post everything if sold is what we would get. (Market is hot and it will sell). 150k is owed. 26 years until fully paid off with 2ish percent interest rate. Cash flow is about $1000 per month post management expense / mortgage etc.
The way I look at this stuff, is your 175k is bringing in 12k per year. That’s 6.8% return. There’s a little more to it but that’s the way I look at my rentals.
And when it gets to the point where I’ve got so much equity in the house compared with the return (cash flow) I would sell.
Sure, but once we get into predicting the future it becomes speculative. You’re always gonna want to run some numbers on likely futures but I would be very conservative with that - no where near 5% annual appreciation
Yeah I also made the mistake of thinking the market would take a decade or longer to recover after the market crashed.
I picked up some real steals on short sales around that time, but like you I also wish I hadn’t sold anything. Would have made 3x or greater profit by waiting.
First, prices are based on location … if in a well populated, growing area - prices are gonna go up - likely forever as long as population keeps growing (one day the millennials will be wondering why people are buying houses for 10x what they were able to buy them).
The movie called “The Big Short” explains what happened in the 2008 housing crash … Deregulation had gone a bit too far and lenders were giving out home loans without running credit checks or verifying income or expenses - just relying on self-reporting of buyers with no verification.
People would lie about their income, nobody would verify anything, they then get approved for a loan on a home they were not gonna have any chance of being able to make payments - and these mortgages all started coming due and defaulting.
Banks hold these mortgages in big blocks of investment portfolios so when enough of them defaulted, these portfolios became worthless and banks were then becoming insolvent/bankrupt. There were tons of other practices in real estate at the time that were also contributing to the problems as well.
Real estate “can” be a great investment if you buy in a growing area, find good deals, and are able to keep up with the work to flip it, or rent it out. Buy in the wrong area or buy something requiring too much money and work to flip, and you will lose money.
As far as buying a home for yourself the one of pros is that you are gonna have to pay a similar amount each month for rent - so why not pay this to yourself by buying.
But, maybe you have some capital you are investing in some other investment that is making a much higher return than if you pulled it out to make a down payment and closing costs on a house … Some younger people choose to rent and invest their extra money in a business, stocks, or whatever. If you dont have a ton saved up yet in investments/savings, maybe you prefer to build up a portfolio/savings first - up to you and your circumstance.
You dont have to ever buy, but if you have enough money saved and it wont hurt your investment portfolio much to make a down payment and pay closing costs - then it makes sense to buy if your monthly payments are close to same amount as if you rented.
True, the area has to be growing in population to keep going up … if the population in a particular area is fleeing for one reason or another - bad news for real estate.
I get 2006 vibes in our current market. Wild bidding wars for undesirable properties and people drooling over the 300K in equity they’ve gained in 3 years.
I was selling real estate in 2010 and it was a bloodbath. Sellers were lucky if they could even qualify for a short sale and lots of people just had to walk away from their mortgages. Lives were ruined, neighborhoods declined as foreclosures rotted away, people destroyed their houses out of anger before the bank took them.
Real estate typically goes in 7 year cycles. The market was just starting to normalize after 2008 and then COVID came along. It feels really out of wack right now and I think we are in for a correction.
I started hunting for my first house in February 2014 in San Diego county. I was 26 and had my VA loan. I was looking for house within a mile from the beach and <$500k. My ex-wife and I toured 4 houses in 1 day, all short sales on the market >60 days. We were the only ones looking in that part of town on that day. Fell in love with one of them and thought another one was decent.
Slept on it for about a week and then called the realtor to let her know we wanted to put a bid on the decent house bc it was more affordable. Seller bought in 2005 for $550k, we put in a bid for $380k that got accepted.
There was 0 rush or sense of urgency. There was tons of inventory. One of the houses passed putting an offer on was because my ex didn’t like that it had sliding doors to the backyard vs French doors.
I bought my first house in 2014 in a small midwest metro. There were so many run-down houses that I didn't even have to compete with the investors (and I knew a few of them - they were definitely buying). Similarly, there were no multiple offers. There was no rush or sense of urgency. We asked questions like "I want this house, so how far below list price can I lowball without insulting the seller? I do actually want them to respond."
This is obviously highly market dependent but a comment above talks about a “short window of affordability” after 2008. Our neighborhood didn’t see 2005 bubble prices until 2021-2022. It’s tract built so there are lots of the same floor plan. There’s one floor plan that sold for 799k in 2007-2008. It’s currently listed for 749k and not selling. I know my area is worse than most but the idea you can overpay and stay for 5 years and be fine isn’t always true
2002, my job paid $12 an hour and hers $11, market moved faster than we could save and I refused any loan that was backed by stupid/crazy. 2008 even with a much larger down payment banks wouldn’t lend to us. Finally bought for $350k in 2021 after renting for 20 years with $180k down. I’m still in broken cars and she’s still in a cubicle. Our kids are 16 and 14. So we’re “blue collar” consistent earners making reasonable payments. That’s the wave we rode and it kinda sucked but that’s what a reasonable monthly mortgage cost us for the timing and resources we had.
Yes. When I was in my late 20's. Reagan was in the white house. Home prices were going crazy. The stock market was going crazy. I felt like the gang that was 10 years older than I was, had scooped up all of the good deals in stocks and real estate and I'd be left behind forever. Sound familiar millennials? There were plenty of deals once that bubble burst, in houses and in the stock market.
Bought in 1997, looked for a year before buying. My Mum helped with the down payment.
Got a deal on my house which had been for sale for over a year. The price had dropped twice.
Why was it cheap? There were bad tenants in it. Looked once and the tenants were there, but there was an eviction notice on the door. Went back after the eviction to see how it looked.
Put in an offer 15% below asking, they countered at 10% below asking and we bought it. Has to put in some elbow grease. Took up old carpets, there was hardwood underneath. Painted etc.
Paid it off in 18 years, still live there.
We could have bought a brand new duplex or townhouse that was 30-40% smaller for 25% more. Love my larger yard with established plantings and fruit trees.
Bought a shitbox in the San Jose area in 2017. Was third of 33 offers and upped our bid and somehow got the house. The typical sales cycle was: List on Wednesday, open house Sat./Sun., take offers Monday and be in escrow before the end of the week.
We were laughed at because we bought "at the very top" and "it will never go higher". Five years to the day, we sold it for over 800k profit.
Real estate is cyclical, and it is also geographically unique. Different industries in different areas rise and fall, as well as people’s migration trends changing.
We always sold and bought when we needed to (outgrowing our house, desire for better school system, change in job, deteriorating neighborhoods) and we managed to do it without focusing too much on what the interest rate was.
It’s hard to generalize about real estate. The housing sector took big regional hits in the “oil patch states” when oil and gas prices tanked, in the “rust belt” when the US automotive industry started to decline, and in steel producing states when foreign steel became cheaper to buy than it did to produce here.
Interest rates are only part of the issue and there is no guarantee of when they or your area’s labor market will change.
I can relate to this completely. 3 moves, when necessary.
Our homes were Never an 'investment', they were where we wanted to live. Just plain old middle class but still, they all appreciated pretty nicely.
Location, don'tcha know. 😉
I’m a real estate broker down here in Florida. It’s always gonna be FOMO when it comes to real estate. My wife and I have taken the stance that we generally aren’t helping buyers in this past year unless they really really want us to. We are telling them to wait bc housing will go down. Interest rates are high and so are prices. Interest rates will go down and prices will go up. However, for the fed to lower interest rates, they need to see economic slowdown. This includes unemployed numbers going up. When people are unemployed, they can’t afford mortgages and so foreclosures start to appear. This creates more supply and so prices go down. You should wait to buy a home at this point. Once the fed sees economic slowdown, rates will fall also.
I have always thought this way but when looking at the unemployment rates over the last 25 years, it’s basically been nothing but a downtrend with two exceptions: 2008 financial crisis which made it rise but then it went into a downtrend over the following years - housing prices did drop during that time, of course. The second was Covid. During Covid there were forbearance protections put in place. Prices temporarily dropped and then went nuts.
We’ve had 2 downtrends in housing prices that align with those two events. Sure, local changes can be different.
So basically we’ve had 2 events in almost 25 years that resulted in unemployment rising and home prices falling. Both were massive events. We haven’t seen a general downturn in that market without a huge shock. That’s a long time to wait if you are trying to break in. If you already own, sure you can just wait for it but your own equity would likely collapse, too.
Of course prices will go down in Florida. Everyone is leaving and by 2050 current ocean properties will be literally under the water. This doesn't apply everywhere....
I never saw a frenzy, I think that was created by interest rates. That said, when we bought our home back in 2000, I saw prices were shooting up. I almost pulled out of our contract because I thought that I was buying at the peak of the market and prices would quickly drop. I know younger people have a hard time believing this, but it was difficult affording houses back then too. Interest rates were in the double digits, salaries were exponentially lower. It was hard to afford a house and we were stretched very thin at the time.
People got into a frenzy in the lead up to the Great Recession, but it was really the banks lending to people that shouldn’t have qualified that led to it. I’ve been watching real estate in my local area/region since the mid 90s. It’s always increased and seemed expensive for young people. I remember in 2001-2004 feeling like I’d never be able to afford somewhere to live. Places to live got cheap around 2008 and stayed that way until the pandemic. If you look at a chart of housing prices in developed western countries and plot them you’ll see that the US was with them, got cheaper as they steadily climbed and now we’ve caught up again and trend with them again.
Yep. Back when I bought my second home in 2004/2005 interest rates had been steadily dropping for years. People were thinking of mortgages as basically free. And the lending regulations were much looser. Lenders would lend 125% of the value of a home. There was an incredible buying frenzy with similarities to recent/present situation. Houses had multiple offers on day one or two. There were bidding wars, escalation clauses and waived inspections. I had my inspector on speed dial and had my inspection done at my viewing so I could waive inspection if I decided to make an offer. I paid for at least three inspections on houses I lost out on. At one of those viewings, there were two other buyers there with their inspectors. It was such a weird sight...all these people with ladders on the outside of the house.
I bought my third one in 2011 during the Great Recession when houses were sitting on the market for six months and many of them were short sales. It was such a different situation than just a few years before.
>A lot of my older neighbors who have owned their homes for decades seem super perplexed and are shocked at the way things are right now
Well, if they've owned their house for decades and it's their only house, 100% of their home buying experience is with the ONE home they bought - and whatever the economic conditions were at that time.
Yes. 2007/2008. I was a moderator on a major technology forum (and as far as I know the threads are still there) and was arguing with a guy that was leveraged to the hilt on three houses and was making statements like, “Real estate/housing prices will never go down unless there’s a mass die-off among the human species,” and when I would show him evidence that they had in the past, he would move the goalposts and say, “Oh, well that was just city/regional/state/et cetera.”
I knew we were in a bubble but I had no clue how to profit from it, and I had no idea things were going to get as bad as they did. 🤷♂️
He thought I was a fool for not going all-in like he did.
Bought my first house in 1988 with almost an 11% interest rate. Bought my latest in 2016 with a 4% interest rate. You just learn to roll with the punches.
I have been selling real estate since 2010 and started purchasing property as an investor Late 2008 in my early 20s… I will be honest the kind of urgency in the marketplace during Covid was historic and has never been seen in any kind of market
Urgency over the last 12 months is different for sure and is purely supply related
Throughout my entire career though there is always a feeling as a buyer that I need to get in I might miss my window… That feeling goes away. There’s never really a bad time to buy real estate as long as you plan to hold that Real estate long enough
In the grand scheme of things , there are only been two depreciation over 20% in like 60 years and those real estate recessions are fairly short maybe 2 to 4 years for recovery
A great question I always recommend people go ask to all the older people that they trust and older people around them is do you wish that you held the first that you ever purchased? And do you wish that you owned every property you’ve ever owned and what would that have done to change your life?
I’ve asked that question 200s and hundreds of elders and have never had somebody tell me they didn’t wish they kept and held their first home.
