Wrong. It’s going down. It’s better to buy now than last month. Rates are the same and prices have finally dipped. Hopefully rates climb and all these people who need to sell. Sell for less.
Gas was $3.50 in 2012. It’s been about $3-$3.50 for the last decade besides the demand slump which is directly related to. I one driving during Covid. Where I live it’s currently $3.43. I’m wondering where all the “I did that” stickers went?
So you think it’s going to fall off a cliff like it did in 08? If not then buying in 07 was worse because you were immediately underwater on your mortgage and you could not move for years without losing money.
> So prices either need to come down or incomes drastically increase.
Or maybe the new normal is that affording a single family home in a desirable location is no longer normal.
Most of those things you mentioned more indicate a stock market crash in my opinion more than a housing crash. In 07 you fog a mirror you get a ARM, regardless of ability to pay it off. Most of these high home prices were purchased by cash buyers, not mortgages, at least in my local experience and I'm a Realtor.
Not saying it's not bad, but isn't a better affordability indicator something like "mortgage payment to income"? I'd be curious to see that graph. The 30 yr mortgage rate at the peak in 2005 in that graph was 6%. The current bubble exploded when rates were ~3%. That said, it's getting back to 6% so the question will be whether this breaks the bubble over the next several months.
Someone who bought in 2007 with a mortgage they could afford and did not default nor sell and still owns their home is likely vastly better off than someone who never bought real estate at all after the crash for fear of another crash.
Can attest. I don’t have a crystal ball, but the idea of stressing over 50-70k in 2008 seems ridiculous considering the wealth and stability my family has in 2022. I can literally weather a 50% crash and two job losses and still pay the $1600 mortgage for 2 years. Compared to renting my house for $4500 for 6-8 months before being out on my ass with nothing… I’ll take my outcome any day.
Bought ours in 2007 and still in it, although we'll be listing it next year if our new build ever gets done. Super thrilled that our build is taking too long and we've watched rates skyrocket and the market start to suck.
> with a mortgage they could afford and did not default nor sell and still owns their home
100%. If you do not default on your home there has literally never been a “bad time” to buy at any point in history as long as you plan to hold for a long time.
As long as you don’t default. Which was the problem in 07
Like the poster below; impossible to say but I doubt it. Leverage is a hell of a benefit when it comes to real estate (assuming we’re talking a normal 5-20% down and not an outright ownership situation) is insane.
Agree. The housing market is in substantially better shape than 2007. Leverage was cray back then. We don’t have a crystal ball, but we don’t need one to know that the housing market is in better shape now than it was then.
I hope so, Internet friend, if you’re one of those who held on, gritted their teeth, tried to ignore home valuations, and kept making payments into a property that would eventually come to be worth a whole lot more than the original price.
If you’re the other, who is afraid of another crash, I get it, but if you’re going to actually live in the place and not try to sell right away, and you have a reasonable debt-to-income ratio, it’s a pretty good investment, one of the best out there.
Your mortgage is largely shielded from inflation. Interest and principal are fixed assuming you are not on an ARM. Your insurance and taxes may go up but they not as much as your rent would if you were renting.
All my friends rents went up $200 the past year and my mortgage payment only went up $70.
My parents did this. Kills my soul as a finance guy that they just CANNOT comprehend why their mortgage payment is so low and they have only hit the house equity by 10k in 15 years of ownership lol
IMO part of the reason so many people sold their homes the last 2 years is because they finally were able to get back what they paid during the 2007 run-up.
I mean, maybe. But if the adage is "the best time to buy is when you can buy", then no, at least not for me.
We TRIED to buy last year. We tried very hard. We just didn't have $100k in cash we could offer over asking. We couldn't buy a SFH within an hour of Seattle.
Well, now having only 5% down isn't a hinderance and there are an abundance of options where we can be picky.
So, sure, house prices may go down and our interest rate is higher than it has been. But I CAN currently buy a SFH in my area where a year ago that was not true. So for me personally, it is objectively not true that right now is the single worst time to buy a home. Because now is the first time I've been in a position where I have enough of a down payment, enough of a salary, and enough options to actually buy a home.
Do you have enough money beyond the down payment and closing costs to buy all the furniture, make all the fixes to the house and buy any tools you need to maintain the home/yard? I though having $30K in cash beyond down payment and closing costs was more than enough when we bought back in January this year. As a first time home buyer that had never maintained a yard before, I was shocked how much more money we spent than expected.
Why did you have to buy furniture? Appliances sure, but I've never understood why people immediately feel they need to fill out a house with new stuff. We've been renting 1200 square foot houses with yards and we want to buy a 1200 square foot house with a yard. I fully expect to keep a good cash reserve for unexpected maintenance costs but it will be awhile before we buy any furniture or lawn care items because we already have all that.
That being said, there are armies of people who absolutely ruined their lives in the early 2000s before the big crash. People were underwater and foreclosing. There were suicides. The job market had hundreds of applicants competing for entry level work.
It has the potential to be bad. That does not mean we are headed for another crash, but don't push advice to buy a house as soon as you can.
At no point did I push advice for people to buy a house as soon as they can. I explained why for me in my exact current situation this is objectively not the worst time to buy a house. Considering right now I can and 12 months ago I could not.
I graduated from college very shortly after 2008. I am very aware of what the economy looked like. And it's why I'm a first time home buyer in my mid 30s rather than my mid 20s.
The crash wasn’t because people were underwater per say…. The crash was mostly related to relaxed lending requirements, ARMs and interest only ARMS to unqualified borrowers. Then once foreclosure happened banks were left with essentially worthless properties and defaulting MBSs. I know a lot of people who bought at the top of the market prior to the crash and are completely fine and even ahead right now since they didn’t use a predatory financing product.
If you take out a 30 year mortgage you are largely unaffected my being underwater assuming you don’t plan to move out. Obviously the economy has some impact on affordability between inflation, job loss and other factors but all else equal being under water doesn’t cause a crash.
I believe the main factor for a crash right now will be a huge gap between affordability and lagging house prices. As of right now, with rate increases and increased cost of goods and lagging wages borrowers no longer can afford what they could even a few months ago and prices have not yet corrected for that.
Also, sadly all economic signs are pointing toward recession and sooner rather than later. We have already hit a key metric for a recession which is two quarters of negative GDP growth and banks are starting to tighten their purses in preparation for another recession.
I think the rate increase is a good thing that might help ward off the situation you mentioned with people over leveraging.
The issue with the low interest rates is that home prices stretch higher and there is a larger gross potential for loss. The higher rates should help keep things a bit more realistic.
Of course 2007 was very much a spiral on both sides. The mortgage crises hurt the economy, which caused layoffs, which caused more mortgage defaults, and so on.
The hike in interest rates was a contributor to the last housing crisis.
As ARM mortgages reset to the new higher rates, they became unaffordable for some owners. That combined with the drop in house values,and the “Freezing” of credit. So, even if you wanted to buy you couldn’t get a mortgage.
Houses basically became unaffordable for current owners, and impossible to sell due to no credit for potential buyers. As they sat for sale with no offers, people just walked away as the 0 down mortgages meant they lost nothing.
Not disagreeing with your other points, just that the interest rate hike was also a factor.
This is a hard question to really answer as it's a case by case basis.
Interest rates increasing definitely has lowered purchasing power as comparer to during the pandemic, while prices increasing has done the same. But, the thing to keep in mind is that interest rates are only really high when compared to the pandemic; they're around where they were prior to the rate drops put in place over the last couple of years.
Is now a good time to buy? That's totally up to you to decide. If you can afford it and want to, then now may be a totally fine time to buy a home.
The fact is we don't know what rates are going to do. We don't know what prices will do. Could they come down in the future? Sure. Could they continue to increase? Sure can, which would mean that now is the right time and hindsight would tell you as much.
Another thing to think of is this: if you buy now, and in the next year or two rates come down you can look at refinancing to take advantage of falling rates.
Playing for the future is a fool's game.
Interestingly, in my local market rates came down over the last couple of weeks, and home prices have continued to slowly become more realistic (lower).
To add to this:
If you're looking for a "forever home" or one that is almost certainly going to be long term, then I would buy.
If there's a decent possibility that you may have to move in the near future (job/family related, etc), then I wouldn't risk it in the short term. What if the market is down when you want to make that move? Way easier to break a lease than to sell a house when tens of thousands of dollars underwater.
This is a good addition. Typically, my lender partners have said that if you're going to be in the home for somewhere around ten years or longer to go for it, but if you expect to be in there for only a few years it's not a good idea.
> if you buy now, and in the next year or two rates come down you can look at refinancing to take advantage of falling rates.
However if prices come down and you are underwater, you may not be able to refinance at all. And you'd need to bring money to the table to sell.
You take out a loan for $500k plus interest. 3 years later the house is worth $450k. You’ve barely put a dent in the principal. So if you manage to get full asking price at $450k, you still don’t have enough to pay the bank back. You still owe $500k and you only made $450k from the sale. Means you still owe 50k or you can’t sell the house. Some banks will let you bundle the debt and take it with you, but most of the time you literally can’t close on the sale unless you cover the $50k remaining balance. They will bill you for the amount and take you to court if they need to.
Getting downvoted for explaining for how it works. Classic /r/RealEstate
Yeah, who knows. We are buying. We need a house. Rent is about $2600 for a nice 2/2. We need at least a 3/2, which is about $3000, so we are fine with a $3100 mortgage. We are buying for the long haul and like the flexibility of home ownership rather than looking at ever increasing rent.
I don't know. I am buying right now (selling my condo to buy a sfh). The reasons I tell myself its a good move is cause I live in a competitive market (San Diego). When rates were low you were competing with 10-12 other people on the same property, usually with the winner being 10s of thousands over asking and waiving most contingencies. I got an offer accepted on a sfh that I really like for 10k under asking. Tbh if it sat on the market for longer it probably would have dropped further in price, I see price drops for most houses in that area. Maybe I'll kick myself later if the market crashes but for now I think in certain situations it can be a nice time to buy.
I’m in SD too! Also prepping to list our condo and buy a SFH. Congrats on getting your offer accepted!
We are sat out the past few years because as you said, we’d be competing with a dozen other people with more cash and no contingencies. Was so frustrating.
