Real estate thread

Looks like I might not be able to buy the home I was hoping to. Since we are financing and I disclosed that the roof leaks, no company will give us homeowner's insurance, which is required for the mortgage. The house is being sold as-is so nothing I can do. I think the realtor assumed I would lie about the state of the roof to our potential insurer.

I prayed that God would put up obstacles for us if it isn't His will for us to move. I'll take this as an answer unless a simple solution comes up.

Now I'm not sure if I should continue saving or looking for a home. I really wanted a home for safety (as we live in a diverse area in a major metropolitan area) and as a hedge against inflation.
In 2003 I bought a house with nearly identical situation. The roof had a hole the size of a football in it. I crawled the attic and realized the damage wasn't too bad. So we paid 800 out of pocket before my bank and insurer would even entertain the note. As is, the place had great location, good bones, just an old house that needed work.

That 800 was good to me. We had instant equity once the deal closed on a habitable home (all the other bidders have the same problem, and it kept the sale price under control). Sold a few years later for a nice profit before 2008.

That "obstacle" may have been a gift, if you can swing a deal on it.
 

Hypno

Crow
What's the price of you losing within the year?

You have the pride of showing me up.

I didn't offer it as a real bet. I try not to gamble. Someone once told me that gambling is a prideful attempt to circumvent Gods plan. Genesis 3:19. I'm not too dogmatic, so I don't know about the theology, I just try to avoid gambling because its a shortcut to things that are not good - pride, sloth, etc.

But intellectual bets can be a useful intellectual tool. Ask yourself where you would place the probabilities at a given endpoint. Sounds like you have already done that and you like the 1 year but but not the 5 and 10. Me, I'm up 100% on my cash invested in 6 months so I'm good. And a neighbor with an inferior house just listed theirs for another 10% more - they might reset the market.
 

Slim Whitman

Sparrow
Looks like I might not be able to buy the home I was hoping to. Since we are financing and I disclosed that the roof leaks, no company will give us homeowner's insurance, which is required for the mortgage. The house is being sold as-is so nothing I can do. I think the realtor assumed I would lie about the state of the roof to our potential insurer.

I prayed that God would put up obstacles for us if it isn't His will for us to move. I'll take this as an answer unless a simple solution comes up.

Now I'm not sure if I should continue saving or looking for a home. I really wanted a home for safety (as we live in a diverse area in a major metropolitan area) and as a hedge against inflation.
You dodged a bullet my man. If you want a hedge against inflation buy silver and gold bullion.
 