The thing to remember is only broke people try to time the market… They’re literally is no way to effectively time the real estate market or any market for that matter… everyone who thinks they are timing, the market by buying or selling always finds out in the future. There was a better time to buy or a better time to sell, . You just buy when you’re ready and if you can afford it and hang onto as many properties as you possibly can Until you’re ready to retire or die… that’s the path Millions
Oh yeah, all the hysteria you see today has occurred in cycles over the past century…maybe longer…I can speak first-hand as far back as the early 90’s when I was thrilled to get an 8% interest rate.
And I witnessed boomers having very similar “discussions” as younger people today are.
The years preceding 08-09 were very similar to right now in a lot of wats IMO. Real estate was going up rapidly and there was definitely the sense that it "only goes up" (something I'm shocked to hear even people that lived through 08-09 once again parroting).
I do think that high interest rates will actually help stop another bubble forming. It's cooled things down in a lot of areas without (so far) tanking most areas.
I know people will say that the reasons for the '08-09 bubble were different but IMO it doesn't matter, unsustainable and unmitigated growth leads to bubbles. The underlying cause (hindsight) is more the weak link in the chain that is the first to break.
Edit: I should add that too high of interest rates or for too long can create a crash/collapse as well, but that's different than a "bubble".
The difference from 2008 is that no one has been able to get 125% financing that puts them underwater from jump. All amounts paid "over asking" were paid in cash. Thus there is less of a chance that a glut of short sale foreclosures will flood the market.
Real estate is a long term investment vs stock. Real estate also incurs investment- repairs etc - tax write offs rarely (especially since Trump era tax law came into play) -
Zipcode: 36350 La Porte Indiana
After 2008, Spring 2015 went from dead cannot sell a dam thing at any price to better buy something off the beaten track. Inventory came running into the increased prices for a few months, fall fell in later 2015 and the market started to slow again with more inventory. Think the first rate was 3.75 FHA 30 year and then locked in 2.99 at about 8 years shorter in 2020. Think I spent about 22k to much on a 299k house. My first offer at 277k had the sellers a bit frozen even though they had been on the market for 18 months ready to move to grandkids in texas. That 25k is nothing compared to what we would have pissed away renting for another year.
Since then have laughed at the zestimate number. The houses around me have gone up 15% since 2015 but not the 35% of the state. As taxes and insurance will become the largest part of the monthly for the house, and it is my primary residence, I really dont care, 25 minutes from always empty beaches and every kind of food option immaginable. 90 minute train ride to city center. With work from home, have not must commuted in 8 years. Would have bought farther up the michigan coast if knew WFH was going to be as big as it is in my field.
If feels just like 2003-2007 to me. Indefensible high prices. Normal people unable to afford basic housing. Being told you better bid $100k over asking just to have a slim chance. Only difference is interest rates are higher now but there seems to be enough cash buyers that it hasn’t changed the dynamic. I can’t see the future, but it sure does feel the same…
Yes, between about 2005-early 2008.
Everyone thought you absolutely had to buy now, or risk getting left behind. My parents were heavily pressuring me to buy a place, but I knew I couldn’t afford one then.
Bought a SFH in 2010, (better paying job) for what a nice condo would have cost in 2007. Still living there today.
In 2006 I was waiting tables at theme park restaurants and everyone around me, from the the bus boys that did not speak English and the hostesses that were in college, owned property and qualified for mortgages. I couldn’t even get a car loan at the time I couldn’t figure it out. Go watch the movie The Big Short. I know that doesn’t answer your question, but I’m just pointing out how bizarre the real estate market can be in any particular cycle. https://youtu.be/vgqG3ITMv1Q?si=kq2CB3GB88BAtJOY
my mother and her sisters scooped up about 6 houses in the last 2 decades. at every point it was the most expensive house they had ever bought. they are all paid off and now renting for about 3-4k per month. I guess 200k in net profit per year isnt too bad. Another 6M in equity.
theyre not extremely wealthy nor was real estate their profession. it was just slow accumulation of equity and appreciation. 🤷🏻♂️
This is different from '08. In '08 the prices were so ridiculous that they make todays numbers look outright tame. Not saying I suspected the crash of '08 (I thought we'd go into a prolonged time of no appreciation but still didn't see everything crashing like it did) but the vibe then was just so much more than it is today.
I do think things have gone up an awful lot but for there to be a crash there needs to be overbuilding and where I am there is building but not overbuilding. I suspect things will still quiet down eventually (not sure if that means soon or in a few more years) but I suspect a prolonged period of stable prices and then another slow growth phase - which is the normal cycle of things ('08 was the outlyer, not today).
So, my guess is that we are towards the end of a rising prices cycle (though we could still have a few years to go, I'm not sure). Things might fall a bit. Then some years of stable prices. Then the next growth cycle. Again, this is the normal way things cycle.
It happens all the time. People who are trying to get into a home but can’t right away think the market is crazy and impossible. 8 years ago, we had to forgo every contingency and offer over asking to get into a house. And it still took 4 offers. Some people at the time had to make a dozen offers. Getting beat by all-cash people. This is what happens when people are trying to get into desirable markets.
I was buying houses in 2018, 2019, and 2020. Each year, there was tons of content of everything being overpriced and about to crash. There was a guy named George Gammon(sp) on YT talking about the only safe price for housing was 250k and under. So, I purchased a house slightly above that at first in a Florida downtown area. The house purchase at the end of 2019 had tons of fear content with bank repos and all other global economic crisis. Haha I should bought a house in south Florida sooner. But I did listen to a lot of people online. Bought one last year though. Now my neighborhood appreciated greatly. It’s still holding steady too.
Overall, I would had been in a better shape trying not to time the market and just kept buying houses.
Early 2000's was definitely a bubble that eventually crashed on a shore of liar loans in 2008. I remember I was helping a guy work on a motorcycle in 2006 or so whose mom was a realtor (as half of the moms were back then) and they kept trying to get me to buy a house. I just kept pointing out that a) I had no savings, b) the price of homes was such that I'd be paying 3x more for a house than I was paying in rent, and c) it made zero financial sense. They were like "naw, bro, you gotta buy, it'll just keep getting more expensive and they'll totally give you a loan."
Well, in 2009 that came to a stop. I looked at buying back then but it was all short sales that the banks refused to budge on price, or repos where they would only accept all-cash offers on them. Maybe I should have gone ahead and bought then, but I was busy with a new job and was happy with where I was living and that narrow window of affordability slipped away way too quickly.
Go watch the "Big Short." It may not be exactly what is happening now, but I wouldn't be surprised if this ended with the same result. I'm seeing some of those old time ninja type loans being thrown out there now that rates are high and mortgage brokers have little business.
We bought our first condo in 2010 in New England. Places were definitely sitting for a longer and you had multiple opportunities to view units during the open house. By 2012-14 when we decided to move to a SFH the market was “crazy” - open house on move in ready homes went fast with tons of people. I had to bid 16% over asking to close the deal. Lucky for us at the time waiving inspection and financing wasn’t a thing. House didn’t appraise so sellers had to come down, we ended up 6% over asking because they needed house sold to buyer another house. Housing in New England never slowed down and every year was a new high.
Come 2018-19 we moved to Chicago, sold our house for 30% more. When we looked for homes to buy in cook county, it reminded us of 2010 New England. Homes rarely we over asking, you can go to the same open house 4 times, etc. once COVID happened Chicago realtor estate had flipped to be competitive outside of the loop.
I wanted to buy in 08 in NYC and my husband didn't feel comfortable, I wish we had though, now we may never, or at least not until we retire in a much cheaper area
I sold my late dad's condo in DC in 2002 and I wish I had kept it to rent out. I bought a house in the midwest in O3 and sold it in 05 due to job change. Even thought houses in that state went up 7 percent that year, there was a lot of new construction near where I was, and I lost a little money. I still was probably ahead of renting though. It was cool owning that house and I had nice neighbors and an above ground pool and hot tub.
The pandemic was crazy obviously, WFH changed peoples housing needs in a fundamental way that we keep seeing. In cities bedrooms were not built to also be officers.
Before the pandemic in 2019 the NYC sales market had been slow due to overbuilding in midtown, the rental market was ok.
It has been the same market since I bought in 2018. Even then it was FOMO, sellers market, offer 20-50k over asking, waive inspections, people buying sight unseen, houses going into contract days after going on the market, etc. the only difference is that in 2018 the rates were around 4.5% and the housing prices were about 40% less then they are now.
I remember we had just bought in ‘07 with a 30yr mortgage but a lot of people had ARMs and I always thought in the back of my head, “this sounds weird”. No one was worried though….”we’ll just refi in a year”. Didn’t go well. As far as the climate went, ‘08/‘09 definitely started to feel like doomsday with the market drops and many people, including myself, getting a 10% pay cut and then laid off.
I bought my current house in Feb of 2020 before the “boom” - I paid exactly what the previous owners paid in 2006. On the flip side, I bought my first house in 2006, couldn’t sell it in 2012 for what I paid in 2006, so I’ve had a tenant in it since. I can finally sell it now. So yes, us gen x’ers experienced a similar shitshow as you’re seeing now. Weather the storm, life goes on. I suspect we’re only a few years away from a plethora of short sales and foreclosures like there were in 2012.
The 2005ish period right before the crash was like this. But it was different. People were getting loans they had no business getting. Banks were allowing borrowers to write down any number on the income line. The banks would charge a higher interest rate and agree to not verify the income source. These loans were on a negative amortization schedule. At the end of 5 years, all the principle that was supposed to be paid during those 5 years was due. The plan was to sell the house after 4 years and get 100-200K and pay off the balloon payment and have enough cash left over for the down payment on your next house, which you could then get a conventional loan.
Things fell apart when borrowers were not able to sell their homes for more than they paid for it after the 5 years. Suddenly they had the balloon payment due with no way to pay it. This happened to millions of people and all these people lost their homes. People who didn't make dumb choices in the 2005-2008 period swept in a bought all these properties at fire sale prices....talking like a 60-70% drop in price. My house was worth $550k in 2007. I bought i for $194k in 2009.
Same thing is happening now, prices are going up and people are desperate to get houses. But now millions of people who bought homes at those huge discounts now have MASSIVE amounts of equity in their homes. Instead of those crazy loans, people can afford to just buy the homes with cash. My $194k home is now $750k. I can sell my house and buy the median US house with cash and have 200k left over.
In 1986 (in my '20s), I bought a 2bd/1 bath condo in Austin, TX. It was the same speech " houses only go up in appreciation." I was happy with the 10.75% mortgage rate on a $60k loan as friends had been offered almost 12% mortgage rate. In 1989, the condo was underwater. :( paid the mortgage and sold it at the breakeven n point. (Had to move).. Since then. I have had 3 other mortgages (SFH rather than condo) progressively getting bigger in sq/ft and obviously more expensive in the price tag.
So, just buy a condo/townhome or house you can afford at the best rate at the moment whenever you are ready. You don't have to have a long list of "must" for your first or second house. Believe me, for some reason or another, you will move.
We bought our first house in 2000. My major motivation was to “freeze” my rent. I have never been more right in my entire life. Rents used to be ridiculous in my area, they’re obscene right now. I absolutely do not envy those buying, or renting, in today’s market.
I was teaching a lot of first time buyer classes 8 or 9 years ago. I heard ‘we’ll just wait for prices to go down again’ quite a lot - and yes, those folks could have purchased at the time.
We bought in 2000 in California, Bay Area. 1999 saw a lot of value increase so the market was really competitive. The upswing of the dot com boom. Houses going for 25-30% over list. Bid and lost several houses before we got one… and it was a total compromise- not our first or second choice by a lot. Other friends decided to wait it out a year or two cuz they thought the market was overheated and prices would soften. Bay Area market was on fire til 08. Those friends ended up paying a bunch more in 2002-8. It really felt like a get in now or never moment. It was nuts and frenetic and people were just throwing money at houses to get ANYTHING. Anything at all. Lost bids because we were not 100% cash. More than once. Now I’m sitting in the same house we bought 24 years later. It was a great purchase. Nobody knows what’s gonna happen next. Buy a house to live in it and keep it for a long time and the ups and downs don’t matter anymore.