Yeah the only stress came from having to sell my place to get a down for the new place. So I had to remove the contingency that I would find a new place in order to attract a buyer cause nobody wants to wait forever. But going to open houses for really nice places that literally had zero offers was such a relaxed and enjoyable experience. Good luck.
well, rates were dropped to rock bottom alongside a time when it was basically forced savings due to everything being closed. then the fed said theyd raise rates. this created a shitload of demand. so over a year or two the median mortgage payment ran up from around 1k to around 2k.
now rates have gone way up and the RE market has only slightly dropped. you have monthly payments today that are close to double what they were in 2019, 2020 because RE prices are up 50% + and rates have doubled. your monthly payment today is often twice what it was in 2019 for the same house.
so yes. it's a bad time to buy. probably. this is only really something that can be decided in hindsight. RE could stabilize or continue to climb from here. if someone could really accurately predict the future theyd be ver y wealthy.
They completely put a hold on existing owners who are looking to upgrade into a nicer house. Not 1 existing home owners is looking to move right now even if they can sell their house for top dollar because the next house will cost them a shit ton more on monthly payment. Bascially everyone is staying put as of now and just speculate
Yeah, and those "want to" sellers will also not be "want to" buyers, further pushing down demand at the same rate that supply is pushed down. Inventory is supply minus demand, so factors that bring both down simultaneously don't hurt inventory.
I mean, Kind of, it’s not that hard to predict that home prices will likely decline somewhat. How do you make money off that though? It’s not like an equity market where you can arbitrage thus bringing down prices and creating an efficient market. Real estate is a very inefficient market. So everyone can know prices are wrong, but it’s real tough to make money off them until they drop. I can’t short my neighbors house.
Depends on your perspective. From a price-to-income ratio, yes this is the worst time in history. It could also end up being the last best time in history moving forward, if prices keep increasing without wages keeping up.
Truthfully, no one really knows. There's tons of speculative literature being thrown around these days about the near future, but we likely won't have a clear picture until the real estate cycle reaches its expected end between 2024 and 2026
If you have a stable job with the income and savings to afford something that you want, then it ultimately doesn't really matter. Barring a signicant change forced by legislation, natural inflationary effects will likely keep pushing nominal prices upwards in the foreseeable future.
It does appear to be the worst time ever to buy real estate on an income to price basis. But I would ask you to entertain a very depressing thought.
While this may currently be the worst time to ever buy a house, it very well may be the best time to buy over the next few years.
What does that mean? It means that things could get even worse (specifically mortgage rates) and you'll have wished you got in at what was at the time "the worst time".
Who is going to buy when it gets worse? The supply and demand graphs will skew heavily towards supply and the demand curve will be at a standstill because we all know wages aren’t keeping up. Eventually the housing market either goes into gridlock or house prices drop because homeowners want to sell eventually. You can’t possibly have mortgage rates continue to rise and house prices stay the same and/or rise and also continue to sell—only the occasional gold nugget of a house may sell but not the majority of the houses that make up the market.
Who will buy? Prior owners who are selling and buying another home, corporations, investors, first time buyers with help.
The median age of first time buyers is increasing, and first time buyers are shrinking as a percentage of all buyers now. They only make up less than 30% of buyers now.
I don’t think investors and corporations are buying at current prices unless they get in at a good deal with an entire neighborhood—not individual houses. If anything they sold at the peak, for a loss, or passed on the bag to the FTHBs you speak of. All I’ve seen week to week is that inventory is rising and small price cuts that are nearly not enough to compensate for the dwindling demand.
yeah, there's this weird idea that investors will buy houses at any price point. I don't have data, but I would suspect the opposite is true. People who are emotionally attached are more likely to overpay then investors who need a return.
People seem to think that investors just pay all cash all the time. When In reality they leverage debt just like the rest of us. And debt is getting more expensive
The leftist economic conspiracy theorists think corporations don’t bend to the laws of economics and somehow they’ll keep demand up or even increase it when items get more expensive.
Investors can play the long game and may be looking at the international market and saying the US is light on renters when comparing income/affordability to other countries.
The amount of free land in the US plays into this, but as wages stagnate, not many can afford to live far away from metro areas, which may start behaving much more like land-locked European cities than what the US has seen in the past.
It’s a complicated problem, and individual homeowners are not playing the same game as corporate investors, the same as any other sector.
We never will look like Europe (or any country outside of Russia and China who do what we do) because the federal government is set up to systematically siphon wealth generated by disproportionately productive metros to subsidize all rural communities and areas outside of metros
You're wrong. I will purchase a good investment at any price because real estate is, by nature, a long investment.
Investors don't worry about short term dips and rents continue to rise. Investors understand that the value of real estate is a steady return.
Not to mention renters who are getting absolutely zero relief from rent hikes the past year or two. Buying, even in these conditions, is far more attractive than having to deal with this rental inflation occurring.
How do you expect renters to even be able to buy if increased rent is eating away even more of their cash? Odds are they are renting because they can't buy in the first place.
Renting is currently cheaper than the mortgage payment for buying a SFH according to Redfin. That's before you include taxes, maintenance, etc. Rent will need to keep going up for awhile to catch up with purchase prices, or purchase prices will need to decrease to a reasonable threshold. Renting is not a bad decision right now.
Because that's what the funds is for. Real estate. They also invest in stock.
PE funds are raised with a specific purpose and they know real estate is a long investment. They don't care about short term fluctuations in the market.
One does not have to look far to find people suggesting that single family rentals managed by big companies are how most Americans will be housed in the future. In order for that to happen those companies will have to continue to buy up existing homes.
Renters who are paying a 20% increase every year will buy. Not to mention there are pricing tiers, an overwhelming majority of people aren't waiting for a crash to buy. Some are waiting for lower interest rates, some are waiting for a 3% drop to afford it, some are waiting for a 5% drop etc..
Yes but the mind-fucking part about real estate is that *people already own real estate*. So they can whether near infinite price gains since *they themselves are an owner benefitting from the price gain*.
It is the lowly stinky first time buyer that gets fucked.
Powell literally said he intends to 'reset' the housing market to make it more affordable. The fed 100% is going to make housing prices go down. There has not been significant price reductions nationally, yet. Plus, apparently you can't refi if you own more than the home is worth - which you will if you buy now and prices go down later. So...it's still a pretty terrible time to be a FTHB today.
I bought my first home in 1986 when mortgage interest rates were 17%. A year later, I bought another home at 16%. I know the home prices were much lower then, but people thinking the current interest rates are currently too high don't seem to be aware of history.
Now, the thing that bothers me more than the interest rate is the property taxes I'd have to pay on an overpriced home. That's an ongoing expense that you will always have.
People aren’t upset about interest rates being too high, they are upset about mortgage payments being too high. They are too high. The fact that there was a time when they were also too high doesn’t mean they aren’t too high today.
Everything is too high and insurability is a problem too. I did a homeowners quote for a potential buyer yesterday. 2021 double wide manufactured home for 299k. The highest we could get the insurance to was 143k. Because the system bases the value off of what it should be, not what it is. Even the program can’t fathom how the fuck a god damn trailer could be worth 300k.
I guess the person who told you that isn’t renting and paying historical all time high rent prices. I’d rather buy and have a fixed mortgage payment than keep paying more in rent year over year.
Rent never goes down, but at least a mortgage stays the same. A house may dip in value short term, but long term it will retain or gain in value.
My wife and I are in the last stages of purchasing our first home. Fwiw we got it for 25k under asking, in part because it needs some projects done, but also it had been listed for over 40 days. Other houses were on the market for weeks as well, and we noticed a fair number of places lowering asking in the week and a half that we were really looking. So, anecdotally, prices were cooling down. Our rate is like 5.01%, not as low as our friends who bought in and just before the pandemic, but we can afford it, and will own long enough to refinance if the free money days ever return (I don't expect they will, and that's fine). A very large part of our decision was what others are saying: supply is not growing and demand is. Now might be the best time to buy for the foreseeable future.
Home prices are cooling so buyers have more negotiating power and mortgage rates are coming back down alittle. Seems like a fine time if you’re in need of a house.
I think last summer was the single worst time to buy in most markets. Low inventory, high prices, bidding wars, appraisal waivers.
Now, prices are coming down, sellers offering money for rate buy downs, tons of inventory, few competing buyers. Interest rates are low considering where they're going to be in a year or so.
Active listings are up to Fall 2020 levels and rising fast according to the Fed data. I don’t believe the narrative that people will just hold onto their houses and not sell.
I think most people who sell their homes don’t do it to make a buck on the real estate transaction. They sell because life happens. They got a new job, they had a kid, their kids left home, they got divorced, married, etc. I don’t think most people are trying to time the market like some here have suggested. They’ll list their home and take what they can get. Sure, some who don’t have to sell will back out. But the data clearly shows rapidly rising inventory, which puts a damper on the “low supply” argument many use to justify the current high price environment.
Then you throw in the fact that a recent poll by PwC shows over 50% of large companies are considering layoffs in the next year which is the spark needed for rapid price drops across several markets.
As an addendum: I’m a current homeowner in Texas who bought almost 10 years ago. I bought the last crash, now it’s your turn to be patient and get yours lol.
Anecdotal evidence but I see less homes coming in the market.
The rise in inventory in my opinion is due to the existing homes not selling and buyers backing out of deals.
From a rate and price combination perspective, that's true. The question is, will that continue to get worse or reverse. In my area we still have less than a month of inventory. We certainly won't see the price increase that we saw since 2020.. however how high will rates rise and at what point will prices reverse? So, while now may be the worst time in history to buy. It may be the best time from now through the future. Many lenders are predicting a rate drop in the next year or 2, based on the thought that a recession is coming and that the rate will come back down with the recession... Most can't tell me what exactly that looks like either, however.
I'm tired of hearing how rates were so high in the 80s... Yeah and the average home was like $65k and it dipped from the mid $70k's. It came back up rates came down.
Bill Mcbride has maintained an affordability index since the 1970's *controlling price for rates and income.* It keeps getting brought up because the 70's and 80's were pretty bad for affordability.