Slim Whitman

Sparrow
10 Reasons Why Now is the Absolute Worst Time to Buy a House

1.
We are at the peak of a housing bubble, caused by panic-buying in a media-fueled mania. The prices have risen so quickly that long-time real estate cheerleaders are now reluctantly admitting that it looks like a bubble. If you buy now, the chances are very high that you are buying at the top of the market.
2. It's a seller's market. Multiple bids are commonplace, along with cash offers tens of thousands of dollars above asking price, and waived inspections. Competing under these conditions creates a false sense of desperation and FOMO, increasing the likelihood of an imprudent decision. There's a saying in real estate that the profit is made at purchase, not at selling time. In other words, if you don't get a great price on your home it's very unlikely you'll realize profit on it. Waiting for a buyer's market to return is the most wise thing you can do. And it WILL return.
3. Imagine that you already have a perfectly running car, let's say it's a Cadillac. Suddenly every magazine and newspaper says you should run out and buy a new Cadillac, and everyone is bidding for them sight unseen, hoping to get whatever Cadillac is available, even if they overpay by 50%. These same magazines and newspapers just happen to make a huge portion of their income from Cadillac advertisements. Would the prudent man join the stampede or sit back and wait until the mania died down? Housing is fungible - there is nothing rare or unique about it. It has undergone a temporary disruption to the supply chain creating an artificial shortage that will self-correct in time. Lumber is stacking up to the ceiling at mills and builders are anxious to get the ball rolling again. Construction costs WILL come down rapidly. Just like the toilet paper shortage was a temporary blip driven by herd mentality, so is the housing "shortage".
4. The argument that housing is a hedge for inflation is faulty. Stop for a minute and think about it logically. If inflation starts to spiral out of control, the interest rates rise to combat it. When that happens housing prices will immediately tumble. You can't have a situation where housing costs inflate so high that average earners can't afford them. The inventory simply wouldn't move. If inflation rises, wages and interest rates will be forced to rise in tandem until equilibrium is reached.
5. The argument that you should buy a depreciating asset based on the monthly payment rather than the total purchase price is faulty. Again, use the car analogy. What does a slick and sleazy car salesman try to do? He makes you focus on the low monthly payments rather than the total price, and that's how you get reamed. Every economist will tell you to ignore the monthly payment and instead negotiate a lower purchase price.
6. The argument that you should buy now to take advantage of low interest rates is faulty. First of all you aren't likely to stay in your home for the full term of the loan - you will stay for an average of 4 years or so before you sell. So you are not locking in low interest rates for the life of the loan. You are also likely to be making interest-only payments, along with PMI, for that first four years. So the low interest rates don't even help you chip away at the principle. The low interest rates simply make the overall purchase price much higher which works against you. Instead, it is wise to wait until interest rates rise and purchase a house for a much lower price, because you can always refinance later when interest rates go back down or your credit improves. This is especially true if you plan to stay in the home for 10 years or longer. You will also have lower property taxes and insurance when you buy a home with lower appraised value.
7. Real estate prices are cyclical and there is no doubt that we are due for another crash. It's as reliable as the sunrise. No, it's not "different this time". No, you won't be "priced out forever". In fact when you see all these armchair investors and amateur economists trying to generate FUD with their haughty, condescending remarks, you know that it's time to get OUT of the housing market because the crash is looming.
8. Now is the perfect time to keep your powder dry. Stay where you are, cut expenses, and save save save. If you're worried about inflation buy gold and silver bullion. You have time to save a substantial down payment so that when prices crash you will be in perfect position to buy during a time when few others can qualify for the stricter lending standards. This puts you in the Captain's Chair - - imagine how much better the deal would be if you're putting in an offer on a place that's been on the market for 3 months without a single serious buyer.
9. The stories about wild appreciation gains are fool's gold. People love to brag about how much their house has increased in "value" over the past six months while they sat back and did nothing. But how are they going to unlock that equity? If they sell now, they will have to roll all that equity and then some into their new home, unless they downgrade their living situation. If they wait until prices go down to sell then they will lose the equity. So they are trapped in their home with a lot of equity on paper that doesn't mean a thing in the real world. And again, think logically - did the house really gain any true value, or did it merely increase in price due to hype and speculation?
10. Renting has the key advantage of mobility. There are a lot of reasons why it's advantageous to stay mobile right now. The world is in a state of flux. The work from home situation might continue or it might go away later this year. The mass migrations out of democrat controlled states might continue or it might reverse. Everyone is moving around right now and a lot of people are putting their houses on the market. This means neighborhoods are rapidly changing. Do you want to be stuck next to a bad neighbor for the next 4 or 5 years? Do you want to be stranded away from employment when your boss announces it's time for everyone to come back to the office? Do you want to be stuck holding the bag when real estate prices suddenly start coming down and you have to find a greater fool to unload yours on? Buyer's remorse is at an all-time high according to polling on recent homebuyers. Imagine overbidding for an average suburban shack only to find that you hate it 6 months later. People slag renters but in a rapidly changing world the renter can go where the opportunity is, or go away from the undesirables. It's hard to put a price tag on that.

As soon as word reaches the masses that we're near the top of the market, everyone will stampede to put their homes up for sale, which will cause prices to come down dramatically. The "pent up demand" is going to be on the seller side, not the buyer's. Sellers are going to be desperate to move once the covid restrictions die down because they have been waiting for over a year now. We haven't even touched on demographic issues like the boomers' downsizing, or the continued birth rate collapse. We haven't touched on the coming end of the eviction and foreclosure moratoriums. We haven't touched on Wall Street roaring back to life post-pandemic, creating movement from housing investment into the equity market.

When something seems out of balance, just ask yourself "is this sustainable"? With current housing trends the obvious answer is NO.

So take a deep breath, relax, stop listening to real estate cheerleaders in the media, and rest easy knowing that if you follow the wise and prudent path you will get the home you want. You just have to wait a little longer for it. Don't believe the hype! Hype is always trying to manipulate you into a trap. Sheep get sheared, the wolf gets dinner.