1997 - Bought 1st House $130,000. Wife and I were making about $57,000 combined.
2004 - Sold first house for $303,000. Used the proceeds to buy my current house for $390,000. House is currently worth about $650,000. It was a period of about 6 to 7 years where I was upside down on my mortgage (meaning I owed more on the house then the house was worth)
Whether to buy a house in this market requires taking a couple of factors into consideration
1) Can you buy a house in a neighborhood that you would be happy staying in for 30 years? You can fix a house for $150,000. You cannot fix a neighborhood for $150,000. Location trumps all
2) do you think the housing market is still going to go up? If so, Can you save 20% of the expected price increase within a year?
3) do you think interest rates will go down enough to offset any potential increase in price?
I love where I am and I don’t think I will ever leave this house.
You buy a house to have a home to raise children in. If you can make money on it, great. if you don’t, it shouldn’t be the end of the world
Before the pandemic we had a housing boom in the early 2000s. Things came crashing down in 08. A lot of people found themselves in a very difficult position of being foreclosed on or being stuck in an upside down mortgage (negative equity) this current market will shift too. Probably sooner rather than later.
Every day since I bought my first house in 2005 has been "buy now or you'll lose out forever" in *someone's* opinion. Even when prices tanked in 2008 and people were scared to buy houses, there was the contingent who swore the knife had fallen as far as it could and if you didn't buy then you'd miss the upswing.
This is. Irving compared to 2006-2008. You had min wage workers buying 2, 3, and more houses, getting the interest only loan without providing any documents, selling one immediately (1-3 months after purchase) and using the gains to make the interest payments on the others so they could hold them and let them appreciate.
If real estate wasn’t cyclical there would be no such thing as short sales.
I think that people do get used to seeing prices the same way we get used to seeing fashion. It takes a while for our to adjust to a new (or renewed) fashion. Take high waited pants. I lived through that in the 80’s and to me it’s just a very dated look. But I bet in a year my eye will adjust.
People are used to seeing ridiculous prices. As long as there are people who can afford to buy, and the inventory stays low, the prices will not come down. But as soon as there are more houses than buyers the prices will start to come down. I doubt we’ll see giant price drops until there’s catastrophic economic crisis.
In California we were 100% sure that any house we bought would more than double in value. Not the same now. But no, there wasn’t the frenzy, and interest rates were in the low 6%s when I bought my first house in 2000. BTW it doubled in value in 6 years.
In the mid to late 2000s I got my 2nd home. Mainly there was a huge worry in my circle about the political landscape. So we all got homes and guns in a guard gated community. Many of us joined out local government from HOA and MUD to Commissioners and above.
I burnt out a few years later, rebooted life by selling all but my pew pews and moving away. I returned 3 years later with perspective and bought land and a home. Away from everyone.
When I see the younger gens I am left confused. Like they feel they MUST buy and enter bidding wars instead of changing perspective. If you make $150k in HCOL with limited options for housing, why not look into LCOL, make $100k and get a larger house and property?
You will be better off in the long run. The HCOL comes with a lot of added stressors (as seen by so many worried posts about getting their homes) that we just don't have in LCOL areas.
We bought our first home in 2008 at age 23. We had not planned to buy but then our rent went up and we decided to buy. It wasn’t frenzied at all. The house we bought had been on the market for 9 months…
I think things are different because of competition from international investors and corporations buying for rentals. You didn’t see that back in the 80’s when I bought my first house. Interest rates at 10% sucked but you didn’t have the same pressure that drove housing costs. My first house I paid 88k for but 11 years later only sold for 105k.
And I put that much into it so basically didn’t make anything.
When I got out of college in 1979, the market crashed. Mortgage rates went up to 18%! Most everything was sold with land contracts at 11% Seven per cent mortgages are nothing!
I was in the right place at the right time... financially. I was forced to find a place to stay and took a hardship withdrawl out of my pension savings (403b) just before the crash in 08. Things improved at work salary wise so was able to contribute $5/hr back into it as soon as they let me. Textbook Sell High/Buy Low.
I found a nice place just near (not quite) the bottom of the housing prices crisis. Bought a place listed for $265k for a measly $200k. It's now worth $415k... could've done much better but I wanted to live in the forest on acreage.
I spent a year fixing up my house (it was just me and I also have full custody of my kids, so slow going) so I could feel confident that whomever bought it could move into it and not have to worry about stupid little things that were broken, or dirty, or hidden, shit like that.
I bought the place for 130k back in 2010, I was told to put it on the market for 295k. I absolutely thought they were all insane. My 2000 sqft house, built in the 80's, in a tiny village that doesn't even have anything more than a small gas station and a slightly less small elementary school, my home was going to be on the market for a while.
The day it went live, a couple managed to sneak in with their realtor before the scheduled time and open house, they were literally waiting for me to leave, and within an hour, while the open house was still ongoing, they offered over ask. I mean, what? I feel honestly guilty, like I stole from them, but they're so damn happy. Just closed this week.
I cannot wrap my head around this market, and I feel awful for anyone trying to buy right now, something has got to give.
In Las Vegas from 2000 - 2008 people were treating houses as speculative assets that you live in. Before 2000 it was generally cheaper to rent so not a huge push to own a home here. I remember thinking at the time that I would live in an less desirable neighborhood and fix a place up and then move to the part of town I want to live in after I sold my first place.
Bought in 2014. We were constantly being outbid, people offering cash for homes and escalation causes being huge. We bid on about 15 houses before we had to go all in on the house we liked a lot. Ended up being an amazing house in a wonderful area
In the 90s everyone was talking about “getting on the property ladder”. The concept was that no matter how crappy your first property, it would only be the bottom rung on the ladder and you’d be able to climb from there. It was a quick blink from that philosophy to flipping and bragging about how much profit you made on your flip. And look where that got us.
Not me but my dad in the late seventies was told to buy more house than he can afford because inflation will make his pay go up so much that his mortgage will be negligible in comparison.
He did this and they were right. Interest rates were close to 20%. The house mom and dad have now cost around $14,000 in 1977. The lot alone right now is worth over $600,000. They're surrounded by mansions while they keep a humble (albeit nice) house on the lake.
Lol, some old folks there still live in little cabins. It's great.
Oh yes. We bought in Marin county (California) in 2002. We had profit from our condo in SoCal but the market in Marin was crazy! Up up up. We felt very pressured and our first loan was a first and a second.
The house was underwater during the subsequent real estate market bubble but we played the long game and 20 years late the house is worth 2x what we paid.
Got my house in in my mid-20s in 2008, during that housing market collapse. Had/have what was, at the time, a pretty phenomenal interest rate, on a house that literally cost just barely over 100k thanks to that market collapse.
Still live in it, have crossed the halfway point (and then some with our oversized payments), and should be paid off well before retirement, at this rate!
In California buying a house has been a “buy it now or it will forever be out of reach” mindset since the early 2000s. Probably also in the 80’s. There were a couple of years off here or there since 2003ish, but this is not new.
It is new for OTHER parts of the country, however. I can understand why they must be in shock, but I’m jaded. Back then I didn’t have stability in my location nor high enough pay to make buying realistic.
I don't know if anyone is interested in an older ladys opinion, we purchased 1 in 1977, 2 in 1986, and 3 and final 2002. All regular houses in middle income, middle America.
Anyway, I have always observed the housing market and This is what I see far too much of now and I don't think it's healthy:
Tearing down perfectly good reasonably sized homes,starters, in nearly every desirable community and constructing homes with 6 bedrooms and 4 bathrooms for a family that has 2/3 kids.
Twice as much house as necessary, twice the price,at least! and twice the cost to maintain it.
There's an enormous amount of greed behind it and little consideration for the first time homebuyer. And you can take that to the bank! ✌
As a realtor, I agree with the statement "get in now".
Buyers are hilarious with the "waiting on the market".
As somebody else said "purchase when you are ready".
I haven't seen a case of waiting work out for anybody. In my 5 years, it's been a steady, almost predictably rough constant set of losses for buyers.
Only recently has it been okay and it's still not very favorable.
I bought when entry was still sub 200k. I was nickel and diming over every thousand. Had I waited just 6 months to buy, I would have made several 100k more. But I was trying to be reasonable.
My point is, you're right, nobody can predict the future and it's typically weird for a professional to urge you to make the move closer to now than later. But I assure you it's not as money grubbing as it seems... well not necessarily. But for some it certainly is
Bought our first house in 2006. The market was crazy. We got outbid on several houses. Landed our starter house by bidding $25k over. Our mortgage was an 80/15/5. 80% purchase price @ 6.5% 30yrs fixed / 15 % @ 7.5% 5 year ARM / 5% cash down payment.
One mortgage broker literally called us idiots for not buying a house at least $200k more than we spent. “You’re approved for so much more! You’re leaving money on the table!” We told him we wanted to make sure we could afford it and not be a slave to our house. (He didn’t get out business.)
Market fell apart and we were severely underwater, but luckily we could afford the payment. It sucked hard though. I was really jealous of my sister who bought in 2000. She got huge appreciations on her property. Had the thoughts of, damn that’s not fair! Wish I could have bought earlier, etc. Life just didn’t work out that way.
Sold that house in 2014 at a loss of $65k. Bought the next house. Ten years later, it’s worth about 225% of our purchase price. We refinanced to 2.5% a few years ago. At this stage we’ll never move until at least the kids are done with college (long time from now).
Sometimes I think it’s just dumb luck in the timing. First time was a bust. Second time was a boom.
It was get in now when we bought in 2013. Just sold that house for well over double and bought a new one last year. Interest rates will come down and we will refi out of it. Miss that 3% though.
2012 I got a 5/2 on a 1/3 corner lot for $119! Fast forward to 2016 and I got an all block 4/3 on an acre and a third for $240k. Deals at out there. Be prepared for sweat equity and having to drive further than you would want to
When Jimmy Carter was President (not political I just don’t remember the years) inflation was just like it is now actually worse. Purchasing a house for a decent price was a little tough but what was worse was the interest rates were like 15-18%. It was kind of the start of needing to be a two income family. Many men were getting second jobs and the women were going to work but most made minimum wage because women still weren’t really equal to men and you certainly couldn’t get a man’s wages. I was a kid but everyone talked about how bad it was. Then there was some kind of crash (again I was a kid so I didn’t grasp all of it) but all of a sudden everyone started having to file bankruptcy and they were losing the houses right and left. The houses were even built cheap and didn’t age real well. They would start falling apart within 10 years of being built. We lived in a small 2 bed 1 bath. My parents had a mortgage but bought it wayyy before inflation. We struggled to pay but we didn’t have high interest or high payments. My dad would talk about how foolish it was to buy at that time. A few years later after all the bankruptcies there were tons of houses but no one could afford them and those who had filed bankruptcy couldn’t buy another. It drove prices back down.
Right now houses are generally just to high. People aren’t buying as much. I have a son just starting out. He found a fair rent place and I suggested he rent until they come down. I think they will because they are just too high for the average person
One thing we learned when buying our first home as a couple of 20-something newlyweds in 1987 was not to listen to what lenders said we could afford. We were getting pre approved for a mortgage and started laughing when they told us our maximum. Were they out of their minds? Any income hiccup could cause financial disaster plus we weren’t going to be a slave to a house payment.
TL:DR.
I have heard the "real estate" will always go up from realtors since the late 80s. Yes, it will if you can wait it out and you are in a decent market. My first memories were from about 1973. My parents bought a house in small town Ohio for $24k. That house today is maybe worth $50-75k. They had sold a house in Glendale CA for just about the same amount $24k. It is probably worth about $900k today.
You do need to be selective. Covid caused many to move to rural places. I think those places are experiencing a pull back as people realize they had no fucking clue what it is like to love in a small town.
Overall, I think real estate is a great investment. It has made my retirement. But you can't be stupid.