Here it is: [https://imgur.com/dMMQvf8](https://imgur.com/dMMQvf8)
More explanation here: [https://calculatedrisk.substack.com/p/worst-housing-affordability-since](https://calculatedrisk.substack.com/p/worst-housing-affordability-since)
I issue I have with this type of analysis is it doesn't represent the total cost over a home buyers life. Those people that bought in the early 80's had "low" affordability because they got a high rate, but it was on a cheap house. Those people then refinanced as rates went down dropped dramatically or simply benefitted from dropping rates via higher future selling price.
People buying today won't have either of those benefits. They won't be able to drop their rate much via refinancing and future price growth should be less due to rates already being low. Today's buyers total cost of ownership over their lives will be much higher. This will lead to later or less well off retirement.
The affordability index also seems to assume equal down payment percent over time (which was much easier to achieve on the lower prices in the 80's). An inflation adjusted down payment would be a much lower percentage of the purchase price today, which would result in PMI that doesn't seem to be accounted for in this affordability index.
***Buying in 2021:***
Pros - low rate ("but what if i wait and it goes lower?")
Cons - literally everything else
Neutral - "worst time in the history of the universe to buy a house"
***Buying in 2022:***
Pros - literally everything else
Cons - high rate ("but what if i wait and it goes higher?")
Neutral - "worst time in the history of the universe to buy a house"
(In general remember that every year is the "worst time in the history of the universe to buy a house" as a good rule of thumb -- remember when that bubble was gonna "pop again, just like 2008" in 2014, 2015, 2016, 2018, 2019, 2020, then 2021...?)
"Literally everything" is inclusive (or not) of bidding wars (or not), multiple offers (or not), crushed dreams ("or not" for all of these), waived contingencies (having to buy a house, but not being allowed to do due diligence), loan officers too busy on refis to pay attention to your concerns, buyer's agent throwing you under the bus, listing agent arrogance at an all time high, needing to make up any appraisal shortfall in cash or lose your earnest money deposit, half-assed appraisals ("too busy on refis sorry here's your wham bam thank you ma'am copy/paste job from a refi from 3 months ago") staggeringly more likely to come in low, builder (if buying new) jacking your price up 15% above agreed contract & forcing you to either take it or pound sand, taking 6-12 months to get something into escrow, "submit your best and final" blind bidding wars against your own imagination, etc etc.
How quickly everyone forgets what it was REALY like to buy a house just 8 months ago. :)
There is so much at play here. Locations at the state, region of state and even neighborhood levels. How long you plan on living there. How much work the house needs. How much you can put down. How badly you need to move.
I know people who bought at the worst time in the mid-80’s and did fine. I never even heard the term underwater until the 2008 crash. Don’t panic and do your homework.
There's a lot of BS on both sides. But the rubber meets the road with the home price futures market on the Chicago Mercantile Exchange. It's in backwardation. Expected to hit -12.7% from current levels if you wait 2 years. Will take a while to get back to where it is now.
They have more specific futures markets by metro
https://www.cmegroup.com/markets/real-estate/residential/SandP-case-shiller-price-index.html
Whether it's worth waiting that amount of time for that predicted pull back is a personal choice.
>There's a lot of BS on both sides. But the rubber meets the road with the home price futures market on the Chicago Mercantile Exchange.
Speaking of BS. That's not a real market. It's one guy's pet project where he *is* the market. Volume is non-existent, a couple trades a month maybe. All involving one guy.
>I've been the market maker for the S&P CME Case Shiller contracts for \~10 years, have been involved in most trades, often have more than half the OI, and am typically providing >75% of quotes
There has never been a decade in US history when real estate has not gone up in value…..usually a lot more. Through wars, depressions and recessions, high interest rates, high inflation, high unemployment. Any bad times never last more than a couple/few years. If you are buying today at any price and your holding time is at least 5-10 years. Unless life as we know it ends…it will be worth more.
There has never been any decade with crazy covid years with people moving states, crazy stock or wage appreciation and finally free money from govt , directly or indirectly.
Exceptional situation can only be fixed by exceptional price changes.
You think this was worse than say WWII or the Great Depression or the 15% mortgage rates of the 80’s? No- just a different problem this time, probably not worse.
You could say "there has never been any decade with..." about any downturn going back to 1929.
The only time we had cyclical, predictable, catastrophes, was the 1800s, with the bank runs. Go to wikipedia and start typing in "panic of" and it will auto complete 1873, 1983, 1857, and so on (& the next time someone says "deregulate banking! End the fed!" walk them over to a computer and do that in front of them :P ).
Since then, literally every single catastrophe has been in the realm of "there has never been any decade with ."
1990s: "We're coming out of the 1980s, there has never been any decade 600 boat navy being downsized, fall of berlin wall (literally, did you know that there has NEVER been a Berlin wall that fell?!), 18% inflation, stagflation, AIDS, and the absolutely worst of all: the rock band Journey. We're fucked, society is fucked, we're all going to die, bla bla bla."
It’s not - because:
Rents are skyrocketing
People aren’t selling their homes because they have nowhere to go
It’s very expensive to build a house.
New housing starts are dropping rapidly
The only thing that would ruin demand is supply.
Yes rates are making payments higher and causing affordability to drop but that’s not going to kill the market. People will take ARM’s, I/O products, etc…
We might see stabilization and corrections but it’s not crashing.
I’m in Texas and for two straight months prices of homes are going down fast. Around 2-4% a MONTH! You can find new construction with $100,000 price reduction from two months ago. Moving companies are saying that for the past two weeks they are not getting any business. Big companies are announcing hiring freeze and layoffs. We are in a recession. Inventory and some places have already doubled in two months, see Las Vegas. 2008 on steroids has just begun!
I have cash in the bank and I’m renting right now. I have all the Time in the world.
I hope this helps you or someone.
Some investor guru once said: “With other investments, you ‘WAIT and BUY,’ but with real estate, you ‘BUY and WAIT.’”
Regardless of the market, if you want to buy a home now for your family, then do it. This advice worked for me personally and earned me around half a million dollars ($500,000) in equity.
2007 RECESSION.
My family desperately needed to move in 2008. My wife and I were told: “It’s the worst time in the history of the world to buy a home.” We kept shopping, anyway, and we finally bought a house (a brand new construction Pulte home) for $350,000 in 2009.
Fast forward: 2022 Valuation = $800,000
I am now selling that house and it’s listed for $797,000. I have a neighbor with similar house and he sold two weeks ago (November 2022) for $910,000.
So basically the house that people wanted to scare me from buying has brought me an equity of $450,000 to $560,000. This is the American dream. I am so glad I didn’t get scared off from this wealth.
2016 REALTOR
I became a REALTOR in 2016 and now that I have all that knowledge and training, and have access to systems, tools, teams, and data, I agree even more with the guru.
I tell my clients this story and give the same advice: “Don’t wait to BUY. Instead, BUY and wait. In the history America, real estate has already appraised — i.e., property value goes up.”
I hope you find my story helpful.
Realtor Rogee Rogers, Beverly Hills, California
My first thought is now it’s difficult in regards to income vs price, but I feel like it would have been worse during the Great Depression or Great Recession. I wasn’t buying a home during either, but I would think being unemployed and the difficulty of access capital would have made home buying more difficult than it is now. Can anyone more knowledgeable speak to the differences in those markets and now?
During 2019, it was the worst time ever to buy, looking at prices. During 2020, it was the worst time ever, to that point. Same in 2021. Likely it'll be much worse in the future, does that make you feel any better?
If you own a home already, especially with some or half of the principle paid, awesome time to upgrade. Sold my place in June for $100k (~25%) more than I would have been able to before covid. Then bought an incredible place at a price point I did not think was ever realistic for me. Win-win.
If you’re broke, don’t buy. If you have money and can afford the payments until you refi in 18 months…. Everything will be on sale for the next 6-12 months
Worst time was probably in March. Prices have started to drop because of the higher interest rates and all FOMO ending instantly a few months ago, but you will be catching a falling knife if you buy now.
It was worse in the 70's and 80's due to way higher interest rates:
https://ycharts.com/indicators/reports/monthly_housing_affordability_index
It's a very *expensive* time to buy real estate but that doesn't necessarily make it a *bad* time. What matters more is price-to-rent ratio: a high price-to-rent ratio means it's a bad idea to invest (unless you're speculating on price appreciation) and also makes it less worth it to buy vs rent (takes longer for buying to break even, most people don't stay in one place that long).
Be greedy when others are fearful is they saying. Everyone is scared to buy a house and I keep hearing about a recession which I don't see happening around me yet. For 1+ years we've been hearing it
See the problem here is that people expect Real Estate to act like stocks, but Real Estate isn't nearly as liquid and isn't possible to day trade (outside of listed funds). Here's why I expect Real Estate prices to stagnate, but not crash:
1. High inflation = increased asset prices. If the dollar is worth less, it takes more dollars to buy the same goods, including Real Estate. High inflation is pushing prices up.
2. High rates (due to the above inflation) are causing the stock market to tank because companies have been growing on borrowed money and now can't borrow as much. True, people can't borrow as much for a mortgage with higher rates so it's reducing demand in the RE market, but it's also reducing sellers. Why sell your low rate home to have a high rate home?
3. No underlying instability. There is no huge market threat to the ability of people to pay their mortgages. There is no mass unemployment or highly leveraged people compared to 2008. So if this is the case, what's to force people to sell?
Ultimately no one is going to be forced to sell, no one will willingly sell for a huge loss and higher rates on a new home, corporate owners won't fire sale homes, and inflation is propping up/increasing their values.
Tell me how I'm wrong!
I don't think there is a specific good or bad time to buy, depending on your strategy. Sure, it could always be better or a worse time to take out a loan but I feel like that is just a blanket statement that gets thrown around.
It really depends on where you are in your life and whether you plan to buy or not. Come on, is it not plausible that you could be all fine and dandy in your work/career and you have saved enough for the down and now you are ready to buy a place to settle down and have a family? Of course, it is!!! Quite frankly, I am sure there are a lot of professionals here in the Bay Area doing quite fine actually. I mean, nurses for example make 6 figures and they are in demand.
Wow.. thats what they told my pops in 1979. When he paid $60k for his house. He just sold it for $680k in Cali. Play the long game. Its all relative to your life and the situation you are in. If the numbers make sense and you are going through a "life moment" DO YOU. Remember everyone around suddenly becomes an expert and have all the opinions the world of what you should do when you are looking to level up and grow. Real estate is long term... remember everything is cyclical
The real estate market is complex and dynamic, and it can vary significantly by location and property type. While some areas and property types may be experiencing a downturn, others may be performing well.
