OT: Is it crazy to even consider buying a home right now?

[hoj]

Alright folks -- first time home buyer soliciting your collective opinions here.

I just finished up grad school and accepted a job in the same area as we are currently living (RTP/RDU area in NC). We have been planning for the last year or so to purchase a home once I graduated, and we have money saved for a sizable down payment if that is the route we choose. We are currently renting and we like the place we're at, however our monthly rent is quite a bit higher than our monthly mortgage payment would be (and yes we are aware of closing costs, potential for repairs, etc)

The housing market where we live is really competitive -- most homes in our zip code and price range that have sold within the last year have sold anywhere from 10-20% over asking price, and most homes generally sell within a week (trust me on this, we've already been outbid on several home offers -- and it's been the same story in this area for the past 6-8 years).

As you'd probably expect, we've had some reservations lately given the pandemic and the uncertainty it has brought to the economy. That being said, the housing market in our neighborhood has historically always been pretty competitive due to the proximity to Duke, UNC, NC State and the RTP area.

Are we crazy to even consider buying a home sometime in the next 2-3 months? We'll be here at least four years, and could pretty easily turn a home in our price range into a rental property if the market takes a hit and I move to a new position somewhere else.

Thoughts?

[zmalwo]

Not at all! The mortgage rate is at an all-time low thanks to the Fed's interest rate cut and money supply. This is the best time to buy a house since inflation will more than likely follow in the near future. the next few months will probably have the lowest loan interest rate you will ever see in your lifetime. Low interest, high inflation, you save a lot of money in the future.

[weisan]

Pandemic or not, don't over commit on your first home purchase. Take a more conservative approach, keep some cash around for rainy days.

[RWL2222]

Congrats. You are in an admirable position. I would value flexibility and risk mitigation foremost right now. Some sources of flex/risk you have influence over and others you don't.

One way to reduce risk is to start your job and get a sense of how good the fit REALLY is. This is an issue maybe 10% of the time, even in good times; much more so now. Unless you have worked for them before (consulting, part-time, project) it's hard to know for sure. Maybe there are politics, tectonics (reorgs) or personalities that your gut tells you might not be so great.

Rates are low now, but lenders will want two years of employment history in the same job for the best rates. You maybe able to make the case that it is the same field. Maybe your spouse significant other has two years history.

Four years is a short horizon for buying a house, but I am financially conservative. I would dig up some historical benchmarks for your area, maybe looking over the period 2008-12 for possible parallels for your region. I would guess that rents went way up, and have not come down much over the past three years, while housing prices have shot up in the past three. I would also guess rents will stay high for the next while, and house prices will decline. I am kind of bearish now overall, which pushes me to find sources of optimism.

If it were me, I would err on waiting a couple of months and start the job and get established. It is good that you have seen a couple of houses go by. Chances are that you will see another one come up even better, and with the confidence you have gained in getting set in your job, you can move quickly. I would not buy more house than I could afford (have cash for 20%, mtg<25ish% of gross income). I am not partial to new developments (unless is is really close to your work of your spouse's) as a first house, or houses that I would not be happy living in for 10+ years (or 20 in my case) if I needed to. Maybe talk to a real estate agent who grew up in RTP.

I could tell you all the mistakes that I have made, but these are some of the points that I got mostly right. My $.02.

[daker13]

Are we crazy to even consider buying a home sometime in the next 2-3 months?

I would not want to be selling a house right now, and if I were buying, I'd certainly wait a couple months to see the direction things were heading in. So I can see buying a house, just not RIGHT now. Look around, maybe August?

[Louis]

Just because you can afford it doesn't me you should do it.

If you think you're going to be starting a family soon and want the room or the "traditional home and white picket fence" for the kids to grow up in, then that's a good reason to do it.

If you and your wife really enjoy some the perks and chores that come with home ownership (entertaining friends often, having family come to visit stay a few days, maintaining the yard, having a vegetable garden, etc, etc) then those are some more good reasons to do it.

But think long and hard about the pros and the cons (there are a lot of those too). Don't just do it because a) it's what people do, or b) you think you can make money from it.

Finally, I wouldn't buy a house in an area unless I thought I was going to be there for at least 7-10 years. Anything less than that is IMO too short a period to make it worthwhile, no matter how much money you happen to have for a down payment.