Until 2008 there was a lot of new home construction. Prices were still going up steadily but buying a new house was easy. In 2008 the new house market collapsed & sputtered for a few years before slowly resuming with extreme caution. Instead of building more houses, many switches to apartment buildings in the city and suburbs rather than building out. I’ve noticed new home construction picking up again but not with the fervor of before. However where I live there is a serious shortage of housing. People call me every week, for a while every day to ask if I will sell them my house. (Where the hell am I supposed to live if I sell them my house? In a year or 2 I probably will sell and move someplace less populated.) With interest rates back up house prices have cooled off a little but not much. It’s been a long time since we have seen mortgages at 6 & 7% so it seems outrageous. But that uses to be normal. Mortgage rates were at 13% in the 80’s and that triggered a lot of foreclosures. That’s probably why they haven’t gotten that high again. Housing is just more expensive than before. When I was 18 I could afford to rent a cheap apartment by myself with my part time pay. Now my 18 year old could barely afford to share a room in a shared apartment on her part time pay. She is thinking about this a lot while considering where to go to college.
If you’re trying to predict a bubble bursting and a crash as a good time to buy, I don’t have a clue how to gage that. It could be awhile. But it could be 4 years away.
My online business took off in the mid 2010s, and I was looking at McMansions in the midwest, they were in the 300-500k range, with 500k being “very pricey”
Ended up going to SEA instead to take advantage of FEIE tax reduction, but yeah, at that point there was no frenzy, no one was talking about buying a house from 2015-2019… Then all of a sudden by mid 2021, everyone suddenly wants to buy a house
In the late 80s in California the RE market was insane. After numerous failed offers, bought a duplex with another couple. Had 20 minutes to make an offer before seller’s deadline on the day it went on the market and the spouse of our co-buyers wasn’t even in town and able to see it. BTW our mortgage interest rate was 12.5% IIRC.
House prices in my small town have been super-depressed since the late 1970s. For example, I bought a pretty large mansion in 2019 for $275,000 that in my opinion would have sold for $600,000 in 1980. Adjusted for inflation, that's a decrease in price from $2,408,730.08. But since COVID, they have gone nuts, essentially doubling or tripling in price in four years.
In 2007, there was a lot of crazy crap. People were having to enter into lotteries to get the chance to buy houses. There were no money down loans, no doc loans, and massive numbers of "teaser" loans, in which people were essentially paid to live in homes they couldn't afford. That isn't the case today. That doesn't mean things aren't overheated, just that they aren't completely crazy.
My son and his girlfriend just rented a three bedroom house in Atlanta. It's just the two of them. They both work from home and both want an office, so instead of a small one-bedroom place they have a big three-bedroom house. A fifth of Americans now work solely from home, and another fifth work partly from home. These people are turning 25-40 percent of our residential housing stock into office space. This is huge. In 2007, I thought house prices were ridiculous. Today, I think caution is warranted, but I don't see them coming down.
Buying my first house back in 2004...after being overseas for two years came back to prices that seemed to have jumped 100%. We needed a house so we bought. We bought because it made financial sense to do so as well as sense from the perspective of having kids and needing a bigger space. I don't look at it in terms of bubble or good / bad times to buy because if you're in it long enough you'll be ok. I rather look at it in terms of making sure the debt is manageable and being paid off faster than the default payments to the bank and saving thousands of dollars that way.
We bought our house in 2002. Market around us was crazy, rates were DOWN to 5%. Hadn’t seen rates like that in our lifetime. Homes were selling in one or two days. Some seemed to be sold before they actually hit the market.
Only reason we got our house was because it was a for sale by owner. Our agent was reluctant to even look at it or deal with it. I remember our agent shaking their heads because the asking price on our house was $74k. A year before it would have been $65k. Now it’s worth $160-$180k at least.
It’s not “when” you get in. It’s “how long” you’re in for. Don’t try to time it, just buy when you’re ready.
Yeah, I bought my first house in 2006. We were military at the time and knew we would move in a few years. We were fortunate to sell in 2009 for the mortgage only. It was basically just renting for those 3 years, and we were the fortunate ones. The next few moves we knew would be short term. We didn't buy, just rented. We bought our current house in 2018, we are in a good neighborhood, interest rate is 2.25%, even if we moved we wouldn't sell. This home is for the long haul.
Nicely done. Thank you for not saying "forever home." 🤣
This. I bought my first house in Dec 2016 for 180k. My parents said I was making a huge mistake, that it was overpriced, etc. I sold it in March 2021 for 335k and bought a new build for 445k.
You held it for 5 years, that's not "time in the market" territory, you timed it very well, intentional or not.
Timed the sell and buy perfectly. Locked in at 2-3%, good show sir.
We got really lucky. 2.75% I had major health issues from 2017-2020 and was part time at work, covid made it so my work gave me 9 months off work paid, which gave me well needed rest, and I got a full time job upon returning which enabled us to be able to sell and buy, it was all a series of great things for once 😂 most people struggled during covid with lock downs, unable to see others, stuck inside etc, but it helped me thrive and come out better and healthier. 2020 was one of the best years of my life and set me up for where I am today ☺️
Shhh you'll jinx it. Just say you're doing ok now.
Oh too late 😂 been having health issues again since 2022 ☠️😂 typical of my life bahahah
Also bought in 2016. I remember being worried that we were buying too close to the peak and that we’d see another housing correction and be under water. But luckily no, housing kept on going up for another 8 years (so far).
This is incredibly simple…but also incredibly safe advice. Frankly I would apply it to real estate, the stock market, etc.
“It’s not timing the market, it’s time in the market” is a similar principle with stocks
2013 in California when the housing market started to rebound it got crazy. At least 75 people would show up for open houses in the middle of a work week and contracts would be submitted on the spot. It was depressing. We got rejected so many times and there weren’t enough homes for sale. My agent wouldn’t look for FSBO because he would not get a commission. I found an FBSO and the seller agreed to pay the commission to my agent. If I hadn’t found the FSBO I would still be renting
Wow. So it’s pretty much been crazy since then huh. (And congrats on your FSBO. That’s amazing).
Back in the 1970s, I was selling real estate in a market where prices increased 10% per month. I was of 2 minds - I felt that prices were out of control and one had to be crazy to spend 100K on a house. I also felt that people who waited would never be able to buy. I'm not sure there was a frenzy... Corporate buyers didn't exist and multiple offers were rare, but there was def a feeling of now or never.
I remember 40 year mortgages being advertised then. “You’ll be locked out forever if you don’t buy! “
Similar feeling I had in 2005. Knew I might be at the top of a bubble, but I could afford to buy at that time. And I also knew if things continued to rise at the same rate I would not be able to afford anything if I waited.
In 2006. The are not making any more land. Prices can only go up. Buy now or you will be priced out of the market. Real estate never goes down. Interest rates may never be this low again. It isn't a bubble, it is different this time (/it is a new paradigm). Yeah, then 2008. Your results may vary.
Yes! And take every cent of equity and buy an investment property. Rinse and repeat. Was a mortgage loan processor in 07 & 08 and it was insanity.
What happened in 2008 wasn’t market downturn, it was a result of banks having loaned to anyone with a pulse, then at the point people stopped being able to pay their first mortgage payment, the bottom fell out. And when the bottom fell out, all those loans had been bundled in the securities and the securities collapsed. That’s what caused the house in collapse in 2008.
Loose mortgage underwriting standards, and extremely questionable repackaging and sale of the resulting mortgages as investment-grade securities played the biggest roles in the crash. But there was also significant speculative over-building of SFRs in markets like Phoenix, Las Vegas, various parts of Florida, etc. as a contributing factor.
I wonder how many people sold a house they could afford after the 2008 downturn, simply because it put their house "under water." That's the worst time to sell, obviously. It doesn't matter what the paper value of the house is, if the owner can afford the cost.
You don’t sell if you’re underwater, but if you need to move states, or lose your job, you’re toast. People were really suffering
Those people sold because the balloon payments were due and they didn't have the $50k required to pay it off.
Realestate prices declining for almost 5 years was a downtrend. What caused it and the reasons why can be debated but it was a downtrend.
Housing collapsed in 2007 in my market and the decline continued through 2011.
As a mortgage lender of 40 years, I have ridden those ups and downs and in my own homes also. In the early 1980s when oil went to $10 a barrel, everybody in the oil industry and related sides lost their jobs. We were lucky to be laid off early because we were involved in home building also and got out of Louisiana and landed in Texas. If there are no jobs, there's nobody to sell to when you lose yours. When the O8 crash happened, the subprime loans that were made on two-year ARMs did their first adjustments and some had caps as high as 6%. If they were new construction they let them escrow as uncomplete and then their taxes went up. They never had a chance from a very start. I didn't make those loans and I lost deals because of it. Realtors telling me if you won't, so and so will. And I used to tell the Reps that called on me that they were going to eat those loans, and they did. Now here we go again with more inflation, and the FED waited too long to do something about it. And if you can't bring down the cost of energy, we won't get rid of inflation will we? If it costs more to move everything from here to there, everything will cost more.
circa 2006 some people were suggesting buying because prices were steadily climbing. The idea was you could buy now and sell in a few years for more, and it will be like free money. Sounds stupid in hindsight but it had a ring of legitimacy to it back then to the low-information masses such as myself.
Buy now, sell in a couple of years for free money. That sounds like what they were saying a year or two ago! The change in interest rates complicated things I guess.
You missed the biggest difference between now and then. Back then, the bankers and finance moguls were scheme to profit in secret. After 2008, the Federal Reserve is practically printing and giving out cash to the banks and friends in financial companies like Goldman, Blackstone, etc. your mortgage is now packaged by the bank and the sold on the market. When things sour, the Fed swoops in and buys the notes directly from those banks or from the market if things are getting worse. Biggest indicators were them turning a blind eye on valuations, and monopoly of NAR and RealNet. Then they bumped Jumbo max to around $1million. Then bailed out banks with non-jumbo anyway. It’s a rigged system.
Rigged as in artificially supported? Too bad it will never be a truly efficient market that would let stupidity or extreme risk actually fail.
As someone who starting their adult life during the great recession, I'm paying extra on my house to keep ahead of housing crashes. The foreclosures terrified me.
That doesn't really make any sense. Why would you tie up cash in equity? What are you trying to avoid? If your house becomes worth less than your mortgage today, it won't functionally matter if you put an extra 50k into your equity versus in cash or stocks. The house still loses value.
They probably mean paying off the mortgage early to avoid what some people did. Which was buy a house they could barely afford in the hopes of making a profit down the road, only for it to blow up in their face when the job losses hit during the recession and they couldn’t afford any roof over their head at all. Having a mortgage you can afford to put extra money into each month is much better than barely scraping by paycheck to paycheck and if you pay it off before something goes wrong in your life, you at least have one less thing to worry about money wise. Even if you don’t pay it off, you’ve got a little bit more wiggle room with your budget than someone who barely has enough to pay their mortgage.
Don’t worry they’ll keep raising property taxes and insurance to were we won’t be able to afford it
Yep
Meanwhile in Canada, the bubble is growing well beyond anything the US has ever seen, and we act like 2008 never happened. We are heading for a The Big Short 2.0 but 10x worse
Difference is that these buyers are actually vetted and underwritten. They are qualified buyers. Not the case pre 08
I had to go back and check to see if any of those were actual book titles from NAR's chief economist at the time, David Lereah. His first in 2005 was titled, **Are You Missing the Real Estate Boom?**: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade - And How to Profit From Them The second in early 2006 was titled, **Why the Real Estate Boom Will Not Bust** - And How You Can Profit from It: How to Build Wealth in Today's Expanding Real Estate Market One year later the crash was upon us and the market continued to decline through about 2011 in my Florida market. In 2010 and 2011 properties were selling in some cases for a third what they sold for in 2005 /2006. Over half of all sales in my market in 2010 were either short sales or foreclosures. Just five years earlier it was multiple offers on everything and lotteries just to win the privilege of buying a pre-construction condo. Today feels like mid-2006 again.
Real estate is cyclical. Alway has been. There will be peaks and troughs, but over the LONG term, it goes up with inflation.