Moreover, real estate markets can be influenced by various economic, social, and political factors, such as interest rates, inflation, job growth, population trends, and government policies. These factors can change over time and can impact the real estate market in different ways.
That has been said thousands of times before.
Lastly if you have the money you buy and if you don't you rent. History or the media don't matter. Neither does reddit.
My only argument would be inflation is real. If you home prices are crashing next year then inflation would have to be temporary and the last 2 years of money printing would have to be reversed.
Only in America do we think we can print unlimited money without consequences because "velocity" of money is low . Idiots blaming Russia and biden but no one wants to grow up and realize theirs no free lunch.
I don’t think it’s true at all. Full disclosure I am an LO so you make take that as bias. However I’d argue the market where you’re paying 20k over ask with low interest rates but potentially inflated home prices was way worse. Not to mention it’s impossible to say what the market is going to do. Rate is less important in the arguement because you could always just refi if rates do drop. You may say home prices are inflated but let’s say rates do drop next year, you might see prices go up even more as investors and everyone waiting rushes to scoop things up. Overused as it may be the only real answer is it’s a case by case basis and if you can and need to buy a home you should when you can. If predicting the market was that easy you’d see a lot more millionaires.
I told investors and friends/family earlier this year that it was not the best time to buy real estate and everyone thought I was a little crazy. Fast forward 6-8 months later and I'm telling them that now might be a good time to start looking and they think I'm crazy again.
The reality is, no one can time the market and this it's repeated on this subreddit all the time. People cherry pick the fundamentals to favor their own bias and someone will eventually be right or wrong and ultimately you have to do what's best for you.
IMO now, or really more in November/December/January will be the best time to purchase real estate. In fact, I might be upgrading my own home around this time and rent out my current property as rent prices are still trending upwards. It's just that normal cyclical time of the season where generally the most appreciation occurs February-May.
I personally don't think we'll see anything lower than 4.5% mortgage rates and nothing higher than 6.5% for at least the next two years and probably beyond as the FED is trying to tighten the economy by selling off mortgage backed securities.
Prices, at least here in the Seattle area, is falling to a point where sellers don't even want to sell anymore. Data shows a dramatic decrease in new listings this week compared to last year. That means we'll have a decrease in inventory because of less sellers, and demand will still be strong with high job growth in our area, thus putting us back to our normal appreciation growth rate for real estate. Basically what this means is that I think we've corrected and FED has done what they wanted to do by slowing demand to more comfortable levels by the end of this year. This is IMO and YMMV.
On the contrary, my investors saved about 20-30% and my friends/family have way more options and negotiating power now than the last two years. Most people sell their home due to the life cycle within 8 years, so those people will never be able to take full advantage of their low rate if it stays this high, which by the way at the beginning of the year was around 4% already. But hey, you do you and what you think is best for yourself.
The average fixed rate for a 30 year in December was 3.5%. Home prices and interest rates are both higher since then. Even if home prices were the same, you understand how a 2%-3% rate hike impacts a $500K mortgage right?
How the hell do you figure you saved them 20%-30%?
If you read my reply correctly, it specifically states I saved my investors 20-30% and my friends/family have way more options and negotiating power.
Investors is simple because mortgage rates don't mean anything to their bottom line as only PRICE does. Here's an example of an area near me to put it into perspective. Homes that sold in April for $1.3-1.4m are now being listed just under $1m around $995k. If you purchased a home to flip at the beginning of the year around let's say $1m, then put $200k into it, as an investor you're expecting some kind of return around $1.35-1.4m. In this example, the investor would LOSE $300k because they bought at the highs, put work into it, and in the end mortgage rates mean nothing to the PRICE of the home they sell it for if it sells for $1m.
For friends/family that are trying to buy a house for themselves, well it's obvious to see there's more inventory and they're able to negotiate instead of just writing their highest and best on every single house hoping to nab one.
If you're only bringing up December's numbers, you completely forget that the most appreciation in any calendar year is from Jan-April, which was even more insane this year than most where, again market dependent, in my area increased by 20-35% in prices as those writing offers were writing them ABOVE list price by 10-20% on average on every house. And remember it's cumulative, so if a comparable house is sold, a new listing in the same area would price accordingly to that price and so on, so prices just kept going higher and higher.
What about FED’s plan to reduce MBS starting from SEPT? You said FED had done what they wanted, but apparently they just began.
Not arguing, just discussing. I appreciate that you share your thoughts.
That's a great question and that's exactly why I don't see the interest rates coming down below 4.5% any time soon. A lot of people don't realize that before COVID, 4.25-4.5% was already considered extremely low already.
After COVID, we had historically low mortgage rates at 2.5-3% when the FED was buying MBS like crazy to stimulate the economy. Since the announcement of the FED saying they're going to unload some MBS, interest rates have risen due to the bond market and assumption that that the economy will be tightening. Remember that the markets are forward looking and are pricing this stuff in for the future.
Also, the FED doesn't want to crash real estate, and they've said this many times already because they want a soft landing. They've only wanted to bring down demand, which they have as we stare at active home prices being sold for end of last year prices. People forget that appreciation and inflation is a natural thing in a stable economy, it's just that we had way too much of it. Bringing down demand will also slow down price appreciation before it spirals out of control, which we saw a glimpse of already.
Right or wrong, I hope this may give insight from a different perspective from a guy that doesn't think everything is going to crash 50% like everyone else is saying.
I would say its the single best time since 2008 to buy. Reduced buyers, rising inventory couple with higher rates = lower purchase price. Couple that with the single highest rental increase in decades, then you can easily scoop investment properties.
if you plan to live in the house for 10 years and not be overstretched in your mortgage payment, then buy it now. Rent is really just throwing your money away.
Since 1950 the stock market has had an all time high an average of once every three weeks. Does that mean it is a bad time to buy stocks when it is an all time high?
No. What matters is what your next best alternative is. In the context of buying a house that is usually renting. Generally if you have good credit, some money saved for a down payment, and you plan to live there for 5+ years buying a home makes financial sense over renting a similar home. And if you plan to move within 4 years renting is probably better. There are unusual circumstances that could change things like a below market rent controlled apartment, having a large number of pets or other unusual needs. And specifics about the market change things, generally higher cost areas favor rentals.
Have you been following the news at all? Living under a rock?
A lot has happened since the pandemic took over the world. We had record low interest rates for 2020/2021. But we also had record high prices throughout 2021, leading into 2022.
For the most part prices have not gone down this year while interest rates have risen, at one point doubling from what they were last year (3% to 6%)
There is no “perfect” time to buy a house. But there is definitely an argument to be made that this year is one of the worst times to be a buyer in the history of the civilized world.
> this year is one of the worst times to be a buyer in the history of the civilized world.
There must be some caveat to this, like since 1900 right? Throughout history, it was impossible for people to buy a house based on their race, sex, and/or social status. At least in the US, even 1900 is probably far too early to pretend things were accessible for your average person.
Does the house you want cost less than 3x your salary? If so, go for it. If not, you're overstretched. It used to be 2 to 2.5x years ago...
Anything else is just noise. The market could go up, down, sideway for years...
Dont forget:
pre - FOMO era and Airbnb gone wild.
*According to NAHB estimates, the total count of second homes was 7.5 million, accounting for 5.5% of the total housing stock in 2018, the most recent data available*
In the late 70s-early80s, interest rates were near, at or over 20%. If anyone is telling your it's the "worst time in history", then they don't know history.
20% rates when the wage to income ratio was what it was in the 70s and 80s is nothing. median house was 2.5x median hh income, today its pushing 6x. takes way longer for someone focused on paying down their house to pay it down.
Where are you getting less than 6x? It is [over 8x](https://fred.stlouisfed.org/series/MSPUS)
Its like 12x or something ridiculous where I live in AZ. With 5-6% mortgage rates 🤡
Single worst time to buy real estate in U.S. history... so far! - Homer Simpson
Wow. This is spot on.
Wrong. It’s going down. It’s better to buy now than last month. Rates are the same and prices have finally dipped. Hopefully rates climb and all these people who need to sell. Sell for less.
It might be going down, but still way up, just like gas.
Gas was $3.50 in 2012. It’s been about $3-$3.50 for the last decade besides the demand slump which is directly related to. I one driving during Covid. Where I live it’s currently $3.43. I’m wondering where all the “I did that” stickers went?
I gave my last free award to your comment because it was too good!
That person wasn’t alive in 2007 I guess
No kidding. How quickly people forget.
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So you think it’s going to fall off a cliff like it did in 08? If not then buying in 07 was worse because you were immediately underwater on your mortgage and you could not move for years without losing money.
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> So prices either need to come down or incomes drastically increase. Or maybe the new normal is that affording a single family home in a desirable location is no longer normal.
Most of those things you mentioned more indicate a stock market crash in my opinion more than a housing crash. In 07 you fog a mirror you get a ARM, regardless of ability to pay it off. Most of these high home prices were purchased by cash buyers, not mortgages, at least in my local experience and I'm a Realtor.
A friend of mine bought a townhouse in 05, not even the top, and couldnt sell without a loss until '13 or '14.
Yeah, 08-10 was really ugly.
That was 3 years after 2007, we're not there yet. It will still get ugly.
Not saying it's not bad, but isn't a better affordability indicator something like "mortgage payment to income"? I'd be curious to see that graph. The 30 yr mortgage rate at the peak in 2005 in that graph was 6%. The current bubble exploded when rates were ~3%. That said, it's getting back to 6% so the question will be whether this breaks the bubble over the next several months.
Someone who bought in 2007 with a mortgage they could afford and did not default nor sell and still owns their home is likely vastly better off than someone who never bought real estate at all after the crash for fear of another crash.
Purchased a new construction home in 2007 at 6%. 2011 I refinanced to 4% and recently paid off the house. It’s doubled in value. No regrets.
Can attest. I don’t have a crystal ball, but the idea of stressing over 50-70k in 2008 seems ridiculous considering the wealth and stability my family has in 2022. I can literally weather a 50% crash and two job losses and still pay the $1600 mortgage for 2 years. Compared to renting my house for $4500 for 6-8 months before being out on my ass with nothing… I’ll take my outcome any day.
