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I'm in the process of buying a new house.
I think "good time" is just kind of luck. I'm buying now because circumstances make it the best choice. Interest rates are kind of high (mine is 7%) and if that drops a few, I'll refinance to get a better rate.
I looked for houses that had a space easily convertible to a MIL suite cut off from the rest of the house. My plan is to get the house payment down as quick as possible with a renter in the MIL suite.
Great advice in the other comments, so I'll only add this - with this being your first house, if you can afford it, do a multifamily unit or a property that can be used as multifamily. Nearly everywhere is in a housing shortage, so you'll be able to get a good win win with some renters that can help pay your mortgage faster while they have an affordable place to live. Best if the units can be fully separated so less drama.
Trying to work out house price trends is like trying to catch a falling knife. My advice would always be that you should just buy when you have the deposit and know you can make the mortgage payments.
I'm neutral on the housing market right now. People buying houses are generally living in them (or renting them), there's very little house flipping like in 2005-06. There's also no interest-only mortgages, so people actually have the cash flow to stay. Rates are probably not going up, but they might come down a little. If they do drop, I think prices will go up proportionately such that the monthly payment is the same either way. New housing is being built, but not fast enough to make a major impact on demand in the near term.
Altogether, I think housing in the US is "fairly" valued on a supply/demand basis at the moment. If we get a recession, prices might dip, but I would be very surprised to see another crash like 2007-09. However, I also don't expect to see prices go up quickly from here other than in response to lower interest rates. So, if I were making a new purchase decision today, I'd be thinking about the following:
Here are some of my major home maintenance expenses from the last 10 years:
Those are the big items I recall that I had little choice in. I also replaced my way past end of life 2 zone HVAC system for about $30k. I could have kept the old one running longer and I could have gotten a cheaper replacement (maybe $22k), but the old system was struggling and couldn't keep the house comfortable anymore. I seem to recall hearing a good rule of thumb is to set aside 1-2% of your home's value every year for major maintenance and that seems about right from my experience.
I went with buying raw land out of the city, for me it’s a 30 minute drive and no traffic, my “rent” is under $200 for the year of property taxes. I own the land for less than 1 year of rent.
I can live in an RV, and I can build a house or convert a shed to live in so it’s super affordable, plus I have room for a garden to feed my family.
I'm not trying to step on your comment, but I read this as unrealistic? It sounds like you bought land, but don't actually live on it currently. Like, you CAN live in an RV, but what are you actually doing with it now? Again, not trying to be a dick. I actually considered the exact same, but once we started crunching numbers on what we wanted, just buying the land and building on it was out of our budget.
Since 2008 the best time to buy has been when you have the money and find something appropriate. It's no different now. Millennials have been hoping for a housing crash they could take advantage of for 16 years and it hasn't materialized. Prices just keep going up and historical evidence suggests that will continue until another crash at an indeterminate point in the future. Trying to time that point is only going to leave you as a permanent renter.
I really doubt the guy who loves low interest rates, looks to be trying to devalue the dollar purposefully, and is a corporate landlord himself will make a lot of moves that purposefully deflate the price of housing. He may do it accidentally, but I kind of doubt that too. If Trump gets his way and deports a bunch of people, welp...guess what a lot of the construction labor pool is? A mortgage is essentially a long-term bet that the dollar will be worth less than it is today. If you can afford to get one at current mortgage rates, I would pull the trigger. If rates drop again you can refinance, but what you will never be able to do is get a 2025 offer accepted on a house that's now worth much more in 2030. My main regret in buying my place--in the pants-shitting part of the early pandemic--was not doing it earlier.
Just look into what you can afford and what kind of loan you can get and see if it makes sense. I don't think there's going to be a crash because there is still a huge deficit of new building. I expect that there will be more housing built this year, but there's still a high demand, so those new houses will be pricey. In the long term I expect more inventory to open up as the age group dying out is the largest age group. However, that inventory will be places that are less desirable to younger people. The population of small towns is about to shrink drastically.
idk, house prices are rising, you may want to either buy as soon as you can or wait for the bubble to pop
The best time to buy is when you need to, it's hard to time the market and if you are going to stay there for a long time all that matters is can you afford it. Where I live they sure seem overvalued, but when we bought our house I was sure it was overpriced and the theoretical value now is 2x that amount not even 5 years later, WTF? So my guess is we will see a downturn, especially with the new government, but really the best time to buy doesn't always align with the best price.