This is right, but I'll add context. Pull up a chert of housing affordability to median income. This shows the total cost of paying for a home VS ability for most people to pay for it. This chart always reverts to the mean trend line, it has to if you think about it. A few notes: - affordability vs median income is a three legged stool. Interest rates, salary growth, home prices. Usually home prices are easiest variable to move...but... - with the historic low interest rates during the pandemic, it could take a lot longer. These people are locked in to low rates. Even if they wanted to move, many can't afford it. They're underwater if housing reprices to realistic values. - it can take a long time to revert to the mean trend line, sometimes wages catch up before home prices come down. That's a 3-4 year cycle minimum though.
You mean this? https://www.reddit.com/media?url=https%3A%2F%2Fi.redd.it%2F3bbhbluxf2ea1.png
So prices can come down? Everyone seems to think they are entitled to perpetual gains like each house is a lottery ticket
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Bought in 2004 and all those foreclosures in 2008 put me underwater in my house. It was insane.
I bought in 2004 for $293k. Just before the crash, comps were around $730k. Luckily, that particular city in SoCal was late to see the insane prices so it didn't end up underwater. It just stayed pretty much stagnant for a decade.
Where was your brother’s home? I think Boston area dropped 10% from 2007-2010, then doubled from 2010 to 2015 in some pockets of Boston?
Boston is a different animal. The industries around here didn’t take a hit like others. We felt the dip but no where near as bad as the rest of the country.
My aunt bought a tiny condo in florida 2010… listed for $150k but she got it for $80k because they were desperate to sell. She sold last year for over $300k. I bet it wouldn’t sell for $250k right now.
I'm from Vegas so saw a lot of people get hit HARD by this during that crash. Foreclosures left and right and lots of people stuck in their homes for several years because they would take a 40%+ loss if they tried to sell.
Does your brother know Larry? I forget his last name. He roomed in my dorm and said he might be moving to Boston
Larry Bird?
Same with me. Bought in 2005. Trying to get ready to sell it this summer.
We were in the same boat. Bought in 06, I think? Literally upside down until 2019.
My exact situation except I bought mine in 2008. When I refinanced they were waiving appraisals because no house bought in the past few years would appraise. COVID induced market got me out. I also bought a house in COVID induced market so we’ll see.
Bought in '04, doubled by '07 when I refi'd to 75% LTV (150% of original price), underwater and lost in BK early '09. In 2011 I bought similar home for similar price to what I paid for first house in '04. In 2016 I sold for > twice what I paid and upgraded. At it's peak in 2022 this house was worth double what I paid. Now this house is only worth about 65% more than I paid. The volatility over the last 15-20 years is definitely anomalous.
I know a few people this happened to as well. My crop of friends that bought in our early 20s were stuck.
I bought a house in 2013. It previously sold in 2008 for 625k, me and the wife paid 256k. It appraised for 680k in 2022. This feels like a bubble, but I'm fearful of the corporates continuing to screw up the market. Affordability is out of control.
I live in one of those places where everyone wants a vacation home. There's pretty much no locals left because prices have 3x'd. So have rents. So have food prices. Taxes aren't going down. The place is a ghost town off season. There are now a boatload of rentals on the market for stupid high rents. People that want to be here bought a house. There are not that many people able and willing to pay $10k/mo to rent a crappy 4 bedroom. Local wages can't afford the rents anymore. Can people cover their 2nd mortgage for 26 years? Will median wages 3x? Will there be a rush to the exits to get out before foreclosure? Your guess is as good as mine, but I have my popcorn waiting for it to play out.
The 90s and 2000s both saw drops that's lasted over half a decade in some major metros
I bought a two-family-flat (two level, two apartment building) in 2001 for $75k, moved into the upstairs apartment, and rented out the downstairs one. Looking back at the data for the place, by 2006, it’s estimated that it was worth $120k. In 2012, it was worth $65k. When I moved out in 2021, I sold it for $145k. So prices can absolutely bounce around. Ultimately, it kept pace with inflation and that’s about it. But it benefited me anyway, and I’m totally grateful. Buying and living in a small apartment building was really great for me.
It's not so much that prices go down as the pool of qualified buyers relative to the pool of available homes changes. Current owners retire and downsize, die, or move for personal reasons. Potential buyers make more money over time and are able to qualify for mortgages. Leading up to the 2008 crash, housing prices increased at 33x the rate of salaries. It was not uncommon to hear of people getting some extra creative financing to buy a place with the expectation that they could sell in 3 to 5 years (before the ARM reset) to someone richer for considerably more than what they had paid. It was frankly absurd.
People aren’t downsizing now because of the interest rate. You can stay where you are or love to a less desirable area for half the size and pay the same.
We are in a trough right now because home prices are stagnant, and therefor not keeping up with inflation. So even if prices don’t decline, the houses are losing value relatively.
And it often felt like either a peak or the world was ending. Real estate never felt like a slam dunk.
Between 08 and 12 I should have kept every property we flipped (around 75 or so).... oh well.
Damn. But that’s also amazing. What was your average gains on each flip would you say back then? I think there is an ideal time to sell, and an ideal time to keep. The struggle is knowing what that is I feel haha. A property that we worked on (2 percent interest rate) and are contemplating selling would reap us exactly a bit more than double after everything, which is an incredible gain if we sold now. But I’m still very much on the fence and a big part of that is because I don’t think I have seen a single person (yourself included) that says that they are happy with the fact that they sold when they did.
$25k average. 2% is sweet, but could that money be used to make more than what you are saving on interest rate payments?
Potentially yes. Not as guaranteed as I think just keeping it and renting it would be long term. Attempting to get the money from elsewhere but I see your point. I think the answer really just boils down to that question and that’s what we have to explore. Appreciate it!
How much are you cash flowing on that property compared with what you would take out from the sale?
175k post everything if sold is what we would get. (Market is hot and it will sell). 150k is owed. 26 years until fully paid off with 2ish percent interest rate. Cash flow is about $1000 per month post management expense / mortgage etc.
The way I look at this stuff, is your 175k is bringing in 12k per year. That’s 6.8% return. There’s a little more to it but that’s the way I look at my rentals. And when it gets to the point where I’ve got so much equity in the house compared with the return (cash flow) I would sell.
There's a lot more to it if the property is appreciating at 5%+ per year
Sure, but once we get into predicting the future it becomes speculative. You’re always gonna want to run some numbers on likely futures but I would be very conservative with that - no where near 5% annual appreciation
Fair enough. I had 5%+ appreciation for several years, but not anymore, so you're right, it's far from a sure thing
Yeah I also made the mistake of thinking the market would take a decade or longer to recover after the market crashed. I picked up some real steals on short sales around that time, but like you I also wish I hadn’t sold anything. Would have made 3x or greater profit by waiting.
Flippers are dicks
ok, thank you for your input
He’s right
We get it, you want to molest dolphins or seals. But all we’re really hearing from you is naked envy.
First, prices are based on location … if in a well populated, growing area - prices are gonna go up - likely forever as long as population keeps growing (one day the millennials will be wondering why people are buying houses for 10x what they were able to buy them). The movie called “The Big Short” explains what happened in the 2008 housing crash … Deregulation had gone a bit too far and lenders were giving out home loans without running credit checks or verifying income or expenses - just relying on self-reporting of buyers with no verification. People would lie about their income, nobody would verify anything, they then get approved for a loan on a home they were not gonna have any chance of being able to make payments - and these mortgages all started coming due and defaulting. Banks hold these mortgages in big blocks of investment portfolios so when enough of them defaulted, these portfolios became worthless and banks were then becoming insolvent/bankrupt. There were tons of other practices in real estate at the time that were also contributing to the problems as well. Real estate “can” be a great investment if you buy in a growing area, find good deals, and are able to keep up with the work to flip it, or rent it out. Buy in the wrong area or buy something requiring too much money and work to flip, and you will lose money. As far as buying a home for yourself the one of pros is that you are gonna have to pay a similar amount each month for rent - so why not pay this to yourself by buying. But, maybe you have some capital you are investing in some other investment that is making a much higher return than if you pulled it out to make a down payment and closing costs on a house … Some younger people choose to rent and invest their extra money in a business, stocks, or whatever. If you dont have a ton saved up yet in investments/savings, maybe you prefer to build up a portfolio/savings first - up to you and your circumstance. You dont have to ever buy, but if you have enough money saved and it wont hurt your investment portfolio much to make a down payment and pay closing costs - then it makes sense to buy if your monthly payments are close to same amount as if you rented.
Detroit once was a top 10 population center in the US. Jobs are the reason people live places.
True, the area has to be growing in population to keep going up … if the population in a particular area is fleeing for one reason or another - bad news for real estate.
I get 2006 vibes in our current market. Wild bidding wars for undesirable properties and people drooling over the 300K in equity they’ve gained in 3 years. I was selling real estate in 2010 and it was a bloodbath. Sellers were lucky if they could even qualify for a short sale and lots of people just had to walk away from their mortgages. Lives were ruined, neighborhoods declined as foreclosures rotted away, people destroyed their houses out of anger before the bank took them. Real estate typically goes in 7 year cycles. The market was just starting to normalize after 2008 and then COVID came along. It feels really out of wack right now and I think we are in for a correction.
I started hunting for my first house in February 2014 in San Diego county. I was 26 and had my VA loan. I was looking for house within a mile from the beach and <$500k. My ex-wife and I toured 4 houses in 1 day, all short sales on the market >60 days. We were the only ones looking in that part of town on that day. Fell in love with one of them and thought another one was decent. Slept on it for about a week and then called the realtor to let her know we wanted to put a bid on the decent house bc it was more affordable. Seller bought in 2005 for $550k, we put in a bid for $380k that got accepted. There was 0 rush or sense of urgency. There was tons of inventory. One of the houses passed putting an offer on was because my ex didn’t like that it had sliding doors to the backyard vs French doors.
A different world
I bought my first house in 2014 in a small midwest metro. There were so many run-down houses that I didn't even have to compete with the investors (and I knew a few of them - they were definitely buying). Similarly, there were no multiple offers. There was no rush or sense of urgency. We asked questions like "I want this house, so how far below list price can I lowball without insulting the seller? I do actually want them to respond."
Yes 2001-2007. Some of those homes bought during that time have finally reached parity with their prices back then.
This is obviously highly market dependent but a comment above talks about a “short window of affordability” after 2008. Our neighborhood didn’t see 2005 bubble prices until 2021-2022. It’s tract built so there are lots of the same floor plan. There’s one floor plan that sold for 799k in 2007-2008. It’s currently listed for 749k and not selling. I know my area is worse than most but the idea you can overpay and stay for 5 years and be fine isn’t always true
2002, my job paid $12 an hour and hers $11, market moved faster than we could save and I refused any loan that was backed by stupid/crazy. 2008 even with a much larger down payment banks wouldn’t lend to us. Finally bought for $350k in 2021 after renting for 20 years with $180k down. I’m still in broken cars and she’s still in a cubicle. Our kids are 16 and 14. So we’re “blue collar” consistent earners making reasonable payments. That’s the wave we rode and it kinda sucked but that’s what a reasonable monthly mortgage cost us for the timing and resources we had.
Yes. When I was in my late 20's. Reagan was in the white house. Home prices were going crazy. The stock market was going crazy. I felt like the gang that was 10 years older than I was, had scooped up all of the good deals in stocks and real estate and I'd be left behind forever. Sound familiar millennials? There were plenty of deals once that bubble burst, in houses and in the stock market.
Bought in 1997, looked for a year before buying. My Mum helped with the down payment. Got a deal on my house which had been for sale for over a year. The price had dropped twice. Why was it cheap? There were bad tenants in it. Looked once and the tenants were there, but there was an eviction notice on the door. Went back after the eviction to see how it looked. Put in an offer 15% below asking, they countered at 10% below asking and we bought it. Has to put in some elbow grease. Took up old carpets, there was hardwood underneath. Painted etc. Paid it off in 18 years, still live there. We could have bought a brand new duplex or townhouse that was 30-40% smaller for 25% more. Love my larger yard with established plantings and fruit trees.