Full Disclosure: I am divested from real estate and am a housing bear who believes prices will come down over the next 18 months. I'm saving to buy when that happens and renting a nice home for about the same price as the mortgage. This is not financial advice, it's informed opinion.
 
^ Great post, the only thing I'm skeptical about is interest rates ever going up - because the bigger issue is govt/national/state/municipal debt, I'm not sure the central banks can "afford" to raise rates - they're stuck. In this situation if the money printing only continues, real estate would be a hedge in a inflationary scenario. Very valid on many of the other points though.
 
The two posts above, by Slim and 2Infinity, summarize my thoughts on RE precisely. I am conflicted by them - both have great and I don't have a crystal ball. Is it really "different this time" or not? How can these crazy prices and gains keep up? How can the Fed ever raise rates without the economy collapsing? How can they not with runaway inflation? Does that or does that not collapse RE values as people can't pay mortgages at 9% versus 5%?

As I am now single, I've minimized my personal RE exposure to near zero. I have commercial properties on fixed, relatively low rates, that are well within my productive cash flow. Boring properties (that I slowly but steadily improve) rented to boring businesses that get to stay open and useful during pandemics. I've done well on real estate in the past, but was lucky to have very low exposure when 2008 hit. Not claiming any genius here.

To me, there is a distinction between "Productive" and "non-Productive" real estate. Farms, Ranches, appropriate commercial properties (preferable where you can also live on-premise) are Productive to me. They are businesses as well as personal RE. Residential RE is "non-productive" in that you are prohibited or it isn't practical to operate a business from them. With residential RE, your value is a simple function: Square Feet X recent comparisons/SF = value. If rates increase, people cannot qualify for nearly as much home as before, so your neighbors who must sell will be forced to sell low.

I do believe that time is running out on Precious Metals at the low prices they are now. So I keep stacking whatever I can.
 