Remember that maintenance on a house is expensive too, build that into your affordability calculation.
Not answering your question. But if you do buy, don't listen to the realtor or loan officer about how big a loan you can afford. Both are incentivized to sell you the biggest house/loan. Neither will care when you're struggling to pay for it.
You're monthly payment plus insurance plus taxes should be something you could safely pay for six months while unemployed. If that's impossible, get a small house. The worst possible situation is being house poor.
Things are only seemingly getting worse. I’d say buy while you can still afford to and there is inventory, who knows what kind of crazinesss is coming to the economy after January.
If things get too wild, sellers will remove inventory, only making both rent and existing inventory prices increase.
No but its only gonna get more expensive so do it if you can swing it.
I made the decision to buy at a bad time, and it turns out the mortgage rates went much higher than what I bought at. I have no idea if that will happen again, but my mental health absolutely benefited from owning my house over the stress of renting and waiting to find out if I need to move every year again.
Same, mortgage rates were near record high when I purchased but the circumstances were otherwise right. Mortgage ended up being a little over half the cost of renting and won’t go up every damn year, and homes aren’t getting cheaper. Plus there’s the option to refinance in the future if rates drop enough.
I'm honestly really surprised that your mortgage is about half the cost of renting. That has not been my experience in recent years at all. That's how things used to be, but in post 2020 times, monthly mortgage payments often seem to surpass rent payments in my area, making the whole thing kind of a hard pill to swallow. Idk. Maybe I was looking at things wrong. I'm not a real estate expert. I just know that buying my place increased my monthly bills a bit instead of decreasing them like that. It seemed that would have happened with any property I looked at.
The caveat is that “circumstances were right” meant a sizable down payment among other things. Without the down payment, a mortgage would have approximated rent at the time. I was at the end of a lease though, and the jump to renew in a craphole apartment was enough to tip the scales. Bills are approximately the same, thankfully. I did take a hit on convenience in location, but the house was a tremendous deal.
Mortgage was always higher than rent where I live, in the past, because people were renting houses they bought a long time ago so even with the profit in there it just worked out that way. Then rents exploded here, and buying was cheaper but then prices of houses exploded and now renting is cheaper again.
Yeah, mortgages around here are a lot higher than rent. But rent is going up at a rate of about 10% per year, so it probably makes sense to buy, even with a more expensive mortgage. Eventually you'll come out on top.
No one knows.
But, if rates suddenly drop you can always refinance.
The Trump administration had a few ideas on how to fix the market, which boiled down to removing regulations. The Harris administration had a more complete plan that addressed housing costs at different angles including regs but we no ont be getting that plan anytime soon.
Don't forget refinancing is not free, often $10000 usd+ to refinance with application, origination, title, and other fees
Whatever bad luck you're having with rentals is nothing compared to how badly home ownership can go, renting isn't all that bad even if it is more expensive. What's really expensive and financially distressing is a sudden and expensive furnace / roof replacement, flooding, fire, the list goes on
Mortgages aren't going away anytime soon, start off with renting and see where that takes you before jumping into a $400,000+ loan
Well that's a super nuanced answer though.
IF OP can afford a house AND can keep enough emergency savings to deal with an issue, it may still be better to buy. Rental money is just gone forever in exchange for not assuming any risk on the property, but it retains no value.
If OP can't afford to buy at all, this post is stupid, so the question is really if there's no money left for emergencies. In which case, the obvious answer is keep renting because a single point of failure pushing you out of your house is a bad proposition.
If there's SOME money.... It just depends on the house. Some of the failure points are covered by inspection, but it could be risky. Better to not max out your ability to borrow if at all possible.