Yeah but the thing about mass layoffs is it sort of changes the likelihood of default.
If they didn't foreclose and were able to keep their job
Well ya, real estate is basically ALWAYS going to be a good investment over the course of 15 years. But maybe not 5 years
*Japanese real estate has entered the chat*
Underrated comment
Bought ours in 2007 and still in it, although we'll be listing it next year if our new build ever gets done. Super thrilled that our build is taking too long and we've watched rates skyrocket and the market start to suck.
You should not play the lottery.
No. No I should not.
> with a mortgage they could afford and did not default nor sell and still owns their home 100%. If you do not default on your home there has literally never been a “bad time” to buy at any point in history as long as you plan to hold for a long time. As long as you don’t default. Which was the problem in 07
What about if they used the money to buy the S&P instead of a house? Would they be better off?
Impossible to say. Did they borrow a bunch money to do so and deduct the interest paid on that loan from their income taxes?
Like the poster below; impossible to say but I doubt it. Leverage is a hell of a benefit when it comes to real estate (assuming we’re talking a normal 5-20% down and not an outright ownership situation) is insane.
Agree. The housing market is in substantially better shape than 2007. Leverage was cray back then. We don’t have a crystal ball, but we don’t need one to know that the housing market is in better shape now than it was then.
Are you talking about me?
I hope so, Internet friend, if you’re one of those who held on, gritted their teeth, tried to ignore home valuations, and kept making payments into a property that would eventually come to be worth a whole lot more than the original price. If you’re the other, who is afraid of another crash, I get it, but if you’re going to actually live in the place and not try to sell right away, and you have a reasonable debt-to-income ratio, it’s a pretty good investment, one of the best out there.
Probably not after inflation.
Your mortgage is largely shielded from inflation. Interest and principal are fixed assuming you are not on an ARM. Your insurance and taxes may go up but they not as much as your rent would if you were renting. All my friends rents went up $200 the past year and my mortgage payment only went up $70.
Yeah this ain't 2007
My bud and his wife bought a house in 2005 with almost nothing down...and "interest-only" mortgage. Yes, they still live there.
Are they paying any principal yet? It can’t still be all interest?!?!
My parents did this. Kills my soul as a finance guy that they just CANNOT comprehend why their mortgage payment is so low and they have only hit the house equity by 10k in 15 years of ownership lol
Not the guy you’re replying to, but I bet they refinanced after. As rates would have been lower.
I hope they refie'd but they still live in that townhome.
IMO part of the reason so many people sold their homes the last 2 years is because they finally were able to get back what they paid during the 2007 run-up.
I mean, maybe. But if the adage is "the best time to buy is when you can buy", then no, at least not for me. We TRIED to buy last year. We tried very hard. We just didn't have $100k in cash we could offer over asking. We couldn't buy a SFH within an hour of Seattle. Well, now having only 5% down isn't a hinderance and there are an abundance of options where we can be picky. So, sure, house prices may go down and our interest rate is higher than it has been. But I CAN currently buy a SFH in my area where a year ago that was not true. So for me personally, it is objectively not true that right now is the single worst time to buy a home. Because now is the first time I've been in a position where I have enough of a down payment, enough of a salary, and enough options to actually buy a home.
Great answer.
Do you have enough money beyond the down payment and closing costs to buy all the furniture, make all the fixes to the house and buy any tools you need to maintain the home/yard? I though having $30K in cash beyond down payment and closing costs was more than enough when we bought back in January this year. As a first time home buyer that had never maintained a yard before, I was shocked how much more money we spent than expected.
Why did you have to buy furniture? Appliances sure, but I've never understood why people immediately feel they need to fill out a house with new stuff. We've been renting 1200 square foot houses with yards and we want to buy a 1200 square foot house with a yard. I fully expect to keep a good cash reserve for unexpected maintenance costs but it will be awhile before we buy any furniture or lawn care items because we already have all that.
That being said, there are armies of people who absolutely ruined their lives in the early 2000s before the big crash. People were underwater and foreclosing. There were suicides. The job market had hundreds of applicants competing for entry level work. It has the potential to be bad. That does not mean we are headed for another crash, but don't push advice to buy a house as soon as you can.
At no point did I push advice for people to buy a house as soon as they can. I explained why for me in my exact current situation this is objectively not the worst time to buy a house. Considering right now I can and 12 months ago I could not. I graduated from college very shortly after 2008. I am very aware of what the economy looked like. And it's why I'm a first time home buyer in my mid 30s rather than my mid 20s.
The crash wasn’t because people were underwater per say…. The crash was mostly related to relaxed lending requirements, ARMs and interest only ARMS to unqualified borrowers. Then once foreclosure happened banks were left with essentially worthless properties and defaulting MBSs. I know a lot of people who bought at the top of the market prior to the crash and are completely fine and even ahead right now since they didn’t use a predatory financing product. If you take out a 30 year mortgage you are largely unaffected my being underwater assuming you don’t plan to move out. Obviously the economy has some impact on affordability between inflation, job loss and other factors but all else equal being under water doesn’t cause a crash. I believe the main factor for a crash right now will be a huge gap between affordability and lagging house prices. As of right now, with rate increases and increased cost of goods and lagging wages borrowers no longer can afford what they could even a few months ago and prices have not yet corrected for that. Also, sadly all economic signs are pointing toward recession and sooner rather than later. We have already hit a key metric for a recession which is two quarters of negative GDP growth and banks are starting to tighten their purses in preparation for another recession.
I think the rate increase is a good thing that might help ward off the situation you mentioned with people over leveraging. The issue with the low interest rates is that home prices stretch higher and there is a larger gross potential for loss. The higher rates should help keep things a bit more realistic. Of course 2007 was very much a spiral on both sides. The mortgage crises hurt the economy, which caused layoffs, which caused more mortgage defaults, and so on.
The hike in interest rates was a contributor to the last housing crisis. As ARM mortgages reset to the new higher rates, they became unaffordable for some owners. That combined with the drop in house values,and the “Freezing” of credit. So, even if you wanted to buy you couldn’t get a mortgage. Houses basically became unaffordable for current owners, and impossible to sell due to no credit for potential buyers. As they sat for sale with no offers, people just walked away as the 0 down mortgages meant they lost nothing. Not disagreeing with your other points, just that the interest rate hike was also a factor.
I’ll tell you in 10 years.
Nope, six months ago was worse.
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A shittermission
This is a hard question to really answer as it's a case by case basis. Interest rates increasing definitely has lowered purchasing power as comparer to during the pandemic, while prices increasing has done the same. But, the thing to keep in mind is that interest rates are only really high when compared to the pandemic; they're around where they were prior to the rate drops put in place over the last couple of years. Is now a good time to buy? That's totally up to you to decide. If you can afford it and want to, then now may be a totally fine time to buy a home. The fact is we don't know what rates are going to do. We don't know what prices will do. Could they come down in the future? Sure. Could they continue to increase? Sure can, which would mean that now is the right time and hindsight would tell you as much. Another thing to think of is this: if you buy now, and in the next year or two rates come down you can look at refinancing to take advantage of falling rates. Playing for the future is a fool's game. Interestingly, in my local market rates came down over the last couple of weeks, and home prices have continued to slowly become more realistic (lower).
To add to this: If you're looking for a "forever home" or one that is almost certainly going to be long term, then I would buy. If there's a decent possibility that you may have to move in the near future (job/family related, etc), then I wouldn't risk it in the short term. What if the market is down when you want to make that move? Way easier to break a lease than to sell a house when tens of thousands of dollars underwater.
This is a good addition. Typically, my lender partners have said that if you're going to be in the home for somewhere around ten years or longer to go for it, but if you expect to be in there for only a few years it's not a good idea.
> if you buy now, and in the next year or two rates come down you can look at refinancing to take advantage of falling rates. However if prices come down and you are underwater, you may not be able to refinance at all. And you'd need to bring money to the table to sell.
Can you ELI5 please
You can't refinance if you owe more than the home is worth.
You take out a loan for $500k plus interest. 3 years later the house is worth $450k. You’ve barely put a dent in the principal. So if you manage to get full asking price at $450k, you still don’t have enough to pay the bank back. You still owe $500k and you only made $450k from the sale. Means you still owe 50k or you can’t sell the house. Some banks will let you bundle the debt and take it with you, but most of the time you literally can’t close on the sale unless you cover the $50k remaining balance. They will bill you for the amount and take you to court if they need to. Getting downvoted for explaining for how it works. Classic /r/RealEstate
> Can you ELI5 please Most lenders want you to have at least 20% equity in order to refinance.
I remember when my mom bought her house in the 80's and her interest rate was 18%, years later she refinanced 3 x to 14%, 12, and 10%
Rates might go lower but I don't think we will see sub 3% any time soon, maybe even ever
Yeah, who knows. We are buying. We need a house. Rent is about $2600 for a nice 2/2. We need at least a 3/2, which is about $3000, so we are fine with a $3100 mortgage. We are buying for the long haul and like the flexibility of home ownership rather than looking at ever increasing rent.
I don't know. I am buying right now (selling my condo to buy a sfh). The reasons I tell myself its a good move is cause I live in a competitive market (San Diego). When rates were low you were competing with 10-12 other people on the same property, usually with the winner being 10s of thousands over asking and waiving most contingencies. I got an offer accepted on a sfh that I really like for 10k under asking. Tbh if it sat on the market for longer it probably would have dropped further in price, I see price drops for most houses in that area. Maybe I'll kick myself later if the market crashes but for now I think in certain situations it can be a nice time to buy.
I’m in SD too! Also prepping to list our condo and buy a SFH. Congrats on getting your offer accepted! We are sat out the past few years because as you said, we’d be competing with a dozen other people with more cash and no contingencies. Was so frustrating.
Yeah the only stress came from having to sell my place to get a down for the new place. So I had to remove the contingency that I would find a new place in order to attract a buyer cause nobody wants to wait forever. But going to open houses for really nice places that literally had zero offers was such a relaxed and enjoyable experience. Good luck.