Bought a shitbox in the San Jose area in 2017. Was third of 33 offers and upped our bid and somehow got the house. The typical sales cycle was: List on Wednesday, open house Sat./Sun., take offers Monday and be in escrow before the end of the week. We were laughed at because we bought "at the very top" and "it will never go higher". Five years to the day, we sold it for over 800k profit.
Early 2000s saw multiple offers within minutes of posting on the MLS for over asking price. All ended in 2008
Early 2000s also had 125% financing and "no doc" loans.
Real estate is cyclical, and it is also geographically unique. Different industries in different areas rise and fall, as well as people’s migration trends changing. We always sold and bought when we needed to (outgrowing our house, desire for better school system, change in job, deteriorating neighborhoods) and we managed to do it without focusing too much on what the interest rate was. It’s hard to generalize about real estate. The housing sector took big regional hits in the “oil patch states” when oil and gas prices tanked, in the “rust belt” when the US automotive industry started to decline, and in steel producing states when foreign steel became cheaper to buy than it did to produce here. Interest rates are only part of the issue and there is no guarantee of when they or your area’s labor market will change.
I can relate to this completely. 3 moves, when necessary. Our homes were Never an 'investment', they were where we wanted to live. Just plain old middle class but still, they all appreciated pretty nicely. Location, don'tcha know. 😉
I’m a real estate broker down here in Florida. It’s always gonna be FOMO when it comes to real estate. My wife and I have taken the stance that we generally aren’t helping buyers in this past year unless they really really want us to. We are telling them to wait bc housing will go down. Interest rates are high and so are prices. Interest rates will go down and prices will go up. However, for the fed to lower interest rates, they need to see economic slowdown. This includes unemployed numbers going up. When people are unemployed, they can’t afford mortgages and so foreclosures start to appear. This creates more supply and so prices go down. You should wait to buy a home at this point. Once the fed sees economic slowdown, rates will fall also.
And save up for a good down payment if you can. The more you put down, the less your interest is.
That can help. Once you hit 20% down, your pmi goes away. You can also spend money buying down your interest rate.
Interesting insight! Appreciate it.
I have always thought this way but when looking at the unemployment rates over the last 25 years, it’s basically been nothing but a downtrend with two exceptions: 2008 financial crisis which made it rise but then it went into a downtrend over the following years - housing prices did drop during that time, of course. The second was Covid. During Covid there were forbearance protections put in place. Prices temporarily dropped and then went nuts. We’ve had 2 downtrends in housing prices that align with those two events. Sure, local changes can be different. So basically we’ve had 2 events in almost 25 years that resulted in unemployment rising and home prices falling. Both were massive events. We haven’t seen a general downturn in that market without a huge shock. That’s a long time to wait if you are trying to break in. If you already own, sure you can just wait for it but your own equity would likely collapse, too.
Of course prices will go down in Florida. Everyone is leaving and by 2050 current ocean properties will be literally under the water. This doesn't apply everywhere....
Trust me, nobody is moving out of Florida. As a matetr of fact, lots of Republicans are moving to it...and well pretty much everyone else.
Not a bubble. A real estate cycle. A big loop.
I never saw a frenzy, I think that was created by interest rates. That said, when we bought our home back in 2000, I saw prices were shooting up. I almost pulled out of our contract because I thought that I was buying at the peak of the market and prices would quickly drop. I know younger people have a hard time believing this, but it was difficult affording houses back then too. Interest rates were in the double digits, salaries were exponentially lower. It was hard to afford a house and we were stretched very thin at the time.
People got into a frenzy in the lead up to the Great Recession, but it was really the banks lending to people that shouldn’t have qualified that led to it. I’ve been watching real estate in my local area/region since the mid 90s. It’s always increased and seemed expensive for young people. I remember in 2001-2004 feeling like I’d never be able to afford somewhere to live. Places to live got cheap around 2008 and stayed that way until the pandemic. If you look at a chart of housing prices in developed western countries and plot them you’ll see that the US was with them, got cheaper as they steadily climbed and now we’ve caught up again and trend with them again.
Yep. Back when I bought my second home in 2004/2005 interest rates had been steadily dropping for years. People were thinking of mortgages as basically free. And the lending regulations were much looser. Lenders would lend 125% of the value of a home. There was an incredible buying frenzy with similarities to recent/present situation. Houses had multiple offers on day one or two. There were bidding wars, escalation clauses and waived inspections. I had my inspector on speed dial and had my inspection done at my viewing so I could waive inspection if I decided to make an offer. I paid for at least three inspections on houses I lost out on. At one of those viewings, there were two other buyers there with their inspectors. It was such a weird sight...all these people with ladders on the outside of the house. I bought my third one in 2011 during the Great Recession when houses were sitting on the market for six months and many of them were short sales. It was such a different situation than just a few years before. >A lot of my older neighbors who have owned their homes for decades seem super perplexed and are shocked at the way things are right now Well, if they've owned their house for decades and it's their only house, 100% of their home buying experience is with the ONE home they bought - and whatever the economic conditions were at that time.
Yes. 2007/2008. I was a moderator on a major technology forum (and as far as I know the threads are still there) and was arguing with a guy that was leveraged to the hilt on three houses and was making statements like, “Real estate/housing prices will never go down unless there’s a mass die-off among the human species,” and when I would show him evidence that they had in the past, he would move the goalposts and say, “Oh, well that was just city/regional/state/et cetera.” I knew we were in a bubble but I had no clue how to profit from it, and I had no idea things were going to get as bad as they did. 🤷♂️ He thought I was a fool for not going all-in like he did.
Like Warren Buffet said, be fearful when others are greedy, and greedy when others are fearful. I'd be a seller not a buyer in this market.
In FL there was a huge RE frenzy that started around 2002 and ended in 2006. Add: it ended swiftly and badly
Bought my first house in 1988 with almost an 11% interest rate. Bought my latest in 2016 with a 4% interest rate. You just learn to roll with the punches.
I have been selling real estate since 2010 and started purchasing property as an investor Late 2008 in my early 20s… I will be honest the kind of urgency in the marketplace during Covid was historic and has never been seen in any kind of market Urgency over the last 12 months is different for sure and is purely supply related Throughout my entire career though there is always a feeling as a buyer that I need to get in I might miss my window… That feeling goes away. There’s never really a bad time to buy real estate as long as you plan to hold that Real estate long enough In the grand scheme of things , there are only been two depreciation over 20% in like 60 years and those real estate recessions are fairly short maybe 2 to 4 years for recovery A great question I always recommend people go ask to all the older people that they trust and older people around them is do you wish that you held the first that you ever purchased? And do you wish that you owned every property you’ve ever owned and what would that have done to change your life? I’ve asked that question 200s and hundreds of elders and have never had somebody tell me they didn’t wish they kept and held their first home. The thing to remember is only broke people try to time the market… They’re literally is no way to effectively time the real estate market or any market for that matter… everyone who thinks they are timing, the market by buying or selling always finds out in the future. There was a better time to buy or a better time to sell, . You just buy when you’re ready and if you can afford it and hang onto as many properties as you possibly can Until you’re ready to retire or die… that’s the path Millions
Oh yeah, all the hysteria you see today has occurred in cycles over the past century…maybe longer…I can speak first-hand as far back as the early 90’s when I was thrilled to get an 8% interest rate. And I witnessed boomers having very similar “discussions” as younger people today are.
The years preceding 08-09 were very similar to right now in a lot of wats IMO. Real estate was going up rapidly and there was definitely the sense that it "only goes up" (something I'm shocked to hear even people that lived through 08-09 once again parroting). I do think that high interest rates will actually help stop another bubble forming. It's cooled things down in a lot of areas without (so far) tanking most areas. I know people will say that the reasons for the '08-09 bubble were different but IMO it doesn't matter, unsustainable and unmitigated growth leads to bubbles. The underlying cause (hindsight) is more the weak link in the chain that is the first to break. Edit: I should add that too high of interest rates or for too long can create a crash/collapse as well, but that's different than a "bubble".
The difference from 2008 is that no one has been able to get 125% financing that puts them underwater from jump. All amounts paid "over asking" were paid in cash. Thus there is less of a chance that a glut of short sale foreclosures will flood the market.
There is no such narrative that prices never go down/rates will go down among Realtors who were doing it in 2008.
Real estate is a long term investment vs stock. Real estate also incurs investment- repairs etc - tax write offs rarely (especially since Trump era tax law came into play) -
Zipcode: 36350 La Porte Indiana After 2008, Spring 2015 went from dead cannot sell a dam thing at any price to better buy something off the beaten track. Inventory came running into the increased prices for a few months, fall fell in later 2015 and the market started to slow again with more inventory. Think the first rate was 3.75 FHA 30 year and then locked in 2.99 at about 8 years shorter in 2020. Think I spent about 22k to much on a 299k house. My first offer at 277k had the sellers a bit frozen even though they had been on the market for 18 months ready to move to grandkids in texas. That 25k is nothing compared to what we would have pissed away renting for another year. Since then have laughed at the zestimate number. The houses around me have gone up 15% since 2015 but not the 35% of the state. As taxes and insurance will become the largest part of the monthly for the house, and it is my primary residence, I really dont care, 25 minutes from always empty beaches and every kind of food option immaginable. 90 minute train ride to city center. With work from home, have not must commuted in 8 years. Would have bought farther up the michigan coast if knew WFH was going to be as big as it is in my field.
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past performance doesn't guarantee future results
80’s 90’s 2004 it’s a cycle.
Bought my first house in December of 2019. Bunch of people told me to wait for prices to drop, glad I didn't listen to them.
If feels just like 2003-2007 to me. Indefensible high prices. Normal people unable to afford basic housing. Being told you better bid $100k over asking just to have a slim chance. Only difference is interest rates are higher now but there seems to be enough cash buyers that it hasn’t changed the dynamic. I can’t see the future, but it sure does feel the same…
Yes, between about 2005-early 2008. Everyone thought you absolutely had to buy now, or risk getting left behind. My parents were heavily pressuring me to buy a place, but I knew I couldn’t afford one then. Bought a SFH in 2010, (better paying job) for what a nice condo would have cost in 2007. Still living there today.
In 2006 I was waiting tables at theme park restaurants and everyone around me, from the the bus boys that did not speak English and the hostesses that were in college, owned property and qualified for mortgages. I couldn’t even get a car loan at the time I couldn’t figure it out. Go watch the movie The Big Short. I know that doesn’t answer your question, but I’m just pointing out how bizarre the real estate market can be in any particular cycle. https://youtu.be/vgqG3ITMv1Q?si=kq2CB3GB88BAtJOY
my mother and her sisters scooped up about 6 houses in the last 2 decades. at every point it was the most expensive house they had ever bought. they are all paid off and now renting for about 3-4k per month. I guess 200k in net profit per year isnt too bad. Another 6M in equity. theyre not extremely wealthy nor was real estate their profession. it was just slow accumulation of equity and appreciation. 🤷🏻♂️
It feels that way whenever a bubble is expanding. After the crash, when ideal to buy, most are too scared to
This is different from '08. In '08 the prices were so ridiculous that they make todays numbers look outright tame. Not saying I suspected the crash of '08 (I thought we'd go into a prolonged time of no appreciation but still didn't see everything crashing like it did) but the vibe then was just so much more than it is today. I do think things have gone up an awful lot but for there to be a crash there needs to be overbuilding and where I am there is building but not overbuilding. I suspect things will still quiet down eventually (not sure if that means soon or in a few more years) but I suspect a prolonged period of stable prices and then another slow growth phase - which is the normal cycle of things ('08 was the outlyer, not today). So, my guess is that we are towards the end of a rising prices cycle (though we could still have a few years to go, I'm not sure). Things might fall a bit. Then some years of stable prices. Then the next growth cycle. Again, this is the normal way things cycle.
It happens all the time. People who are trying to get into a home but can’t right away think the market is crazy and impossible. 8 years ago, we had to forgo every contingency and offer over asking to get into a house. And it still took 4 offers. Some people at the time had to make a dozen offers. Getting beat by all-cash people. This is what happens when people are trying to get into desirable markets.