First few years are spent in interest so it's also going straight to the bank
Equity is uncertain in this market, especially with unexpected maintenance
Rent comfortably for a few years is still the better choice, buying a house now that might fall in price is a terrible risk
Depends how much money you have an the mortgage length you pick. Every payment covers some principle and some interest. There is no situation where you get a house and then just pay interest. This is a lack of understanding of how payments work.
The first few years are overwhelmingly paid towards interest and not the principal, it's not an equal ratio throughout the mortgage. I think you missed some fine print
If you get into a mortgage then sell in 2 years you would have paid off less than 2 years worth of payments to the principal and you're not getting that money back, that's straight to the bank
"The first few years go to interest" and "the first few years are overwhelmingly paid toward interest" are not the same thing. The shorter the term, the smaller the total amount of interest paid is (and often the better the rates), and the more principal only payments you can make the lesser the interest paid.
Of course interest fraction is different by payment, but it's not as though the first payments you make are a lost cause: mortgage payments are always contributing to your ownership, rent payments never are. It's only a question of liquidity in the moment. Depending on the OPs situation rent could be more than a mortgage payment, in which case I know which I'd rather pay (as long as I could afford the insurance) if I wasnt planning to move right away.
There’s a saying that goes along the lines of: “The best time to buy a house was 10 years ago. The second best time is now”. Rates are bad but you can refinance down the road. I was also on the fence because I wasn’t 100% sure yet if we’ll still be in our city in 5 years, but our lease was ending and I was getting tired of moving with ever increasing rent. Back in my home country, you typically buy a house and live there forever, so it was also a culture shock for me to learn that the average homebuyer in the US lives in their house for only 7 years before moving on. So I had to change my mindset, and we bought a house earlier this year.
Depends...
Got a path to immigrate to a country thats better than the US? Well just save the money and bring it with you when you exit.
No paths towards a country better than the US? Just buy a house like you normally would if the election didnt happen yet.
It's always a good time to buy if you are confident that you will live there for 3-5 years. Even pre 2008 crash, homes recovered in about 5 years.
The important part is avoiding becoming house poor. The payment you can qualify for and the payment you can afford are very different. There's plenty of online calculators that can show you what a payment would look like. In many states taxes can increase dramatically after the first year, so be prepared to pay more in the future. For a down payment, 20% is ideal but often unrealistic for a first time buyer. More is better, but don't clean out your entire account. You can put as little as 3% down, but that's a good sign you can't afford it if anything goes wrong
You can test drive a payment level while watching the market. Pick the price bracket that you think might be your max and calculate the payment. Then set up an automatic recurring transfer from your checking to a savings account for the amount of the theoretical house payement with escrow - current rent. This will help you see if you can manage a higher payment or if you will feel too house poor. Those savings transfers can be earmarked for the downpayment too.
When figuring out how much of a downpayment you can afford, don't forget to reserve money for closing costs which can be thousands of dollars. You will also need to reserve some emergency funds, and expect to buy a significant number of tools in the first few years. Yard care tools, ladders, etc. really add up.
If you look at places that need a little work, do your best to arrange to have all that work done before you move in. For example I wish we had our floors refinished before we moved in. To do that now would be a lot like moving twice.
I know your pain. I had the same problem in 2013.
Everyone said it was a horrible time to buy a house, "The rates/prices are too high, wait a bit" but I also couldn't afford to get an apartment that wasn't a roach motel for less than $1k per month, so I bought a house anyways. Now I'm laughing with my $750 USD mortgage while the idiots who kept telling me it was a horrid time to buy a house are bitching about their apartment leases that keep going up each year and paying out 1.5k to 2k per month in rent.
Renting really only makes sense if you know you are going to be moving a good distance frequently over the next several years. If you have a steady job you are planning on staying at for a while, better to buy. You can always rent it out if life changes your plans for you.
Set a time frame by which you want to move in, and a budget roughly 2 times but not more than 4 times your annual gross income and see what you can find for that in that time frame.