[Spaghetti Legs]

I have no special expertise but I don’t think we’ve seen the bottom of the stock market and I think the real estate market is going to get softer as we settle into a couple of years of economic doldrums. In your shoes I would settle into the new job first to give yourself some time to get a feel for it, make sure it’s stable. I think this is a good time to have cash in reserve.

Congrats on the new job!

[old_fat_and_slow]

I can't imagine selling a house right now. No way I'd let all those lookie-loos to go parading through my house just because they have nothing better to do.

[AngryScientist]

we almost bought a house right before this hit. we were under contract, but it didnt work out because the sellers were idiots.

anyway, we dodged a huge bullet and were lucky.

many predictions are that the the value of real estate is going to plummet. i'm still keeping an eye on the market, because we need more space and need to do something soon, and prices seem stable at the moment.

i'm guessing between the looming recession, rate of unemployment, and the general malaise of the universe once restrictions start to lift in the US is going to drive down prices in a big way.

i would not buy right now. wait and see. you dont want to buy something now that the value of plummets in the next several months.

i would identify a few houses that interest you and keep an eye on their prices over the next weeks into months. i would also find a good realtor who has their finger on the pulse of the local market.

you are definitely in a good position. there will be people very very eager to sell soon, and you have nothing to sell yourself, so - win.

good luck!

[MikeD]

I would not want to be selling a house right now, and if I were buying, I'd certainly wait a couple months to see the direction things were heading in. So I can see buying a house, just not RIGHT now. Look around, maybe August?


Yes, wait. Prices are still high right now because sellers don't yet realize we're in a recession. Watch for housing prices to drop like a rock soon.

[OtayBW]

The housing market where we live is really competitive -- most homes in our zip code and price range that have sold within the last year have sold anywhere from 10-20% over asking price, and most homes generally sell within a week (trust me on this, we've already been outbid on several home offers -- and it's been the same story in this area for the past 6-8 years).
I believe you will likely find that the market has softened up quite a bit within just the last few weeks, with asking prices even dropping in the area I'm looking. If I were you - and I will likely be in your shoes soon - I would wait a bit as suggested here, but if you're comfortable with your new gig, I'd go for it within a ~month or two. Get prequalified through your lender before you shop, and you'll be in a much better negotiating position. Also, check the price/sales history of the houses you're looking at. Finally, if you go through a buyer's agent/broker, make sure you don't just get a 'tour guide', but rather someone who truly knows the market, neighborhoods, home valuation and potential for appreciation. They'll guide you to a better offer and save you money. MHO...

[Velocipede]

My wife works for Key Corp and they are getting out of home loans and home equity lines for a bit. More than a couple of big banks are doing the same thing. So just keep an eye on that.

[ColonelJLloyd]

i would not buy right now. wait and see. you dont want to buy something now that the value of plummets in the next several months.

Watch for housing prices to drop like a rock soon.

This is obviously going to be area/neighborhood dependent. I just don't see it happening in my zip code.

[mkbk]

Don't listen to me! We are under contract both ways in Boulder Co. We might as well be in San Fran or Manhattan as far as the local market goes. Two weeks ago we put an offer in on a ranch house at peak local panic, our offer was well under asking price, a bit of negotiation and our second under price offer was accepted. One week later our condo sold for asking price in 12 hours, with a back up contract that is even better. I say take some risk if you like where you are living. A mortgage is the only debt I carry and we will end up with a very small one at an un-heard of rate. I say banks won't want to lend this low for long, but what do I know, I ride Italian frames with Japanese components. :)

[hoj]

Thanks all for the replies, some good info here. Yes we feel very fortunate to be in our current situation -- I know many recent graduates are not going to be as fortunate given all the hiring freezes, furloughs, etc. We're already pre-approved and we already have a realtor that we trust and have been working with since before the pandemic hit. I also already have a very solid relationship with both my colleagues and my boss at my new position that extends back several years so no worries on that end either. :)

We are definitely on the conservative side when it comes to managing our finances (except for the occasional bicycle-related splurge), and last thing either of us want is to be house-poor so we've done our best to factor that in when deciding if we can afford it or not. I think our rationale has been that a worst-case scenario would be to turn it into a rental property if the market takes a dip and hasn't recovered by the time we're ready to move for work or family reasons. Always plenty of people willing to rent in this area.