westernman

Sparrow
10 Reasons Why Now is the Absolute Worst Time to Buy a House

1.
We are at the peak of a housing bubble, caused by panic-buying in a media-fueled mania. The prices have risen so quickly that long-time real estate cheerleaders are now reluctantly admitting that it looks like a bubble. If you buy now, the chances are very high that you are buying at the top of the market.
2. It's a seller's market. Multiple bids are commonplace, along with cash offers tens of thousands of dollars above asking price, and waived inspections. Competing under these conditions creates a false sense of desperation and FOMO, increasing the likelihood of an imprudent decision. There's a saying in real estate that the profit is made at purchase, not at selling time. In other words, if you don't get a great price on your home it's very unlikely you'll realize profit on it. Waiting for a buyer's market to return is the most wise thing you can do. And it WILL return.
3. Imagine that you already have a perfectly running car, let's say it's a Cadillac. Suddenly every magazine and newspaper says you should run out and buy a new Cadillac, and everyone is bidding for them sight unseen, hoping to get whatever Cadillac is available, even if they overpay by 50%. These same magazines and newspapers just happen to make a huge portion of their income from Cadillac advertisements. Would the prudent man join the stampede or sit back and wait until the mania died down? Housing is fungible - there is nothing rare or unique about it. It has undergone a temporary disruption to the supply chain creating an artificial shortage that will self-correct in time. Lumber is stacking up to the ceiling at mills and builders are anxious to get the ball rolling again. Construction costs WILL come down rapidly. Just like the toilet paper shortage was a temporary blip driven by herd mentality, so is the housing "shortage".
4. The argument that housing is a hedge for inflation is faulty. Stop for a minute and think about it logically. If inflation starts to spiral out of control, the interest rates rise to combat it. When that happens housing prices will immediately tumble. You can't have a situation where housing costs inflate so high that average earners can't afford them. The inventory simply wouldn't move. If inflation rises, wages and interest rates will be forced to rise in tandem until equilibrium is reached.
5. The argument that you should buy a depreciating asset based on the monthly payment rather than the total purchase price is faulty. Again, use the car analogy. What does a slick and sleazy car salesman try to do? He makes you focus on the low monthly payments rather than the total price, and that's how you get reamed. Every economist will tell you to ignore the monthly payment and instead negotiate a lower purchase price.
6. The argument that you should buy now to take advantage of low interest rates is faulty. First of all you aren't likely to stay in your home for the full term of the loan - you will stay for an average of 4 years or so before you sell. So you are not locking in low interest rates for the life of the loan. You are also likely to be making interest-only payments, along with PMI, for that first four years. So the low interest rates don't even help you chip away at the principle. The low interest rates simply make the overall purchase price much higher which works against you. Instead, it is wise to wait until interest rates rise and purchase a house for a much lower price, because you can always refinance later when interest rates go back down or your credit improves. This is especially true if you plan to stay in the home for 10 years or longer. You will also have lower property taxes and insurance when you buy a home with lower appraised value.
7. Real estate prices are cyclical and there is no doubt that we are due for another crash. It's as reliable as the sunrise. No, it's not "different this time". No, you won't be "priced out forever". In fact when you see all these armchair investors and amateur economists trying to generate FUD with their haughty, condescending remarks, you know that it's time to get OUT of the housing market because the crash is looming.
8. Now is the perfect time to keep your powder dry. Stay where you are, cut expenses, and save save save. If you're worried about inflation buy gold and silver bullion. You have time to save a substantial down payment so that when prices crash you will be in perfect position to buy during a time when few others can qualify for the stricter lending standards. This puts you in the Captain's Chair - - imagine how much better the deal would be if you're putting in an offer on a place that's been on the market for 3 months without a single serious buyer.
9. The stories about wild appreciation gains are fool's gold. People love to brag about how much their house has increased in "value" over the past six months while they sat back and did nothing. But how are they going to unlock that equity? If they sell now, they will have to roll all that equity and then some into their new home, unless they downgrade their living situation. If they wait until prices go down to sell then they will lose the equity. So they are trapped in their home with a lot of equity on paper that doesn't mean a thing in the real world. And again, think logically - did the house really gain any true value, or did it merely increase in price due to hype and speculation?
10. Renting has the key advantage of mobility. There are a lot of reasons why it's advantageous to stay mobile right now. The world is in a state of flux. The work from home situation might continue or it might go away later this year. The mass migrations out of democrat controlled states might continue or it might reverse. Everyone is moving around right now and a lot of people are putting their houses on the market. This means neighborhoods are rapidly changing. Do you want to be stuck next to a bad neighbor for the next 4 or 5 years? Do you want to be stranded away from employment when your boss announces it's time for everyone to come back to the office? Do you want to be stuck holding the bag when real estate prices suddenly start coming down and you have to find a greater fool to unload yours on? Buyer's remorse is at an all-time high according to polling on recent homebuyers. Imagine overbidding for an average suburban shack only to find that you hate it 6 months later. People slag renters but in a rapidly changing world the renter can go where the opportunity is, or go away from the undesirables. It's hard to put a price tag on that.

As soon as word reaches the masses that we're near the top of the market, everyone will stampede to put their homes up for sale, which will cause prices to come down dramatically. The "pent up demand" is going to be on the seller side, not the buyer's. Sellers are going to be desperate to move once the covid restrictions die down because they have been waiting for over a year now. We haven't even touched on demographic issues like the boomers' downsizing, or the continued birth rate collapse. We haven't touched on the coming end of the eviction and foreclosure moratoriums. We haven't touched on Wall Street roaring back to life post-pandemic, creating movement from housing investment into the equity market.

When something seems out of balance, just ask yourself "is this sustainable"? With current housing trends the obvious answer is NO.

So take a deep breath, relax, stop listening to real estate cheerleaders in the media, and rest easy knowing that if you follow the wise and prudent path you will get the home you want. You just have to wait a little longer for it. Don't believe the hype! Hype is always trying to manipulate you into a trap. Sheep get sheared, the wolf gets dinner.