When my wife and I bought our house I was making roughly $50k a year, so we were looking at the $100k-$150k price point but wound up finding our home at $90K. Not a palace by any stretch and it needed a new roof, but it's been a great house. Basing our budget off just my income and aiming for the lower side of 2-4x income has allowed us to stay in our home even when me or my wife was out of work for a bit.
Look and see if there are any programs for first time home buyers in your area also. I forget exactly what program we qualified for but we were able to get our mortgage for $0 down at the added expense of mortgage insurance. It cost me more per month (and over all) than it would have if I had had the traditional 20% down but TANSTAFL.
Make sure you get a fixed rate mortgage though and not an adjustable rate one. I've a sneaking suspicion that rates may wind up going back up in a few years and such a roller coaster has cost more than one person I know their home.
rates are 7%, will likely drop a little more over the next 2 years. The sub 3% from 2020 was once in a lifetime. 40 years ago it was 10-15%. 5-7% seems like a decently fair mortgage rate. If I were going to loan out $250k, I'd want a 7%+ return on it..
You're gonna have to specify an area, and you'd be better off asking people from that area
Ah you're right. I figured the US overall would kinda answer the question. But I guess NW Washington state is where I'm looking.
If you can afford it and plan on staying a while, buying is the way to go. I'm in NW Oregon and waited to buy because I was nervous and thought I "needed 20% down to avoid PMI" and essentially missed out on an extra 1000sqft for the same price by waiting. Putting 10% down, my PMI was $40 a month, which is chump change in the grand scheme of things, and has already been removed due to increased value and payments.
Even still, buying in 2019 when I did, I'm in so much better shape now than if I'd continued renting. Rent would probably be $500-$1000 more each month, and I wouldn't be gaining equity on top of that.
Of course nobody has a crystal ball to make it 100% risk-free, but this is still a pretty solid strategy, and you live in an in-demand area in case you ever wanted or needed to sell, so you should be fine. If the interest rates go down substantially, refinancing is also a good idea.
How long will you live there? Generally 7 years is a good rule of thumb for rent vs buy. Selling is more hasstle and expense. 7 years of no rent increases (read inflation, and your raises) and some principal paydown mean typically your have done better. However that is a guess. Sometimes even one year is better to buy, sometimes 15 years is needed (new roof and other major evpenses) just to break even.
Tough to call. Prices are high right now, who knows when they'll come down. I look at it like this: my sister just bought a house for $120k and her mortgage payment is less than what she was paying for renting half a house. If the real estate market bottoms out tomorrow, her house value may drop and her mortgage payment stays the same. If she had stayed in the rental her rent would have stayed the same. After the lease expired the rent might have increased but the mortgage stays the same.
You’re not gonna see a huge drop in prices. You might see better rates, but you can refinance. Presuming you’re not trying to sell the house in the next few years, now is as good a time as any to buy. Housing will continue to be more expensive, except in the case of market crash, but even then the prices will continue to go up after leveling out.
I have no idea about the situation in the US but normally prices will always go up because inflation. Sometimes the price will flatline or go down for a bit because of lower interest rate on a loan but the also more people want to buy. More buyers == higher prices.
Some time ago I heard a story about a couple buying a house in the 80s in a big city for an extreme high price. Now that house is worth 20x more than it used to be.
But then again, I have no idea about the situation in your country. In my country even the cheapest houses are made to last at least 80 years.
Wish I could help but economic things have not made sense to me since 2016
No clue but my brother and sister-in-law are hoping for a housing market crash so they can get one. I hope it crashes so not only can they get one, but hopefully my parents (and by extension my other brother and I) would have a house to live in instead of an apartment. Though I feel as though my they would have an easier time getting one than my parents since, even though it's only a smaller business, he has a good job (not doxxing what he does, though).
There is strong likelihood of banking and us collapse. This also crashes housing.
If you would stop mortgage payments and squat if value goes down, and can get ultra high leveraged mortgage, then yes it's a good time to buy.
Big risk to all investments right now, but housing could do worst.
How safe do you feel in your area?
I used zillow. I heard all about the controversies. But it worked perfectly for me.
