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Buy a home or wait out this insanity?

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  • medicoFIRE
    replied
    A house is a consumption item according to my advisor. Buy it if it makes you happy and you want more control over your home amenities and appliances etc. But don’t buy thinking it’s a guaranteed investment because it may not be depending on your timing and how long you plan to live there. Gonna live there 4-5 years? Probably just should rent. 5-10 and maybe more? Might make sense to buy if you’re ok stomaching a downturn and reversal in the market in the short term.

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  • White.Beard.Doc
    replied
    It's just a feeling, but I would guess we are at the tail end of the cycle of extreme price inflation for residential real estate. Mortgage rates are soaring, and affordability is tanking for all but the wealthiest segment of society. That has to play a role in future prices. I don't think I would have the stomach to buy in today's market.

    We got lucky in that we bought both our first house in a recession, and then we traded up after the real estate meltdown of 2008. We waited long enough for the market to begin to recover so that we sold our first home for a reasonably good price into the early years of the RE recovery, and we purchased our current trade up home as a leftover foreclosure that remained unsold during the early years of the recovery. Purchase price was 1.3M in foreclosure, current value 9 years later is 3M. Part of this was luck, but part of it was timing the trade up by taking action when the right opportunity came along.

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  • bovie
    replied
    Originally posted by Tim View Post
    If you need a house, buy it.
    If you don’t, sell it.
    Gotta sleep someplace. Stop think about a home as an investment.
    Sure, but that oversimplifies the issue.

    Absolutely right that primary residence is not an investment, and that you have to sleep someplace.

    But you still have to evaluate it deeper than “if you need a house, buy it.”

    Everybody needs clothes, and some might prefer Brooks Brothers to Old Navy—or the other way around—but while they both satisfy the stated requirement there are clear differences, not least of which is price.

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  • Tim
    replied
    If you need a house, buy it.
    If you don’t, sell it.
    Gotta sleep someplace. Stop think about a home as an investment.

    Leave a comment:


  • bovie
    replied
    Originally posted by uksho View Post

    Absolutely, but how do you decide if it is a fair price ? The prices don’t seem fair , when you are a buyer but to the seller, they do .
    In this market, sure. Other times, it’s the opposite.

    You just have to do your best to decide where your equilibrium lies.

    You're right—it’s not easy, is likely frustrating, is an inherently emotional decision, and there’s lots of gray.

    But you just have to do the best you can by appropriately weighting the factors that are most important (or not) to you in terms of intrinsic value—location, commute, schools, lot characteristics, square footage, etc.—and comparing that to the financial value of a potential purchase price.

    At the end of the day, if it’s worth it to you, then it’s fair.

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  • StarTrekDoc
    replied
    If you're willing to wait 8 years, that's not really ready to buy but looking for market price g to match yours.

    As far as fair pricing, with each closing you have at least that buyer making a fair offer in their minds
    Yes, it's an emotional buy. It's your home. Quite personal. That's why when you're ready dive in cause you don't know when the market is going

    Last year people thought the same. And now it's 15-20% the emotional higher route

    We sold last year and could have carried two mortgages and made out with another 600k. That went against our plan, so didn't do it. A prudent investor may have though....but not us.

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  • Tim
    replied
    Originally posted by CordMcNally View Post

    Considering that on average a recession occurs every 4-5 years, I don't think that's a very thin branch you've walked out on.
    But real estate is local and different price ranges react differently. Different tree.

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  • CordMcNally
    replied
    Originally posted by resident_1 View Post
    Larry Summers (former treasury secretary) is writing that fed will raise rates to 4-5%.
    What mortgage rate will that generate?
    The way this decade is going I wont be surprised if recession will occur in next 8years.
    Considering that on average a recession occurs every 4-5 years, I don't think that's a very thin branch you've walked out on.

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  • uksho
    replied
    Originally posted by bovie View Post

    Yes, of course it makes sense.

    But there is a risk to that as well—which you have identified.

    Solution: Buy when you’re ready, and at a price you deem fair.
    Absolutely, but how do you decide if it is a fair price ? The prices don’t seem fair , when you are a buyer but to the seller, they do .

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  • bovie
    replied
    Originally posted by jellowars View Post
    We're in a similar situation in a VHCOL area. Seems that we keep getting outbid by all cash offers or offers that are $90-120k over asking. I know people say to buy when you're ready and try not to time the market, but this seems like a lot of panic/emotional buying. I feel like going that high over asking is digging yourself a hole. I'm OK with listing prices at this time, but not OK going $100k over asking. Does it make sense to wait out the market a bit until there's fewer buyers (with the understanding that the listing prices may not necessarily trend down)?
    Yes, of course it makes sense.

    But there is a risk to that as well—which you have identified.

    Solution: Buy when you’re ready, and at a price you deem fair.

    Leave a comment:


  • jellowars
    replied
    We're in a similar situation in a VHCOL area. Seems that we keep getting outbid by all cash offers or offers that are $90-120k over asking. I know people say to buy when you're ready and try not to time the market, but this seems like a lot of panic/emotional buying. I feel like going that high over asking is digging yourself a hole. I'm OK with listing prices at this time, but not OK going $100k over asking. Does it make sense to wait out the market a bit until there's fewer buyers (with the understanding that the listing prices may not necessarily trend down)?

    Leave a comment:


  • prpdoc
    replied
    Similar situation as OP, this is madness here I’m in a HCOL and deciding to wait as this cannot sustain with both increasing rates and home values or make a move on something that isn’t what we need in 5-10 years

    Leave a comment:


  • Tim
    replied
    Originally posted by resident_1 View Post
    Larry Summers (former treasury secretary) is writing that fed will raise rates to 4-5%.
    What mortgage rate will that generate?
    The way this decade is going I wont be surprised if recession will occur in next 8years.
    Speaking of recessions, interest rates and inflation, data needs to always be taken in context and “adjusted”. NBER is the official group to announce we are in a recession, and by design they are alway 6-9 months late. Kind of crappie moving data too.
    https://www.advisorperspectives.com/...rch-employment
    Raw data is so incomplete and adjusted to find the “real” metric. Which probably will be adjusted later. Summers is a bright guy. As long as he is guessing too.

    Leave a comment:


  • CBCwDiffpls
    replied
    Rates rising, and home prices going up also. Getting more and more unaffordable.

    Leave a comment:


  • resident_1
    replied
    Larry Summers (former treasury secretary) is writing that fed will raise rates to 4-5%.
    What mortgage rate will that generate?
    The way this decade is going I wont be surprised if recession will occur in next 8years.

    Leave a comment:

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