Full Disclosure: I am divested from real estate and am a housing bear who believes prices will come down over the next 18 months. I'm saving to buy when that happens and renting a nice home for about the same price as the mortgage. This is not financial advice, it's informed opinion.
This is what I'm banking on. I just keep saving (60k cash right now)
 

Monty_Brogan

Woodpecker
Gold Member
10 Reasons Why Now is the Absolute Worst Time to Buy a House

1.
We are at the peak of a housing bubble, caused by panic-buying in a media-fueled mania. The prices have risen so quickly that long-time real estate cheerleaders are now reluctantly admitting that it looks like a bubble. If you buy now, the chances are very high that you are buying at the top of the market.
2. It's a seller's market. Multiple bids are commonplace, along with cash offers tens of thousands of dollars above asking price, and waived inspections. Competing under these conditions creates a false sense of desperation and FOMO, increasing the likelihood of an imprudent decision. There's a saying in real estate that the profit is made at purchase, not at selling time. In other words, if you don't get a great price on your home it's very unlikely you'll realize profit on it. Waiting for a buyer's market to return is the most wise thing you can do. And it WILL return.
3. Imagine that you already have a perfectly running car, let's say it's a Cadillac. Suddenly every magazine and newspaper says you should run out and buy a new Cadillac, and everyone is bidding for them sight unseen, hoping to get whatever Cadillac is available, even if they overpay by 50%. These same magazines and newspapers just happen to make a huge portion of their income from Cadillac advertisements. Would the prudent man join the stampede or sit back and wait until the mania died down? Housing is fungible - there is nothing rare or unique about it. It has undergone a temporary disruption to the supply chain creating an artificial shortage that will self-correct in time. Lumber is stacking up to the ceiling at mills and builders are anxious to get the ball rolling again. Construction costs WILL come down rapidly. Just like the toilet paper shortage was a temporary blip driven by herd mentality, so is the housing "shortage".
4. The argument that housing is a hedge for inflation is faulty. Stop for a minute and think about it logically. If inflation starts to spiral out of control, the interest rates rise to combat it. When that happens housing prices will immediately tumble. You can't have a situation where housing costs inflate so high that average earners can't afford them. The inventory simply wouldn't move. If inflation rises, wages and interest rates will be forced to rise in tandem until equilibrium is reached.
5. The argument that you should buy a depreciating asset based on the monthly payment rather than the total purchase price is faulty. Again, use the car analogy. What does a slick and sleazy car salesman try to do? He makes you focus on the low monthly payments rather than the total price, and that's how you get reamed. Every economist will tell you to ignore the monthly payment and instead negotiate a lower purchase price.
6. The argument that you should buy now to take advantage of low interest rates is faulty. First of all you aren't likely to stay in your home for the full term of the loan - you will stay for an average of 4 years or so before you sell. So you are not locking in low interest rates for the life of the loan. You are also likely to be making interest-only payments, along with PMI, for that first four years. So the low interest rates don't even help you chip away at the principle. The low interest rates simply make the overall purchase price much higher which works against you. Instead, it is wise to wait until interest rates rise and purchase a house for a much lower price, because you can always refinance later when interest rates go back down or your credit improves. This is especially true if you plan to stay in the home for 10 years or longer. You will also have lower property taxes and insurance when you buy a home with lower appraised value.
7. Real estate prices are cyclical and there is no doubt that we are due for another crash. It's as reliable as the sunrise. No, it's not "different this time". No, you won't be "priced out forever". In fact when you see all these armchair investors and amateur economists trying to generate FUD with their haughty, condescending remarks, you know that it's time to get OUT of the housing market because the crash is looming.
8. Now is the perfect time to keep your powder dry. Stay where you are, cut expenses, and save save save. If you're worried about inflation buy gold and silver bullion. You have time to save a substantial down payment so that when prices crash you will be in perfect position to buy during a time when few others can qualify for the stricter lending standards. This puts you in the Captain's Chair - - imagine how much better the deal would be if you're putting in an offer on a place that's been on the market for 3 months without a single serious buyer.
9. The stories about wild appreciation gains are fool's gold. People love to brag about how much their house has increased in "value" over the past six months while they sat back and did nothing. But how are they going to unlock that equity? If they sell now, they will have to roll all that equity and then some into their new home, unless they downgrade their living situation. If they wait until prices go down to sell then they will lose the equity. So they are trapped in their home with a lot of equity on paper that doesn't mean a thing in the real world. And again, think logically - did the house really gain any true value, or did it merely increase in price due to hype and speculation?
10. Renting has the key advantage of mobility. There are a lot of reasons why it's advantageous to stay mobile right now. The world is in a state of flux. The work from home situation might continue or it might go away later this year. The mass migrations out of democrat controlled states might continue or it might reverse. Everyone is moving around right now and a lot of people are putting their houses on the market. This means neighborhoods are rapidly changing. Do you want to be stuck next to a bad neighbor for the next 4 or 5 years? Do you want to be stranded away from employment when your boss announces it's time for everyone to come back to the office? Do you want to be stuck holding the bag when real estate prices suddenly start coming down and you have to find a greater fool to unload yours on? Buyer's remorse is at an all-time high according to polling on recent homebuyers. Imagine overbidding for an average suburban shack only to find that you hate it 6 months later. People slag renters but in a rapidly changing world the renter can go where the opportunity is, or go away from the undesirables. It's hard to put a price tag on that.