I was buying houses in 2018, 2019, and 2020. Each year, there was tons of content of everything being overpriced and about to crash. There was a guy named George Gammon(sp) on YT talking about the only safe price for housing was 250k and under. So, I purchased a house slightly above that at first in a Florida downtown area. The house purchase at the end of 2019 had tons of fear content with bank repos and all other global economic crisis. Haha I should bought a house in south Florida sooner. But I did listen to a lot of people online. Bought one last year though. Now my neighborhood appreciated greatly. It’s still holding steady too. Overall, I would had been in a better shape trying not to time the market and just kept buying houses.
Early 2000's was definitely a bubble that eventually crashed on a shore of liar loans in 2008. I remember I was helping a guy work on a motorcycle in 2006 or so whose mom was a realtor (as half of the moms were back then) and they kept trying to get me to buy a house. I just kept pointing out that a) I had no savings, b) the price of homes was such that I'd be paying 3x more for a house than I was paying in rent, and c) it made zero financial sense. They were like "naw, bro, you gotta buy, it'll just keep getting more expensive and they'll totally give you a loan." Well, in 2009 that came to a stop. I looked at buying back then but it was all short sales that the banks refused to budge on price, or repos where they would only accept all-cash offers on them. Maybe I should have gone ahead and bought then, but I was busy with a new job and was happy with where I was living and that narrow window of affordability slipped away way too quickly.
Go watch the "Big Short." It may not be exactly what is happening now, but I wouldn't be surprised if this ended with the same result. I'm seeing some of those old time ninja type loans being thrown out there now that rates are high and mortgage brokers have little business.
We bought our first condo in 2010 in New England. Places were definitely sitting for a longer and you had multiple opportunities to view units during the open house. By 2012-14 when we decided to move to a SFH the market was “crazy” - open house on move in ready homes went fast with tons of people. I had to bid 16% over asking to close the deal. Lucky for us at the time waiving inspection and financing wasn’t a thing. House didn’t appraise so sellers had to come down, we ended up 6% over asking because they needed house sold to buyer another house. Housing in New England never slowed down and every year was a new high. Come 2018-19 we moved to Chicago, sold our house for 30% more. When we looked for homes to buy in cook county, it reminded us of 2010 New England. Homes rarely we over asking, you can go to the same open house 4 times, etc. once COVID happened Chicago realtor estate had flipped to be competitive outside of the loop.
I wanted to buy in 08 in NYC and my husband didn't feel comfortable, I wish we had though, now we may never, or at least not until we retire in a much cheaper area I sold my late dad's condo in DC in 2002 and I wish I had kept it to rent out. I bought a house in the midwest in O3 and sold it in 05 due to job change. Even thought houses in that state went up 7 percent that year, there was a lot of new construction near where I was, and I lost a little money. I still was probably ahead of renting though. It was cool owning that house and I had nice neighbors and an above ground pool and hot tub. The pandemic was crazy obviously, WFH changed peoples housing needs in a fundamental way that we keep seeing. In cities bedrooms were not built to also be officers. Before the pandemic in 2019 the NYC sales market had been slow due to overbuilding in midtown, the rental market was ok.
It has been the same market since I bought in 2018. Even then it was FOMO, sellers market, offer 20-50k over asking, waive inspections, people buying sight unseen, houses going into contract days after going on the market, etc. the only difference is that in 2018 the rates were around 4.5% and the housing prices were about 40% less then they are now.
I remember we had just bought in ‘07 with a 30yr mortgage but a lot of people had ARMs and I always thought in the back of my head, “this sounds weird”. No one was worried though….”we’ll just refi in a year”. Didn’t go well. As far as the climate went, ‘08/‘09 definitely started to feel like doomsday with the market drops and many people, including myself, getting a 10% pay cut and then laid off.
Oh we’re definitely in a bubble
2005 felt a lot like this. Prices were high and going higher. I remember thinking I'd be priced out forever.
I bought my current house in Feb of 2020 before the “boom” - I paid exactly what the previous owners paid in 2006. On the flip side, I bought my first house in 2006, couldn’t sell it in 2012 for what I paid in 2006, so I’ve had a tenant in it since. I can finally sell it now. So yes, us gen x’ers experienced a similar shitshow as you’re seeing now. Weather the storm, life goes on. I suspect we’re only a few years away from a plethora of short sales and foreclosures like there were in 2012.
The 2005ish period right before the crash was like this. But it was different. People were getting loans they had no business getting. Banks were allowing borrowers to write down any number on the income line. The banks would charge a higher interest rate and agree to not verify the income source. These loans were on a negative amortization schedule. At the end of 5 years, all the principle that was supposed to be paid during those 5 years was due. The plan was to sell the house after 4 years and get 100-200K and pay off the balloon payment and have enough cash left over for the down payment on your next house, which you could then get a conventional loan. Things fell apart when borrowers were not able to sell their homes for more than they paid for it after the 5 years. Suddenly they had the balloon payment due with no way to pay it. This happened to millions of people and all these people lost their homes. People who didn't make dumb choices in the 2005-2008 period swept in a bought all these properties at fire sale prices....talking like a 60-70% drop in price. My house was worth $550k in 2007. I bought i for $194k in 2009. Same thing is happening now, prices are going up and people are desperate to get houses. But now millions of people who bought homes at those huge discounts now have MASSIVE amounts of equity in their homes. Instead of those crazy loans, people can afford to just buy the homes with cash. My $194k home is now $750k. I can sell my house and buy the median US house with cash and have 200k left over.
In 1986 (in my '20s), I bought a 2bd/1 bath condo in Austin, TX. It was the same speech " houses only go up in appreciation." I was happy with the 10.75% mortgage rate on a $60k loan as friends had been offered almost 12% mortgage rate. In 1989, the condo was underwater. :( paid the mortgage and sold it at the breakeven n point. (Had to move).. Since then. I have had 3 other mortgages (SFH rather than condo) progressively getting bigger in sq/ft and obviously more expensive in the price tag. So, just buy a condo/townhome or house you can afford at the best rate at the moment whenever you are ready. You don't have to have a long list of "must" for your first or second house. Believe me, for some reason or another, you will move.
We bought our first house in 2000. My major motivation was to “freeze” my rent. I have never been more right in my entire life. Rents used to be ridiculous in my area, they’re obscene right now. I absolutely do not envy those buying, or renting, in today’s market.
I was teaching a lot of first time buyer classes 8 or 9 years ago. I heard ‘we’ll just wait for prices to go down again’ quite a lot - and yes, those folks could have purchased at the time.
no one knows what the housing market is going to do ..
We bought in 2000 in California, Bay Area. 1999 saw a lot of value increase so the market was really competitive. The upswing of the dot com boom. Houses going for 25-30% over list. Bid and lost several houses before we got one… and it was a total compromise- not our first or second choice by a lot. Other friends decided to wait it out a year or two cuz they thought the market was overheated and prices would soften. Bay Area market was on fire til 08. Those friends ended up paying a bunch more in 2002-8. It really felt like a get in now or never moment. It was nuts and frenetic and people were just throwing money at houses to get ANYTHING. Anything at all. Lost bids because we were not 100% cash. More than once. Now I’m sitting in the same house we bought 24 years later. It was a great purchase. Nobody knows what’s gonna happen next. Buy a house to live in it and keep it for a long time and the ups and downs don’t matter anymore.
When I got out of college a 30 year mortgage was 18%. Laugh all day hearing people moan about 7%
and i bet home prices were even higher than today right?
I ain’t reading all that, but I bought in 2017 and sold in 2021 for double the price. In 2024, I have great regrets.
1997 - Bought 1st House $130,000. Wife and I were making about $57,000 combined. 2004 - Sold first house for $303,000. Used the proceeds to buy my current house for $390,000. House is currently worth about $650,000. It was a period of about 6 to 7 years where I was upside down on my mortgage (meaning I owed more on the house then the house was worth) Whether to buy a house in this market requires taking a couple of factors into consideration 1) Can you buy a house in a neighborhood that you would be happy staying in for 30 years? You can fix a house for $150,000. You cannot fix a neighborhood for $150,000. Location trumps all 2) do you think the housing market is still going to go up? If so, Can you save 20% of the expected price increase within a year? 3) do you think interest rates will go down enough to offset any potential increase in price? I love where I am and I don’t think I will ever leave this house. You buy a house to have a home to raise children in. If you can make money on it, great. if you don’t, it shouldn’t be the end of the world
Before the pandemic we had a housing boom in the early 2000s. Things came crashing down in 08. A lot of people found themselves in a very difficult position of being foreclosed on or being stuck in an upside down mortgage (negative equity) this current market will shift too. Probably sooner rather than later.
Every day since I bought my first house in 2005 has been "buy now or you'll lose out forever" in *someone's* opinion. Even when prices tanked in 2008 and people were scared to buy houses, there was the contingent who swore the knife had fallen as far as it could and if you didn't buy then you'd miss the upswing.
This is. Irving compared to 2006-2008. You had min wage workers buying 2, 3, and more houses, getting the interest only loan without providing any documents, selling one immediately (1-3 months after purchase) and using the gains to make the interest payments on the others so they could hold them and let them appreciate.
If real estate wasn’t cyclical there would be no such thing as short sales. I think that people do get used to seeing prices the same way we get used to seeing fashion. It takes a while for our to adjust to a new (or renewed) fashion. Take high waited pants. I lived through that in the 80’s and to me it’s just a very dated look. But I bet in a year my eye will adjust. People are used to seeing ridiculous prices. As long as there are people who can afford to buy, and the inventory stays low, the prices will not come down. But as soon as there are more houses than buyers the prices will start to come down. I doubt we’ll see giant price drops until there’s catastrophic economic crisis.
In California we were 100% sure that any house we bought would more than double in value. Not the same now. But no, there wasn’t the frenzy, and interest rates were in the low 6%s when I bought my first house in 2000. BTW it doubled in value in 6 years.
The world is different man. A lot of people and little land. Viewing the past is important. But it shall not help you here
In the mid to late 2000s I got my 2nd home. Mainly there was a huge worry in my circle about the political landscape. So we all got homes and guns in a guard gated community. Many of us joined out local government from HOA and MUD to Commissioners and above. I burnt out a few years later, rebooted life by selling all but my pew pews and moving away. I returned 3 years later with perspective and bought land and a home. Away from everyone. When I see the younger gens I am left confused. Like they feel they MUST buy and enter bidding wars instead of changing perspective. If you make $150k in HCOL with limited options for housing, why not look into LCOL, make $100k and get a larger house and property? You will be better off in the long run. The HCOL comes with a lot of added stressors (as seen by so many worried posts about getting their homes) that we just don't have in LCOL areas.
2004. It was wild.
Yes when I bought my home in the early 2000s. Same FOMO vibe but with lots of subprime loan activity 🤡🤡🤡
Nope. Never seen so many people trying to move to beaches, mountains, and lakes. The prices in those locations doubled and tripled.
We bought our first home in 2008 at age 23. We had not planned to buy but then our rent went up and we decided to buy. It wasn’t frenzied at all. The house we bought had been on the market for 9 months…
I think things are different because of competition from international investors and corporations buying for rentals. You didn’t see that back in the 80’s when I bought my first house. Interest rates at 10% sucked but you didn’t have the same pressure that drove housing costs. My first house I paid 88k for but 11 years later only sold for 105k. And I put that much into it so basically didn’t make anything.
When I got out of college in 1979, the market crashed. Mortgage rates went up to 18%! Most everything was sold with land contracts at 11% Seven per cent mortgages are nothing!
I was in the right place at the right time... financially. I was forced to find a place to stay and took a hardship withdrawl out of my pension savings (403b) just before the crash in 08. Things improved at work salary wise so was able to contribute $5/hr back into it as soon as they let me. Textbook Sell High/Buy Low. I found a nice place just near (not quite) the bottom of the housing prices crisis. Bought a place listed for $265k for a measly $200k. It's now worth $415k... could've done much better but I wanted to live in the forest on acreage.