The pandemic has forced a shut down of all open houses and showings in our area so inventory is terrible, but there are still just as many interested buyers since all the incoming residents, physicians, researchers, postdocs, etc still need a place to live this fall near the universities -- market demand hasn't softened at all for us and I doubt it will between now and end of summer, but we'll see.

Sounds like the most reasonable thing to do might be to wait a month or two and see how the housing market responds to the pandemic at a general, national level -- which might foretell how things will respond at a later date in a buyer-hungry market like ours. The low interest rates are certainly tempting, but a low interest rate doesn't mean much to me if the value of my home takes a nose dive off a cliff the moment we buy it.

[rnhood]

Nothing wrong with waiting, and nothing wrong with renting either. The triangle is a good area, as it's professional and many cycling clubs at hand. I have a home in north Raleigh and its a great area. But most all areas round here are good. I suspect you will live closer to your work. Take your time and be sure of what you want. No hurry.

[vqdriver]

so you're liquid and ready to buy during a period of stupid low rates??? yeah, you're the luckiest of all lucky lucks.
inventory will certainly bump in the summer and you should be able to tour homes by then. assuming your credit is good enough to take advantage of the lowest rates you'll feel like a genius in 3 years.

i suspect waiting too long will be a thing as banks drag their feet on loans while home prices drop then inevitably rebound. i would not try to time this. sure, prices could dip in the short term but there's pent up demand waiting on the sidelines too. one thing we all know is that rates have nowhere to go but up. if you find a home you want then pull the trigger.

[Ken Robb]

Thanks all for the replies, some good info here. Yes we feel very fortunate to be in our current situation -- I know many recent graduates are not going to be as fortunate given all the hiring freezes, furloughs, etc. We're already pre-approved and we already have a realtor that we trust and have been working with since before the pandemic hit. I also already have a very solid relationship with both my colleagues and my boss at my new position that extends back several years so no worries on that end either. :)

We are definitely on the conservative side when it comes to managing our finances (except for the occasional bicycle-related splurge), and last thing either of us want is to be house-poor so we've done our best to factor that in when deciding if we can afford it or not. I think our rationale has been that a worst-case scenario would be to turn it into a rental property if the market takes a dip and hasn't recovered by the time we're ready to move for work or family reasons. Always plenty of people willing to rent in this area.

The pandemic has forced a shut down of all open houses and showings in our area so inventory is terrible, but there are still just as many interested buyers since all the incoming residents, physicians, researchers, postdocs, etc still need a place to live this fall near the universities -- market demand hasn't softened at all for us and I doubt it will between now and end of summer, but we'll see.

Sounds like the most reasonable thing to do might be to wait a month or two and see how the housing market responds to the pandemic at a general, national level -- which might foretell how things will respond at a later date in a buyer-hungry market like ours. The low interest rates are certainly tempting, but a low interest rate doesn't mean much to me if the value of my home takes a nose dive off a cliff the moment we buy it.
Most comments here concern financial considerations and if you are sure you are going to stay in the area "forever" or as close to that as possible you should be working with your Realtor to find a home you LOVE rather than one that seems like a good deal. People who might have to move need to be more concerned about market fluctuations than people buying what is potentially there "forever" home. For the latter really low interest rates will probably be more important .

[SPOKE]

RDU/RTP is a great area to live. I moved here originally in 1977. This area has been growing, generally good growth, and home pricing has continued on an upward pace even during the dot com bust and the 08-09 financial mess. What I don’t know is what impact the current Corona virus crisis will have on the realestate market. Nationally we now have given back all the jobs created before the financial crisis. As a few others have said I think waiting a few months may be wise. Get settled into your new job to see how you like it and give this virus mess a bit of time to shake out is my advice. If the housing market takes a hit then take advantage of the opportunity. If the housing market isn’t impacted the mortgage rates will still be extremely low so you’ll still be in a good spot.

[KarlC]

This is obviously going to be area/neighborhood dependent. I just don't see it happening in my zip code.