As soon as word reaches the masses that we're near the top of the market, everyone will stampede to put their homes up for sale, which will cause prices to come down dramatically. The "pent up demand" is going to be on the seller side, not the buyer's. Sellers are going to be desperate to move once the covid restrictions die down because they have been waiting for over a year now. We haven't even touched on demographic issues like the boomers' downsizing, or the continued birth rate collapse. We haven't touched on the coming end of the eviction and foreclosure moratoriums. We haven't touched on Wall Street roaring back to life post-pandemic, creating movement from housing investment into the equity market.

When something seems out of balance, just ask yourself "is this sustainable"? With current housing trends the obvious answer is NO.

So take a deep breath, relax, stop listening to real estate cheerleaders in the media, and rest easy knowing that if you follow the wise and prudent path you will get the home you want. You just have to wait a little longer for it. Don't believe the hype! Hype is always trying to manipulate you into a trap. Sheep get sheared, the wolf gets dinner.

Full Disclosure: I am divested from real estate and am a housing bear who believes prices will come down over the next 18 months. I'm saving to buy when that happens and renting a nice home for about the same price as the mortgage. This is not financial advice, it's informed opinion.

What’s the point of #8? Why save save save if there’s going to be inflation?
 

Robert High Hawk

Kingfisher
10 Reasons Why Now is the Absolute Worst Time to Buy a House

1.
We are at the peak of a housing bubble, caused by panic-buying in a media-fueled mania. The prices have risen so quickly that long-time real estate cheerleaders are now reluctantly admitting that it looks like a bubble. If you buy now, the chances are very high that you are buying at the top of the market.
2. It's a seller's market. Multiple bids are commonplace, along with cash offers tens of thousands of dollars above asking price, and waived inspections. Competing under these conditions creates a false sense of desperation and FOMO, increasing the likelihood of an imprudent decision. There's a saying in real estate that the profit is made at purchase, not at selling time. In other words, if you don't get a great price on your home it's very unlikely you'll realize profit on it. Waiting for a buyer's market to return is the most wise thing you can do. And it WILL return.
3. Imagine that you already have a perfectly running car, let's say it's a Cadillac. Suddenly every magazine and newspaper says you should run out and buy a new Cadillac, and everyone is bidding for them sight unseen, hoping to get whatever Cadillac is available, even if they overpay by 50%. These same magazines and newspapers just happen to make a huge portion of their income from Cadillac advertisements. Would the prudent man join the stampede or sit back and wait until the mania died down? Housing is fungible - there is nothing rare or unique about it. It has undergone a temporary disruption to the supply chain creating an artificial shortage that will self-correct in time. Lumber is stacking up to the ceiling at mills and builders are anxious to get the ball rolling again. Construction costs WILL come down rapidly. Just like the toilet paper shortage was a temporary blip driven by herd mentality, so is the housing "shortage".
4. The argument that housing is a hedge for inflation is faulty. Stop for a minute and think about it logically. If inflation starts to spiral out of control, the interest rates rise to combat it. When that happens housing prices will immediately tumble. You can't have a situation where housing costs inflate so high that average earners can't afford them. The inventory simply wouldn't move. If inflation rises, wages and interest rates will be forced to rise in tandem until equilibrium is reached.
5. The argument that you should buy a depreciating asset based on the monthly payment rather than the total purchase price is faulty. Again, use the car analogy. What does a slick and sleazy car salesman try to do? He makes you focus on the low monthly payments rather than the total price, and that's how you get reamed. Every economist will tell you to ignore the monthly payment and instead negotiate a lower purchase price.
6. The argument that you should buy now to take advantage of low interest rates is faulty. First of all you aren't likely to stay in your home for the full term of the loan - you will stay for an average of 4 years or so before you sell. So you are not locking in low interest rates for the life of the loan. You are also likely to be making interest-only payments, along with PMI, for that first four years. So the low interest rates don't even help you chip away at the principle. The low interest rates simply make the overall purchase price much higher which works against you. Instead, it is wise to wait until interest rates rise and purchase a house for a much lower price, because you can always refinance later when interest rates go back down or your credit improves. This is especially true if you plan to stay in the home for 10 years or longer. You will also have lower property taxes and insurance when you buy a home with lower appraised value.