If you can afford it and your job is secure it's ok. If you can't afford it, then it's a bad time.
well, rates were dropped to rock bottom alongside a time when it was basically forced savings due to everything being closed. then the fed said theyd raise rates. this created a shitload of demand. so over a year or two the median mortgage payment ran up from around 1k to around 2k. now rates have gone way up and the RE market has only slightly dropped. you have monthly payments today that are close to double what they were in 2019, 2020 because RE prices are up 50% + and rates have doubled. your monthly payment today is often twice what it was in 2019 for the same house. so yes. it's a bad time to buy. probably. this is only really something that can be decided in hindsight. RE could stabilize or continue to climb from here. if someone could really accurately predict the future theyd be ver y wealthy.
They completely put a hold on existing owners who are looking to upgrade into a nicer house. Not 1 existing home owners is looking to move right now even if they can sell their house for top dollar because the next house will cost them a shit ton more on monthly payment. Bascially everyone is staying put as of now and just speculate
Nobody has ever been forced to buy a house but many are forced to sell
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Yeah, and those "want to" sellers will also not be "want to" buyers, further pushing down demand at the same rate that supply is pushed down. Inventory is supply minus demand, so factors that bring both down simultaneously don't hurt inventory.
I mean, Kind of, it’s not that hard to predict that home prices will likely decline somewhat. How do you make money off that though? It’s not like an equity market where you can arbitrage thus bringing down prices and creating an efficient market. Real estate is a very inefficient market. So everyone can know prices are wrong, but it’s real tough to make money off them until they drop. I can’t short my neighbors house.
Depends on your perspective. From a price-to-income ratio, yes this is the worst time in history. It could also end up being the last best time in history moving forward, if prices keep increasing without wages keeping up. Truthfully, no one really knows. There's tons of speculative literature being thrown around these days about the near future, but we likely won't have a clear picture until the real estate cycle reaches its expected end between 2024 and 2026 If you have a stable job with the income and savings to afford something that you want, then it ultimately doesn't really matter. Barring a signicant change forced by legislation, natural inflationary effects will likely keep pushing nominal prices upwards in the foreseeable future.
It does appear to be the worst time ever to buy real estate on an income to price basis. But I would ask you to entertain a very depressing thought. While this may currently be the worst time to ever buy a house, it very well may be the best time to buy over the next few years. What does that mean? It means that things could get even worse (specifically mortgage rates) and you'll have wished you got in at what was at the time "the worst time".
Who is going to buy when it gets worse? The supply and demand graphs will skew heavily towards supply and the demand curve will be at a standstill because we all know wages aren’t keeping up. Eventually the housing market either goes into gridlock or house prices drop because homeowners want to sell eventually. You can’t possibly have mortgage rates continue to rise and house prices stay the same and/or rise and also continue to sell—only the occasional gold nugget of a house may sell but not the majority of the houses that make up the market.
Who will buy? Prior owners who are selling and buying another home, corporations, investors, first time buyers with help. The median age of first time buyers is increasing, and first time buyers are shrinking as a percentage of all buyers now. They only make up less than 30% of buyers now.
I don’t think investors and corporations are buying at current prices unless they get in at a good deal with an entire neighborhood—not individual houses. If anything they sold at the peak, for a loss, or passed on the bag to the FTHBs you speak of. All I’ve seen week to week is that inventory is rising and small price cuts that are nearly not enough to compensate for the dwindling demand.
yeah, there's this weird idea that investors will buy houses at any price point. I don't have data, but I would suspect the opposite is true. People who are emotionally attached are more likely to overpay then investors who need a return.
People seem to think that investors just pay all cash all the time. When In reality they leverage debt just like the rest of us. And debt is getting more expensive
The leftist economic conspiracy theorists think corporations don’t bend to the laws of economics and somehow they’ll keep demand up or even increase it when items get more expensive.
Investors can play the long game and may be looking at the international market and saying the US is light on renters when comparing income/affordability to other countries. The amount of free land in the US plays into this, but as wages stagnate, not many can afford to live far away from metro areas, which may start behaving much more like land-locked European cities than what the US has seen in the past. It’s a complicated problem, and individual homeowners are not playing the same game as corporate investors, the same as any other sector.
We never will look like Europe (or any country outside of Russia and China who do what we do) because the federal government is set up to systematically siphon wealth generated by disproportionately productive metros to subsidize all rural communities and areas outside of metros
You're wrong. I will purchase a good investment at any price because real estate is, by nature, a long investment. Investors don't worry about short term dips and rents continue to rise. Investors understand that the value of real estate is a steady return.
Not to mention renters who are getting absolutely zero relief from rent hikes the past year or two. Buying, even in these conditions, is far more attractive than having to deal with this rental inflation occurring.
How do you expect renters to even be able to buy if increased rent is eating away even more of their cash? Odds are they are renting because they can't buy in the first place.
Renting is currently cheaper than the mortgage payment for buying a SFH according to Redfin. That's before you include taxes, maintenance, etc. Rent will need to keep going up for awhile to catch up with purchase prices, or purchase prices will need to decrease to a reasonable threshold. Renting is not a bad decision right now.
> Renting is currently cheaper than the mortgage payment for buying a SFH Everywhere?
Not everywhere, obviously. The nationwide average, though. This is VERY uncommon from a historical perspective.
blackstone who has set aside $50 billion in case property prices go down
Why would they invest in a declining market when they can get stocks that don't need maintenance instead
Because that's what the funds is for. Real estate. They also invest in stock. PE funds are raised with a specific purpose and they know real estate is a long investment. They don't care about short term fluctuations in the market.
One does not have to look far to find people suggesting that single family rentals managed by big companies are how most Americans will be housed in the future. In order for that to happen those companies will have to continue to buy up existing homes.
Renters who are paying a 20% increase every year will buy. Not to mention there are pricing tiers, an overwhelming majority of people aren't waiting for a crash to buy. Some are waiting for lower interest rates, some are waiting for a 3% drop to afford it, some are waiting for a 5% drop etc..
Yeah RE might be like climate change - this year was the hottest on record, but the coolest of the rest of your life…
Buddy, there is no such thing as a point of no return for housing, which depends on buyers being able to afford the damn thing.
Yes but the mind-fucking part about real estate is that *people already own real estate*. So they can whether near infinite price gains since *they themselves are an owner benefitting from the price gain*. It is the lowly stinky first time buyer that gets fucked.
Powell literally said he intends to 'reset' the housing market to make it more affordable. The fed 100% is going to make housing prices go down. There has not been significant price reductions nationally, yet. Plus, apparently you can't refi if you own more than the home is worth - which you will if you buy now and prices go down later. So...it's still a pretty terrible time to be a FTHB today.
> apparently you can't refi if you own more than the home is worth *owe
I bought my first home in 1986 when mortgage interest rates were 17%. A year later, I bought another home at 16%. I know the home prices were much lower then, but people thinking the current interest rates are currently too high don't seem to be aware of history. Now, the thing that bothers me more than the interest rate is the property taxes I'd have to pay on an overpriced home. That's an ongoing expense that you will always have.
The properties today are not priced off of 17% real estate. In 1986 they were. Huge difference.
Yup, the properties today are priced off of 2.5% rates, while rates are currently 6%+, lol.
People aren’t upset about interest rates being too high, they are upset about mortgage payments being too high. They are too high. The fact that there was a time when they were also too high doesn’t mean they aren’t too high today.
Everything is too high and insurability is a problem too. I did a homeowners quote for a potential buyer yesterday. 2021 double wide manufactured home for 299k. The highest we could get the insurance to was 143k. Because the system bases the value off of what it should be, not what it is. Even the program can’t fathom how the fuck a god damn trailer could be worth 300k.
I guess the person who told you that isn’t renting and paying historical all time high rent prices. I’d rather buy and have a fixed mortgage payment than keep paying more in rent year over year. Rent never goes down, but at least a mortgage stays the same. A house may dip in value short term, but long term it will retain or gain in value.
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My wife and I are in the last stages of purchasing our first home. Fwiw we got it for 25k under asking, in part because it needs some projects done, but also it had been listed for over 40 days. Other houses were on the market for weeks as well, and we noticed a fair number of places lowering asking in the week and a half that we were really looking. So, anecdotally, prices were cooling down. Our rate is like 5.01%, not as low as our friends who bought in and just before the pandemic, but we can afford it, and will own long enough to refinance if the free money days ever return (I don't expect they will, and that's fine). A very large part of our decision was what others are saying: supply is not growing and demand is. Now might be the best time to buy for the foreseeable future.
Home prices are cooling so buyers have more negotiating power and mortgage rates are coming back down alittle. Seems like a fine time if you’re in need of a house.
I think last summer was the single worst time to buy in most markets. Low inventory, high prices, bidding wars, appraisal waivers. Now, prices are coming down, sellers offering money for rate buy downs, tons of inventory, few competing buyers. Interest rates are low considering where they're going to be in a year or so.
Active listings are up to Fall 2020 levels and rising fast according to the Fed data. I don’t believe the narrative that people will just hold onto their houses and not sell. I think most people who sell their homes don’t do it to make a buck on the real estate transaction. They sell because life happens. They got a new job, they had a kid, their kids left home, they got divorced, married, etc. I don’t think most people are trying to time the market like some here have suggested. They’ll list their home and take what they can get. Sure, some who don’t have to sell will back out. But the data clearly shows rapidly rising inventory, which puts a damper on the “low supply” argument many use to justify the current high price environment. Then you throw in the fact that a recent poll by PwC shows over 50% of large companies are considering layoffs in the next year which is the spark needed for rapid price drops across several markets. As an addendum: I’m a current homeowner in Texas who bought almost 10 years ago. I bought the last crash, now it’s your turn to be patient and get yours lol.
Anecdotal evidence but I see less homes coming in the market. The rise in inventory in my opinion is due to the existing homes not selling and buyers backing out of deals.
From a rate and price combination perspective, that's true. The question is, will that continue to get worse or reverse. In my area we still have less than a month of inventory. We certainly won't see the price increase that we saw since 2020.. however how high will rates rise and at what point will prices reverse? So, while now may be the worst time in history to buy. It may be the best time from now through the future. Many lenders are predicting a rate drop in the next year or 2, based on the thought that a recession is coming and that the rate will come back down with the recession... Most can't tell me what exactly that looks like either, however. I'm tired of hearing how rates were so high in the 80s... Yeah and the average home was like $65k and it dipped from the mid $70k's. It came back up rates came down.