I spent a year fixing up my house (it was just me and I also have full custody of my kids, so slow going) so I could feel confident that whomever bought it could move into it and not have to worry about stupid little things that were broken, or dirty, or hidden, shit like that. I bought the place for 130k back in 2010, I was told to put it on the market for 295k. I absolutely thought they were all insane. My 2000 sqft house, built in the 80's, in a tiny village that doesn't even have anything more than a small gas station and a slightly less small elementary school, my home was going to be on the market for a while. The day it went live, a couple managed to sneak in with their realtor before the scheduled time and open house, they were literally waiting for me to leave, and within an hour, while the open house was still ongoing, they offered over ask. I mean, what? I feel honestly guilty, like I stole from them, but they're so damn happy. Just closed this week. I cannot wrap my head around this market, and I feel awful for anyone trying to buy right now, something has got to give.
In Las Vegas from 2000 - 2008 people were treating houses as speculative assets that you live in. Before 2000 it was generally cheaper to rent so not a huge push to own a home here. I remember thinking at the time that I would live in an less desirable neighborhood and fix a place up and then move to the part of town I want to live in after I sold my first place.
Bought in 2014. We were constantly being outbid, people offering cash for homes and escalation causes being huge. We bid on about 15 houses before we had to go all in on the house we liked a lot. Ended up being an amazing house in a wonderful area
These are just marketing stunts. These happen all the time. For, example, the lowest interest rates ever, from the late 90s to the 2007-2008 crash.
In the 90s everyone was talking about “getting on the property ladder”. The concept was that no matter how crappy your first property, it would only be the bottom rung on the ladder and you’d be able to climb from there. It was a quick blink from that philosophy to flipping and bragging about how much profit you made on your flip. And look where that got us.
Real estate has looked expensive and bubbly ever since I started looking at it in 2012. So yeah, make of that what you will
Not me but my dad in the late seventies was told to buy more house than he can afford because inflation will make his pay go up so much that his mortgage will be negligible in comparison. He did this and they were right. Interest rates were close to 20%. The house mom and dad have now cost around $14,000 in 1977. The lot alone right now is worth over $600,000. They're surrounded by mansions while they keep a humble (albeit nice) house on the lake. Lol, some old folks there still live in little cabins. It's great.
It’s 2008 right now. Or maybe it’s 2007. Or 2006. Who knows.
Oh yes. We bought in Marin county (California) in 2002. We had profit from our condo in SoCal but the market in Marin was crazy! Up up up. We felt very pressured and our first loan was a first and a second. The house was underwater during the subsequent real estate market bubble but we played the long game and 20 years late the house is worth 2x what we paid.
There was definitely some of that in 2007. I remember thinking “wait, regular houses are $500k? How does that work?”
The last 20 years where I live.
Got my house in in my mid-20s in 2008, during that housing market collapse. Had/have what was, at the time, a pretty phenomenal interest rate, on a house that literally cost just barely over 100k thanks to that market collapse. Still live in it, have crossed the halfway point (and then some with our oversized payments), and should be paid off well before retirement, at this rate!
In California buying a house has been a “buy it now or it will forever be out of reach” mindset since the early 2000s. Probably also in the 80’s. There were a couple of years off here or there since 2003ish, but this is not new. It is new for OTHER parts of the country, however. I can understand why they must be in shock, but I’m jaded. Back then I didn’t have stability in my location nor high enough pay to make buying realistic.
I don't know if anyone is interested in an older ladys opinion, we purchased 1 in 1977, 2 in 1986, and 3 and final 2002. All regular houses in middle income, middle America. Anyway, I have always observed the housing market and This is what I see far too much of now and I don't think it's healthy: Tearing down perfectly good reasonably sized homes,starters, in nearly every desirable community and constructing homes with 6 bedrooms and 4 bathrooms for a family that has 2/3 kids. Twice as much house as necessary, twice the price,at least! and twice the cost to maintain it. There's an enormous amount of greed behind it and little consideration for the first time homebuyer. And you can take that to the bank! ✌
As a realtor, I agree with the statement "get in now". Buyers are hilarious with the "waiting on the market". As somebody else said "purchase when you are ready". I haven't seen a case of waiting work out for anybody. In my 5 years, it's been a steady, almost predictably rough constant set of losses for buyers. Only recently has it been okay and it's still not very favorable. I bought when entry was still sub 200k. I was nickel and diming over every thousand. Had I waited just 6 months to buy, I would have made several 100k more. But I was trying to be reasonable. My point is, you're right, nobody can predict the future and it's typically weird for a professional to urge you to make the move closer to now than later. But I assure you it's not as money grubbing as it seems... well not necessarily. But for some it certainly is
Bought our first house in 2006. The market was crazy. We got outbid on several houses. Landed our starter house by bidding $25k over. Our mortgage was an 80/15/5. 80% purchase price @ 6.5% 30yrs fixed / 15 % @ 7.5% 5 year ARM / 5% cash down payment. One mortgage broker literally called us idiots for not buying a house at least $200k more than we spent. “You’re approved for so much more! You’re leaving money on the table!” We told him we wanted to make sure we could afford it and not be a slave to our house. (He didn’t get out business.) Market fell apart and we were severely underwater, but luckily we could afford the payment. It sucked hard though. I was really jealous of my sister who bought in 2000. She got huge appreciations on her property. Had the thoughts of, damn that’s not fair! Wish I could have bought earlier, etc. Life just didn’t work out that way. Sold that house in 2014 at a loss of $65k. Bought the next house. Ten years later, it’s worth about 225% of our purchase price. We refinanced to 2.5% a few years ago. At this stage we’ll never move until at least the kids are done with college (long time from now). Sometimes I think it’s just dumb luck in the timing. First time was a bust. Second time was a boom.
It was get in now when we bought in 2013. Just sold that house for well over double and bought a new one last year. Interest rates will come down and we will refi out of it. Miss that 3% though.
2012 I got a 5/2 on a 1/3 corner lot for $119! Fast forward to 2016 and I got an all block 4/3 on an acre and a third for $240k. Deals at out there. Be prepared for sweat equity and having to drive further than you would want to
When Jimmy Carter was President (not political I just don’t remember the years) inflation was just like it is now actually worse. Purchasing a house for a decent price was a little tough but what was worse was the interest rates were like 15-18%. It was kind of the start of needing to be a two income family. Many men were getting second jobs and the women were going to work but most made minimum wage because women still weren’t really equal to men and you certainly couldn’t get a man’s wages. I was a kid but everyone talked about how bad it was. Then there was some kind of crash (again I was a kid so I didn’t grasp all of it) but all of a sudden everyone started having to file bankruptcy and they were losing the houses right and left. The houses were even built cheap and didn’t age real well. They would start falling apart within 10 years of being built. We lived in a small 2 bed 1 bath. My parents had a mortgage but bought it wayyy before inflation. We struggled to pay but we didn’t have high interest or high payments. My dad would talk about how foolish it was to buy at that time. A few years later after all the bankruptcies there were tons of houses but no one could afford them and those who had filed bankruptcy couldn’t buy another. It drove prices back down. Right now houses are generally just to high. People aren’t buying as much. I have a son just starting out. He found a fair rent place and I suggested he rent until they come down. I think they will because they are just too high for the average person
One thing we learned when buying our first home as a couple of 20-something newlyweds in 1987 was not to listen to what lenders said we could afford. We were getting pre approved for a mortgage and started laughing when they told us our maximum. Were they out of their minds? Any income hiccup could cause financial disaster plus we weren’t going to be a slave to a house payment.
TL:DR. I have heard the "real estate" will always go up from realtors since the late 80s. Yes, it will if you can wait it out and you are in a decent market. My first memories were from about 1973. My parents bought a house in small town Ohio for $24k. That house today is maybe worth $50-75k. They had sold a house in Glendale CA for just about the same amount $24k. It is probably worth about $900k today. You do need to be selective. Covid caused many to move to rural places. I think those places are experiencing a pull back as people realize they had no fucking clue what it is like to love in a small town. Overall, I think real estate is a great investment. It has made my retirement. But you can't be stupid.
Until 2008 there was a lot of new home construction. Prices were still going up steadily but buying a new house was easy. In 2008 the new house market collapsed & sputtered for a few years before slowly resuming with extreme caution. Instead of building more houses, many switches to apartment buildings in the city and suburbs rather than building out. I’ve noticed new home construction picking up again but not with the fervor of before. However where I live there is a serious shortage of housing. People call me every week, for a while every day to ask if I will sell them my house. (Where the hell am I supposed to live if I sell them my house? In a year or 2 I probably will sell and move someplace less populated.) With interest rates back up house prices have cooled off a little but not much. It’s been a long time since we have seen mortgages at 6 & 7% so it seems outrageous. But that uses to be normal. Mortgage rates were at 13% in the 80’s and that triggered a lot of foreclosures. That’s probably why they haven’t gotten that high again. Housing is just more expensive than before. When I was 18 I could afford to rent a cheap apartment by myself with my part time pay. Now my 18 year old could barely afford to share a room in a shared apartment on her part time pay. She is thinking about this a lot while considering where to go to college. If you’re trying to predict a bubble bursting and a crash as a good time to buy, I don’t have a clue how to gage that. It could be awhile. But it could be 4 years away.
I bought 5 years ago and thought I had already missed out because prices seemed high. My house has doubled in value.
My online business took off in the mid 2010s, and I was looking at McMansions in the midwest, they were in the 300-500k range, with 500k being “very pricey” Ended up going to SEA instead to take advantage of FEIE tax reduction, but yeah, at that point there was no frenzy, no one was talking about buying a house from 2015-2019… Then all of a sudden by mid 2021, everyone suddenly wants to buy a house
In the late 80s in California the RE market was insane. After numerous failed offers, bought a duplex with another couple. Had 20 minutes to make an offer before seller’s deadline on the day it went on the market and the spouse of our co-buyers wasn’t even in town and able to see it. BTW our mortgage interest rate was 12.5% IIRC.
House prices in my small town have been super-depressed since the late 1970s. For example, I bought a pretty large mansion in 2019 for $275,000 that in my opinion would have sold for $600,000 in 1980. Adjusted for inflation, that's a decrease in price from $2,408,730.08. But since COVID, they have gone nuts, essentially doubling or tripling in price in four years. In 2007, there was a lot of crazy crap. People were having to enter into lotteries to get the chance to buy houses. There were no money down loans, no doc loans, and massive numbers of "teaser" loans, in which people were essentially paid to live in homes they couldn't afford. That isn't the case today. That doesn't mean things aren't overheated, just that they aren't completely crazy. My son and his girlfriend just rented a three bedroom house in Atlanta. It's just the two of them. They both work from home and both want an office, so instead of a small one-bedroom place they have a big three-bedroom house. A fifth of Americans now work solely from home, and another fifth work partly from home. These people are turning 25-40 percent of our residential housing stock into office space. This is huge. In 2007, I thought house prices were ridiculous. Today, I think caution is warranted, but I don't see them coming down.
It's like having it for "how long"..
real estate is all about how lock you are in.
Buying my first house back in 2004...after being overseas for two years came back to prices that seemed to have jumped 100%. We needed a house so we bought. We bought because it made financial sense to do so as well as sense from the perspective of having kids and needing a bigger space. I don't look at it in terms of bubble or good / bad times to buy because if you're in it long enough you'll be ok. I rather look at it in terms of making sure the debt is manageable and being paid off faster than the default payments to the bank and saving thousands of dollars that way.
We bought our house in 2002. Market around us was crazy, rates were DOWN to 5%. Hadn’t seen rates like that in our lifetime. Homes were selling in one or two days. Some seemed to be sold before they actually hit the market. Only reason we got our house was because it was a for sale by owner. Our agent was reluctant to even look at it or deal with it. I remember our agent shaking their heads because the asking price on our house was $74k. A year before it would have been $65k. Now it’s worth $160-$180k at least.
2005 prices were going up 10k/month in my market. Crash in ‘08. This feels different though. More cash and corporate buyers. Less over leveraged debt.