7. Real estate prices are cyclical and there is no doubt that we are due for another crash. It's as reliable as the sunrise. No, it's not "different this time". No, you won't be "priced out forever". In fact when you see all these armchair investors and amateur economists trying to generate FUD with their haughty, condescending remarks, you know that it's time to get OUT of the housing market because the crash is looming.
8. Now is the perfect time to keep your powder dry. Stay where you are, cut expenses, and save save save. If you're worried about inflation buy gold and silver bullion. You have time to save a substantial down payment so that when prices crash you will be in perfect position to buy during a time when few others can qualify for the stricter lending standards. This puts you in the Captain's Chair - - imagine how much better the deal would be if you're putting in an offer on a place that's been on the market for 3 months without a single serious buyer.
9. The stories about wild appreciation gains are fool's gold. People love to brag about how much their house has increased in "value" over the past six months while they sat back and did nothing. But how are they going to unlock that equity? If they sell now, they will have to roll all that equity and then some into their new home, unless they downgrade their living situation. If they wait until prices go down to sell then they will lose the equity. So they are trapped in their home with a lot of equity on paper that doesn't mean a thing in the real world. And again, think logically - did the house really gain any true value, or did it merely increase in price due to hype and speculation?
10. Renting has the key advantage of mobility. There are a lot of reasons why it's advantageous to stay mobile right now. The world is in a state of flux. The work from home situation might continue or it might go away later this year. The mass migrations out of democrat controlled states might continue or it might reverse. Everyone is moving around right now and a lot of people are putting their houses on the market. This means neighborhoods are rapidly changing. Do you want to be stuck next to a bad neighbor for the next 4 or 5 years? Do you want to be stranded away from employment when your boss announces it's time for everyone to come back to the office? Do you want to be stuck holding the bag when real estate prices suddenly start coming down and you have to find a greater fool to unload yours on? Buyer's remorse is at an all-time high according to polling on recent homebuyers. Imagine overbidding for an average suburban shack only to find that you hate it 6 months later. People slag renters but in a rapidly changing world the renter can go where the opportunity is, or go away from the undesirables. It's hard to put a price tag on that.

As soon as word reaches the masses that we're near the top of the market, everyone will stampede to put their homes up for sale, which will cause prices to come down dramatically. The "pent up demand" is going to be on the seller side, not the buyer's. Sellers are going to be desperate to move once the covid restrictions die down because they have been waiting for over a year now. We haven't even touched on demographic issues like the boomers' downsizing, or the continued birth rate collapse. We haven't touched on the coming end of the eviction and foreclosure moratoriums. We haven't touched on Wall Street roaring back to life post-pandemic, creating movement from housing investment into the equity market.

When something seems out of balance, just ask yourself "is this sustainable"? With current housing trends the obvious answer is NO.

So take a deep breath, relax, stop listening to real estate cheerleaders in the media, and rest easy knowing that if you follow the wise and prudent path you will get the home you want. You just have to wait a little longer for it. Don't believe the hype! Hype is always trying to manipulate you into a trap. Sheep get sheared, the wolf gets dinner.

Full Disclosure: I am divested from real estate and am a housing bear who believes prices will come down over the next 18 months. I'm saving to buy when that happens and renting a nice home for about the same price as the mortgage. This is not financial advice, it's informed opinion.
Outstanding synopsis. One last quick point to add about real estate as an inflation hedge: in most cases property taxes go up as your real estate value also goes up. And your maintainence costs will also go up as well.

That said, if there ends up being wage inflation as well, a cheap mortgage may end up being basically a free gift. That's what companies do when they borrow at low rates to buy back their own stock or in some cases buy bitcoin.