LOL

sorry that made me lol

.

[ColonelJLloyd]

LOL

sorry that made me lol



Haha. Indulge me and tell me why housing prices are going to tank in my hood. 40205.

[Stan Lee]

Haha. Indulge me and tell me why housing prices are going to tank in my hood. 40205.

I'm with you, we have three houses in Lincoln, NE and a 200k house in a great area can't tank. Worse case scenario it may drop to 180 but my retirements seen a larger hit than that.

[Clean39T]

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[Clean39T]

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[mod6]

I would wait. I bought a house in 2006 for 370,000 for which I knew I was over paying giving the market signs. Come 2011 the house is worth 200k. I had a 5 percent mortgage rate that I could not refinance under TARP cause I was so upside down even with putting 20 percent down.

Two years from now I suspect that house will be much cheaper given the economic climate.

[echappist]

Thanks all for the replies, some good info here. Yes we feel very fortunate to be in our current situation -- I know many recent graduates are not going to be as fortunate given all the hiring freezes, furloughs, etc. We're already pre-approved and we already have a realtor that we trust and have been working with since before the pandemic hit. I also already have a very solid relationship with both my colleagues and my boss at my new position that extends back several years so no worries on that end either. :)

We are definitely on the conservative side when it comes to managing our finances (except for the occasional bicycle-related splurge), and last thing either of us want is to be house-poor so we've done our best to factor that in when deciding if we can afford it or not. I think our rationale has been that a worst-case scenario would be to turn it into a rental property if the market takes a dip and hasn't recovered by the time we're ready to move for work or family reasons. Always plenty of people willing to rent in this area.

The pandemic has forced a shut down of all open houses and showings in our area so inventory is terrible, but there are still just as many interested buyers since all the incoming residents, physicians, researchers, postdocs, etc still need a place to live this fall near the universities -- market demand hasn't softened at all for us and I doubt it will between now and end of summer, but we'll see.

Sounds like the most reasonable thing to do might be to wait a month or two and see how the housing market responds to the pandemic at a general, national level -- which might foretell how things will respond at a later date in a buyer-hungry market like ours. The low interest rates are certainly tempting, but a low interest rate doesn't mean much to me if the value of my home takes a nose dive off a cliff the moment we buy it.

That's not the worst case scenario. The worst case scenario is that the rent coming in won't even come close to servicing the mortgage. Granted, you are fortunate, in that the Triangle has drawn interest from elsewhere from a long time, and that companies there attract talent. Being a landlord is also very hit-or-miss; no easy money there.

If I were you, I would make the following checklist and only proceed after I check off everything.

-A) do you have a rainy day fund, preferably with at least 12-months worth of expected future expenses;
-B) if you are dual-incomed, are you two, combined, socking away a) at least the lesser of 15% of pre-tax income or $39K in company-sponsored retirement and b) $12K in Roth IRA or Roth backdoor. Alternatively, if you are single-incomed, are you socking away a) at least the lesser of either a1) 15% of pre-tax income or a2) $19.5K in company-sponsored retirement and b) $12K in Roth IRA or Roth backdoor;
-C) have at least 25% down (20% to avoid PMI, the other 5% for closing costs);
-D) plan to stay at least 5-6 years in the area; and
-E) played around with this rent v buy calculator (https://michaelbluejay.com/house/rentvsbuy.html) (don't use the NYT one, as it assumes the itemized deduction > standard). Make sure to run numerous simulations and understand the costs breakdown.

D is particularly salient, 5 years is usually the number of years required to break even with minimal appreciation in prices. There are a lot of fixed costs to consider (real estate taxes, closing costs, and agent fees when selling). You mentioned you will be there for four years, which is good, but the goal really should be at least six years. Buying a house with a mortgage is in reality buying on margin: the gains are amplified relative to the equity put in, but so are the losses.

If you are really serious about this, you should (if you haven't already) create an account on bogleheads.org, specifically in the personal finances subforum (https://www.bogleheads.org/forum/viewforum.php?f=2&sid=a69ad3c5707639f4e17f84d29dc48b37). The posters there will be much more able to break down the finances.

Lastly (as someone who is very cautious), all the above assumes you two are married. If not, a lot more legal issues to consider.