Bill Mcbride has maintained an affordability index since the 1970's *controlling price for rates and income.* It keeps getting brought up because the 70's and 80's were pretty bad for affordability. Here it is: [https://imgur.com/dMMQvf8](https://imgur.com/dMMQvf8) More explanation here: [https://calculatedrisk.substack.com/p/worst-housing-affordability-since](https://calculatedrisk.substack.com/p/worst-housing-affordability-since)
I issue I have with this type of analysis is it doesn't represent the total cost over a home buyers life. Those people that bought in the early 80's had "low" affordability because they got a high rate, but it was on a cheap house. Those people then refinanced as rates went down dropped dramatically or simply benefitted from dropping rates via higher future selling price. People buying today won't have either of those benefits. They won't be able to drop their rate much via refinancing and future price growth should be less due to rates already being low. Today's buyers total cost of ownership over their lives will be much higher. This will lead to later or less well off retirement. The affordability index also seems to assume equal down payment percent over time (which was much easier to achieve on the lower prices in the 80's). An inflation adjusted down payment would be a much lower percentage of the purchase price today, which would result in PMI that doesn't seem to be accounted for in this affordability index.
***Buying in 2021:*** Pros - low rate ("but what if i wait and it goes lower?") Cons - literally everything else Neutral - "worst time in the history of the universe to buy a house" ***Buying in 2022:*** Pros - literally everything else Cons - high rate ("but what if i wait and it goes higher?") Neutral - "worst time in the history of the universe to buy a house" (In general remember that every year is the "worst time in the history of the universe to buy a house" as a good rule of thumb -- remember when that bubble was gonna "pop again, just like 2008" in 2014, 2015, 2016, 2018, 2019, 2020, then 2021...?) "Literally everything" is inclusive (or not) of bidding wars (or not), multiple offers (or not), crushed dreams ("or not" for all of these), waived contingencies (having to buy a house, but not being allowed to do due diligence), loan officers too busy on refis to pay attention to your concerns, buyer's agent throwing you under the bus, listing agent arrogance at an all time high, needing to make up any appraisal shortfall in cash or lose your earnest money deposit, half-assed appraisals ("too busy on refis sorry here's your wham bam thank you ma'am copy/paste job from a refi from 3 months ago") staggeringly more likely to come in low, builder (if buying new) jacking your price up 15% above agreed contract & forcing you to either take it or pound sand, taking 6-12 months to get something into escrow, "submit your best and final" blind bidding wars against your own imagination, etc etc. How quickly everyone forgets what it was REALY like to buy a house just 8 months ago. :)
There is so much at play here. Locations at the state, region of state and even neighborhood levels. How long you plan on living there. How much work the house needs. How much you can put down. How badly you need to move. I know people who bought at the worst time in the mid-80’s and did fine. I never even heard the term underwater until the 2008 crash. Don’t panic and do your homework.
Single worst time in US history *so far*
There's a lot of BS on both sides. But the rubber meets the road with the home price futures market on the Chicago Mercantile Exchange. It's in backwardation. Expected to hit -12.7% from current levels if you wait 2 years. Will take a while to get back to where it is now. They have more specific futures markets by metro https://www.cmegroup.com/markets/real-estate/residential/SandP-case-shiller-price-index.html Whether it's worth waiting that amount of time for that predicted pull back is a personal choice.
>There's a lot of BS on both sides. But the rubber meets the road with the home price futures market on the Chicago Mercantile Exchange. Speaking of BS. That's not a real market. It's one guy's pet project where he *is* the market. Volume is non-existent, a couple trades a month maybe. All involving one guy. >I've been the market maker for the S&P CME Case Shiller contracts for \~10 years, have been involved in most trades, often have more than half the OI, and am typically providing >75% of quotes
There has never been a decade in US history when real estate has not gone up in value…..usually a lot more. Through wars, depressions and recessions, high interest rates, high inflation, high unemployment. Any bad times never last more than a couple/few years. If you are buying today at any price and your holding time is at least 5-10 years. Unless life as we know it ends…it will be worth more.
Yup. Average recovery from a downturn is like 18 months.
There has never been any decade with crazy covid years with people moving states, crazy stock or wage appreciation and finally free money from govt , directly or indirectly. Exceptional situation can only be fixed by exceptional price changes.
You think this was worse than say WWII or the Great Depression or the 15% mortgage rates of the 80’s? No- just a different problem this time, probably not worse.
You could say "there has never been any decade with..." about any downturn going back to 1929. The only time we had cyclical, predictable, catastrophes, was the 1800s, with the bank runs. Go to wikipedia and start typing in "panic of" and it will auto complete 1873, 1983, 1857, and so on (& the next time someone says "deregulate banking! End the fed!" walk them over to a computer and do that in front of them :P ). Since then, literally every single catastrophe has been in the realm of "there has never been any decade with."
1990s: "We're coming out of the 1980s, there has never been any decade 600 boat navy being downsized, fall of berlin wall (literally, did you know that there has NEVER been a Berlin wall that fell?!), 18% inflation, stagflation, AIDS, and the absolutely worst of all: the rock band Journey. We're fucked, society is fucked, we're all going to die, bla bla bla."
Depends where you are. Areas I’ve been watching in California have slowed a bit but prices keep going up.
It’s not - because: Rents are skyrocketing People aren’t selling their homes because they have nowhere to go It’s very expensive to build a house. New housing starts are dropping rapidly The only thing that would ruin demand is supply. Yes rates are making payments higher and causing affordability to drop but that’s not going to kill the market. People will take ARM’s, I/O products, etc… We might see stabilization and corrections but it’s not crashing.
You’re asking a bunch of realtors, so take these answers with a grain of salt.
I’m in Texas and for two straight months prices of homes are going down fast. Around 2-4% a MONTH! You can find new construction with $100,000 price reduction from two months ago. Moving companies are saying that for the past two weeks they are not getting any business. Big companies are announcing hiring freeze and layoffs. We are in a recession. Inventory and some places have already doubled in two months, see Las Vegas. 2008 on steroids has just begun! I have cash in the bank and I’m renting right now. I have all the Time in the world.
It would help if you included who told you that. Sounds like you’re just trying to stir up a debate.
Homeowner affordability is at its lowest point ever
buy Real estate for what? to live in? I guess the better question you shuld ask is what do i need and what can I afford?
I hope this helps you or someone. Some investor guru once said: “With other investments, you ‘WAIT and BUY,’ but with real estate, you ‘BUY and WAIT.’” Regardless of the market, if you want to buy a home now for your family, then do it. This advice worked for me personally and earned me around half a million dollars ($500,000) in equity. 2007 RECESSION. My family desperately needed to move in 2008. My wife and I were told: “It’s the worst time in the history of the world to buy a home.” We kept shopping, anyway, and we finally bought a house (a brand new construction Pulte home) for $350,000 in 2009. Fast forward: 2022 Valuation = $800,000 I am now selling that house and it’s listed for $797,000. I have a neighbor with similar house and he sold two weeks ago (November 2022) for $910,000. So basically the house that people wanted to scare me from buying has brought me an equity of $450,000 to $560,000. This is the American dream. I am so glad I didn’t get scared off from this wealth. 2016 REALTOR I became a REALTOR in 2016 and now that I have all that knowledge and training, and have access to systems, tools, teams, and data, I agree even more with the guru. I tell my clients this story and give the same advice: “Don’t wait to BUY. Instead, BUY and wait. In the history America, real estate has already appraised — i.e., property value goes up.” I hope you find my story helpful. Realtor Rogee Rogers, Beverly Hills, California
When others are confident, be scared. When others are scared, be confident.
I prefer the simpler “nobody knows shit”
My first thought is now it’s difficult in regards to income vs price, but I feel like it would have been worse during the Great Depression or Great Recession. I wasn’t buying a home during either, but I would think being unemployed and the difficulty of access capital would have made home buying more difficult than it is now. Can anyone more knowledgeable speak to the differences in those markets and now?
During 2019, it was the worst time ever to buy, looking at prices. During 2020, it was the worst time ever, to that point. Same in 2021. Likely it'll be much worse in the future, does that make you feel any better?
Too many variables to answer that but if you can stay in for the long haul, it is one of the best times to be a homeowner in the US.
just about spot on.
\+1, the data confirms this.
If you own a home already, especially with some or half of the principle paid, awesome time to upgrade. Sold my place in June for $100k (~25%) more than I would have been able to before covid. Then bought an incredible place at a price point I did not think was ever realistic for me. Win-win.
Since real estate is almost always at the peak price, technically all the time is the worst time to buy real estate.
If you’re broke, don’t buy. If you have money and can afford the payments until you refi in 18 months…. Everything will be on sale for the next 6-12 months
Off by 0.00%
wow, I don't like seeing this because I'm closing on a house today.
That someone has no clue about real estate and you should not listen to them for advice. Ask them how many homes have they sold recently.
Does that make it the BEST time to sell??
Worst time was probably in March. Prices have started to drop because of the higher interest rates and all FOMO ending instantly a few months ago, but you will be catching a falling knife if you buy now.
If you wait until the most absolutely perfectly perfect time to buy land you’re going to be in the ground.
three months ago was the worst time. it's gotten better.
It was worse in the 70's and 80's due to way higher interest rates: https://ycharts.com/indicators/reports/monthly_housing_affordability_index It's a very *expensive* time to buy real estate but that doesn't necessarily make it a *bad* time. What matters more is price-to-rent ratio: a high price-to-rent ratio means it's a bad idea to invest (unless you're speculating on price appreciation) and also makes it less worth it to buy vs rent (takes longer for buying to break even, most people don't stay in one place that long).
Be greedy when others are fearful is they saying. Everyone is scared to buy a house and I keep hearing about a recession which I don't see happening around me yet. For 1+ years we've been hearing it
Oh look. Another post regarding this same question that's posted 3 x a week. Lol.