But for a house.... what other side hassles and costs come with this thing? Property taxes alone often drive people out of their own home. And as towns and cities get more broke, they will start getting more aggressive about enforcing higher taxes and evicting and confiscating houses of those who are even a little delinquent
 
Some things I'm keeping an eye on that may slow things down, aside from interest rates

Short Term
Property tax reevaluations
U.S. Property Taxes Jump Most in Four Years With Sun Belt Catching Up
Eviction moratorium expiration
Millions of Americans could face eviction as housing protection expires in June
Unemployment expiration
Millions of Americans in 24 states are set to lose unemployment benefits as early as June 12
High levels of buyers remorse, unexpected expensive maintenance, bad locations, relocating for work, or returning to work in office
These People Rushed to Buy Homes During Covid. Now They Regret It.
Return to 'normalizaton', bringing inventory to market
Seattle sees monthly increase in housing inventory; prices continue to rise

Long Term
Forced decline of the AUTOMOBILE
Washington state passes bill with goal to phase out gasoline cars
Industry wide layoffs (maybe, maybe not)
Do Not Be Alarmed by Wild Predictions of Robots Taking Everyone’s Jobs
Boomers passing away in mass
OK Boomer, Who’s Going to Buy Your 21 Million Homes?
Anti-landlord programs (landlord registration, limiting loans for investors)
Denver landlords will have to license long-term rental buildings after city council passes new law
Big Hit to Second Home and Investment Mortgages
 
this is another reason (along with atomizing society) for the elite are pushing for mass immigration - economist say that population growth fuels the economy - (of course they could just have affordable family formation for people here, but we know there are other reasons they don't want that) - at the same time we're told be green and eat bugs they tell us we have to keep building new homes and have more bodies to buy existing homes..
 
Hey guys,

I found some land for a decent price and in a conservative town about 40 min from where I work. I have never bought land before and I'm seriously inexperienced in the subject. Any advice for an up and coming landowner?
 
this is another reason (along with atomizing society) for the elite are pushing for mass immigration - economist say that population growth fuels the economy - (of course they could just have affordable family formation for people here, but we know there are other reasons they don't want that) - at the same time we're told be green and eat bugs they tell us we have to keep building new homes and have more bodies to buy existing homes..
A lot of the homes that will eventually be vacated by the boomer generation would be uninhabitable, due to lack of maintenance. Boomers, by and large, are asset rich and cash poor. Unless they have a reverse mortgage, this cohort will have significant cash flow issues.

For most people who stand to inherit a home, their share would amount to 30-50% of the purchase price of a home. With such a sizable deposit, most gainfully employed people will be able to obtain a mortgage for the balance. That is if they don't already have their own home, and simply pay off the current mortgage.
 

NoMoreTO

Ostrich
Hey guys,

I found some land for a decent price and in a conservative town about 40 min from where I work. I have never bought land before and I'm seriously inexperienced in the subject. Any advice for an up and coming landowner?
Dive in! Only way to do it.

Don't over extend yourself on the mortgage.
 
Dive in! Only way to do it.

Don't over extend yourself on the mortgage.
Exactly. If it is rural land, you can go modular/mobile while you build out a home. I have a midwestern buddy that bought the same distance from his work. He had credit problems and was strapped, but he could build. So he moved a single wide on the property for 2 years while he built his house. He's on about 20 acres, hobby farms, and has a debt free home in a very peaceful, country setting. Good luck.
 
A lot of the homes that will eventually be vacated by the boomer generation would be uninhabitable, due to lack of maintenance. Boomers, by and large, are asset rich and cash poor. Unless they have a reverse mortgage, this cohort will have significant cash flow issues.

For most people who stand to inherit a home, their share would amount to 30-50% of the purchase price of a home. With such a sizable deposit, most gainfully employed people will be able to obtain a mortgage for the balance. That is if they don't already have their own home, and simply pay off the current mortgage.
Usually the last few months of life medical care will eat up whatever assets boomers have - including homes - I would even say the system has either been designed or allowed to evolve that way.
 

Thomas More

Hummingbird
Third sentence in #8: "If you're worried about inflation buy gold and silver bullion."
Good point. Also, the advice here is to save so you have a good down payment in the next couple of years after this current bubble passes. Holding savings long term during inflationary times is bad, but inflation is not going to be that bad in just the next couple of years. You need to have a decent chunk of working capital to get the best deal on a mortgage.
 
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