Good luck. I really like the Triangle (my dad lived there for four years and still has a rental there). And as a final anecdote, he moved into the new-construction house in December of 2009 (I think, could have been January 2010). The furnace went kaput in December of 2018, way before it should have (those have a 25-year service life). The house even has a dual furnace system, but the tenant (who has been quite good) demanded repairs. In the end, a new furnace was installed, at the cost of ~$5,500. My dad went with it, b/c he lived six hours away. The replacement cost was definitely on the high side, but even a more reasonable cost wouldn't have been too much lower. Expect to deal with this type situations as an absentee landlord.

[Clean39T]

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[echappist]

If you passed this test, congratulations, you were born a Kennedy.........

20% for a downpayment, 6 months rainy day fund, and 15% for retirement savings are points that almost any personal finance educator would advise. Look up an old episode of Marketplace Weekend, and you'll hear the host repeat these ideas over and over again. I upped it to 12 months, because of the current economic climate.

Point D is just basic math. Go ahead, play around with the rent vs own calculator, based on the assumption of low appreciation value and see what comes up. Here in Wisconsin, the sunk cost alone on a 350K house for four years is $35K in taxes, $28K in closing cost and agent fee, and $30K in interest. Recouping has to be compared against rental cost during the same time and housing value appreciation/depreciation. In general, longer the stay, the better.

Your hyperbole suggests that only the ultra rich and wealthy could meet it. That's far from the truth, and you and I both know it.

[Clean39T]

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[cinema]

consider the cost of waiting to buy for two years. lets say one pays 2k a month in rent. basically throwing cash into an incinerator. 24k over 2 years.

as fed drops rates to 0 cash begins to look like oil. houses and land rights a bit better. almost all equities function as deflationary assets in a time such as this. The central bank is debasing our currency and riding it into the ground.

If you are lucky enough to be able to buy a home for your family you will likely not regret it. and if you are looking to extract as much value/profit from an asset as possible the right time to sell it is usually never. Being bearish makes you sound cool and smart when/if you’re right once every ten years, but it doesn’t help you if you are truly in it for the long haul and for the benefit of your life and your family and your childrens children.

Put as much down as you can while having a year or so of cash left. For us, we were fortunate to be able to put around 30% down but havent closed yet. Looks like we may back out due to dumb, greedy seller, but my point is a big down payment helps out a lot.

[pcxmbfj]

Buying a house is more than just a financial decision it's lifestyle and temperament. Do what you want.

[benb]

My guess is it could be a year or more before stuff even bottoms out.

My wife and I bought our house in 2010. Massachusetts did not crash prices after 2008 to anywhere near the degree places like Florida or Nevada did but there was still a drop and we were near the bottom still 2 years after the recession started.

Our place is actually a duplex. We paid about 20% less than our neighbors who bought before the crash, and our side the developer had to add a nice detached garage and finish the basement.

10 years on the house just appraised for about 50% more than we paid when we refinanced and our equity is 2x the mortgage. We’ve refinanced 3x and have a 15 year mortgage with a payment that is less than our rent was in 2009. Our rent + taxes are still much less than an apartment like the one we had is now.

Stuff is and was still ridiculously expensive here of course though.

You’re basically in the same situation we are. No home to worry about selling in a down market so you can wait and be very careful. I’d maybe just be careful about keeping your down payment safe. You might want to make sure that money is a little more conservatively managed.

Buying well here could make a significant difference in your financial future.

[hoj]

Thanks all for your collective input -- definitely some reasonable advice here. I think it seems rational for us to wait a few months if we can to see how things play out.

On the other hand, anyone care to chime in with their opinions on the article linked below? I recognize this particular link is from Zillow, who inherently has a vested interest in promoting confidence in the housing market, but I've seen countless articles around the web with similar talking points as I research more about the possibility of buying a home.

http://zillow.mediaroom.com/2019-08-06-Recessions-Typically-Have-Limited-Effect-on-the-Housing-Market

Anyone have thoughts about why a similar scenario --- ie, the housing market not being impacted by an upcoming recession --- wouldn't be applicable in the case of a COVID-19-induced recession? It seems a little counterintuitive to me that the massive unemployment we've already seen in the last month or so wouldn't also have negative consequences on the housing market.