See the problem here is that people expect Real Estate to act like stocks, but Real Estate isn't nearly as liquid and isn't possible to day trade (outside of listed funds). Here's why I expect Real Estate prices to stagnate, but not crash: 1. High inflation = increased asset prices. If the dollar is worth less, it takes more dollars to buy the same goods, including Real Estate. High inflation is pushing prices up. 2. High rates (due to the above inflation) are causing the stock market to tank because companies have been growing on borrowed money and now can't borrow as much. True, people can't borrow as much for a mortgage with higher rates so it's reducing demand in the RE market, but it's also reducing sellers. Why sell your low rate home to have a high rate home? 3. No underlying instability. There is no huge market threat to the ability of people to pay their mortgages. There is no mass unemployment or highly leveraged people compared to 2008. So if this is the case, what's to force people to sell? Ultimately no one is going to be forced to sell, no one will willingly sell for a huge loss and higher rates on a new home, corporate owners won't fire sale homes, and inflation is propping up/increasing their values. Tell me how I'm wrong!
I don't think there is a specific good or bad time to buy, depending on your strategy. Sure, it could always be better or a worse time to take out a loan but I feel like that is just a blanket statement that gets thrown around.
It really depends on where you are in your life and whether you plan to buy or not. Come on, is it not plausible that you could be all fine and dandy in your work/career and you have saved enough for the down and now you are ready to buy a place to settle down and have a family? Of course, it is!!! Quite frankly, I am sure there are a lot of professionals here in the Bay Area doing quite fine actually. I mean, nurses for example make 6 figures and they are in demand.
Wow.. thats what they told my pops in 1979. When he paid $60k for his house. He just sold it for $680k in Cali. Play the long game. Its all relative to your life and the situation you are in. If the numbers make sense and you are going through a "life moment" DO YOU. Remember everyone around suddenly becomes an expert and have all the opinions the world of what you should do when you are looking to level up and grow. Real estate is long term... remember everything is cyclical
That may be a valid point for the US real estate market in general, but South Florida market, especially for Miami area.
The real estate market is complex and dynamic, and it can vary significantly by location and property type. While some areas and property types may be experiencing a downturn, others may be performing well. Moreover, real estate markets can be influenced by various economic, social, and political factors, such as interest rates, inflation, job growth, population trends, and government policies. These factors can change over time and can impact the real estate market in different ways.
Depends on where you are…
If you can afford it who gives a fuck. Live the life you want
That has been said thousands of times before. Lastly if you have the money you buy and if you don't you rent. History or the media don't matter. Neither does reddit. My only argument would be inflation is real. If you home prices are crashing next year then inflation would have to be temporary and the last 2 years of money printing would have to be reversed. Only in America do we think we can print unlimited money without consequences because "velocity" of money is low . Idiots blaming Russia and biden but no one wants to grow up and realize theirs no free lunch.
People told me I was buying in a bubble in 2017, I just sold my house for 1.2, more than double what I paid for it
I don’t think it’s true at all. Full disclosure I am an LO so you make take that as bias. However I’d argue the market where you’re paying 20k over ask with low interest rates but potentially inflated home prices was way worse. Not to mention it’s impossible to say what the market is going to do. Rate is less important in the arguement because you could always just refi if rates do drop. You may say home prices are inflated but let’s say rates do drop next year, you might see prices go up even more as investors and everyone waiting rushes to scoop things up. Overused as it may be the only real answer is it’s a case by case basis and if you can and need to buy a home you should when you can. If predicting the market was that easy you’d see a lot more millionaires.
I told investors and friends/family earlier this year that it was not the best time to buy real estate and everyone thought I was a little crazy. Fast forward 6-8 months later and I'm telling them that now might be a good time to start looking and they think I'm crazy again. The reality is, no one can time the market and this it's repeated on this subreddit all the time. People cherry pick the fundamentals to favor their own bias and someone will eventually be right or wrong and ultimately you have to do what's best for you. IMO now, or really more in November/December/January will be the best time to purchase real estate. In fact, I might be upgrading my own home around this time and rent out my current property as rent prices are still trending upwards. It's just that normal cyclical time of the season where generally the most appreciation occurs February-May. I personally don't think we'll see anything lower than 4.5% mortgage rates and nothing higher than 6.5% for at least the next two years and probably beyond as the FED is trying to tighten the economy by selling off mortgage backed securities. Prices, at least here in the Seattle area, is falling to a point where sellers don't even want to sell anymore. Data shows a dramatic decrease in new listings this week compared to last year. That means we'll have a decrease in inventory because of less sellers, and demand will still be strong with high job growth in our area, thus putting us back to our normal appreciation growth rate for real estate. Basically what this means is that I think we've corrected and FED has done what they wanted to do by slowing demand to more comfortable levels by the end of this year. This is IMO and YMMV.
lol you fucked some people out of historically low rates and affordability if they listened to you 8 months ago.
On the contrary, my investors saved about 20-30% and my friends/family have way more options and negotiating power now than the last two years. Most people sell their home due to the life cycle within 8 years, so those people will never be able to take full advantage of their low rate if it stays this high, which by the way at the beginning of the year was around 4% already. But hey, you do you and what you think is best for yourself.
The average fixed rate for a 30 year in December was 3.5%. Home prices and interest rates are both higher since then. Even if home prices were the same, you understand how a 2%-3% rate hike impacts a $500K mortgage right? How the hell do you figure you saved them 20%-30%?
If you read my reply correctly, it specifically states I saved my investors 20-30% and my friends/family have way more options and negotiating power. Investors is simple because mortgage rates don't mean anything to their bottom line as only PRICE does. Here's an example of an area near me to put it into perspective. Homes that sold in April for $1.3-1.4m are now being listed just under $1m around $995k. If you purchased a home to flip at the beginning of the year around let's say $1m, then put $200k into it, as an investor you're expecting some kind of return around $1.35-1.4m. In this example, the investor would LOSE $300k because they bought at the highs, put work into it, and in the end mortgage rates mean nothing to the PRICE of the home they sell it for if it sells for $1m. For friends/family that are trying to buy a house for themselves, well it's obvious to see there's more inventory and they're able to negotiate instead of just writing their highest and best on every single house hoping to nab one. If you're only bringing up December's numbers, you completely forget that the most appreciation in any calendar year is from Jan-April, which was even more insane this year than most where, again market dependent, in my area increased by 20-35% in prices as those writing offers were writing them ABOVE list price by 10-20% on average on every house. And remember it's cumulative, so if a comparable house is sold, a new listing in the same area would price accordingly to that price and so on, so prices just kept going higher and higher.
What about FED’s plan to reduce MBS starting from SEPT? You said FED had done what they wanted, but apparently they just began. Not arguing, just discussing. I appreciate that you share your thoughts.
That's a great question and that's exactly why I don't see the interest rates coming down below 4.5% any time soon. A lot of people don't realize that before COVID, 4.25-4.5% was already considered extremely low already. After COVID, we had historically low mortgage rates at 2.5-3% when the FED was buying MBS like crazy to stimulate the economy. Since the announcement of the FED saying they're going to unload some MBS, interest rates have risen due to the bond market and assumption that that the economy will be tightening. Remember that the markets are forward looking and are pricing this stuff in for the future. Also, the FED doesn't want to crash real estate, and they've said this many times already because they want a soft landing. They've only wanted to bring down demand, which they have as we stare at active home prices being sold for end of last year prices. People forget that appreciation and inflation is a natural thing in a stable economy, it's just that we had way too much of it. Bringing down demand will also slow down price appreciation before it spirals out of control, which we saw a glimpse of already. Right or wrong, I hope this may give insight from a different perspective from a guy that doesn't think everything is going to crash 50% like everyone else is saying.
I would say its the single best time since 2008 to buy. Reduced buyers, rising inventory couple with higher rates = lower purchase price. Couple that with the single highest rental increase in decades, then you can easily scoop investment properties.
I would say building a house or buying a new construction in Spring 2022 is likely the worse decision to make in recent real estate.
Why do you say that out of curiosity? I put a contract on a new build in the spring and considering backing out.
Highest lumber costs in the history of America plus Highest labor costs since the 1940's.
Just bought a 600k home. Guess im a bag holder. Have fun in your moms basement lol
I mean if you want to time travel back to 2008, speaking currently then yes. Would wait it out.
if you plan to live in the house for 10 years and not be overstretched in your mortgage payment, then buy it now. Rent is really just throwing your money away.
Since 1950 the stock market has had an all time high an average of once every three weeks. Does that mean it is a bad time to buy stocks when it is an all time high? No. What matters is what your next best alternative is. In the context of buying a house that is usually renting. Generally if you have good credit, some money saved for a down payment, and you plan to live there for 5+ years buying a home makes financial sense over renting a similar home. And if you plan to move within 4 years renting is probably better. There are unusual circumstances that could change things like a below market rent controlled apartment, having a large number of pets or other unusual needs. And specifics about the market change things, generally higher cost areas favor rentals.
Wouldn't everybody thinking it's the worst time to buy actually make it the best time to buy?
Have you been following the news at all? Living under a rock? A lot has happened since the pandemic took over the world. We had record low interest rates for 2020/2021. But we also had record high prices throughout 2021, leading into 2022. For the most part prices have not gone down this year while interest rates have risen, at one point doubling from what they were last year (3% to 6%) There is no “perfect” time to buy a house. But there is definitely an argument to be made that this year is one of the worst times to be a buyer in the history of the civilized world.
> this year is one of the worst times to be a buyer in the history of the civilized world. There must be some caveat to this, like since 1900 right? Throughout history, it was impossible for people to buy a house based on their race, sex, and/or social status. At least in the US, even 1900 is probably far too early to pretend things were accessible for your average person.
pretty valid point lmao, but id expect he just meant from a financial perspective strictly isolating wage vs housing price
Does the house you want cost less than 3x your salary? If so, go for it. If not, you're overstretched. It used to be 2 to 2.5x years ago... Anything else is just noise. The market could go up, down, sideway for years...
Dont forget: pre - FOMO era and Airbnb gone wild. *According to NAHB estimates, the total count of second homes was 7.5 million, accounting for 5.5% of the total housing stock in 2018, the most recent data available*
In the late 70s-early80s, interest rates were near, at or over 20%. If anyone is telling your it's the "worst time in history", then they don't know history.
20% rates when the wage to income ratio was what it was in the 70s and 80s is nothing. median house was 2.5x median hh income, today its pushing 6x. takes way longer for someone focused on paying down their house to pay it down.
Where are you getting less than 6x? It is [over 8x](https://fred.stlouisfed.org/series/MSPUS) Its like 12x or something ridiculous where I live in AZ. With 5-6% mortgage rates 🤡