Thanks all in advance!

[dustyrider]

I wouldn't base your decision off of the market and what it might do. Do some of the basic math on your own for the market you live in before you make up your mind. I don't think paying rent is burning your money. When you rent, you don't have to put any money into the home you're renting which can be significant depending on what you can afford to buy. Go ahead and call up a roofer for an estimate and you'll quickly see what I mean. Let's say you're handy and don't mind doing the roof yourself when the time comes, materials and tools alone are expensive. And don't forget your personal time... I consider mine as priceless. With all that in mind, is renting really a bad thing?

Five years ago I decided to do a lot less riding, and bicycle purchasing, and put my time and extra money into a house. I wanted to live close enough to work so I could walk everyday, and I wanted to invest my money in something I could own forever. The idea for me was to not put so much money into a market that could see my returns disappear in the blink of an eye. I really feel for those folks trying to retire right now, just like I did when my father got out in 2008. Hundreds of thousands of dollars gone over night...

Before I started looking at houses, I spoke to a lender. After jumping through their hoops, they said I could start looking at houses in the 250k range when I bring in under 40k a year. I did have plenty of savings(thanks to low rent) but knew that the mortgage alone would tank me in a few years. I made sure my realtor knew to only show me homes in the 150k range, and in the end settled on a foreclosure that I'm still happily sinking money into. Within 6 months I had to spend close to 8k on a new sewer line unless I wanted to be swimming in my own grey water. The next summer my neighbor bought two pitbulls that were climbing over the fence to eat me and my old dog. 2k for a privacy fence to keep the beasts at bay. The next summer water main, then irrigation for lawn, and the list goes on. Never mind that I'm building an addition and remodeling the entire place. Money that I could sink into the market, and possibly lose forever, is going into making my home a place I can see myself living in forever. I keep kidding myself and saying I'll be back to riding everyday, but there's always something else to do when you own a home. I'm sure if I made the kind of money folks here on the Paceline do, I could have bought a brand new home, or pay someone to do all the work for me and then I could spend all my extra money on custom bikes. But the career that brings me meaning and joy doesn't pay me enough to do that kind of stuff. I get out when I can and enjoy what I have. Everyone makes choices, the trick is to be happy with the ones you make!

[Elefantino]

Where in the area are you looking?

[Tickdoc]

Kids?

Always a factor for home ownership, for me at least. Owning offers a ton of security and peace of mind, but with 4-5 yrs only before a possible move, I’d consider renting, and saving. You get some decent first time perks when purchasing, and rates shouldn’t be going anywhere anytime soon. I mean, they can only go up from here and with the financial fallout/recovery(?)looming you can save money towards buying what you really want where you really want it.

FWIW I thought we would be in our current house only for 4-5 yrs until we bought or built something better and I’m still here 16 yrs later. Hell I’d stay here if it weren’t for hgtv convincing my wife we need to upgrade. It’s still more house than we need and positioned perfectly between work. And I can reach country roads for riding within a few miles:cool:

Best of luck!

[hoj]

Where in the area are you looking?

Durham primarily -- near Woodcroft/Hope Valley neighborhoods if you're familiar with the area.

Kids?

Always a factor for home ownership, for me at least. Owning offers a ton of security and peace of mind, but with 4-5 yrs only before a possible move, I’d consider renting, and saving. You get some decent first time perks when purchasing, and rates shouldn’t be going anywhere anytime soon. I mean, they can only go up from here and with the financial fallout/recovery(?)looming you can save money towards buying what you really want where you really want it.

FWIW I thought we would be in our current house only for 4-5 yrs until we bought or built something better and I’m still here 16 yrs later. Hell I’d stay here if it weren’t for hgtv convincing my wife we need to upgrade. It’s still more house than we need and positioned perfectly between work. And I can reach country roads for riding within a few miles:cool:

Best of luck!

Yep, we've got two young kids and another due in less than two weeks -- definitely an interesting time to be adding another kid to the family!

Renting and saving is something we are definitely considering even though our monthly cost of rent would be significantly higher than a mortgage payment -- primarily due to the fact that we aren't sure if we'll want to stay here 4-5+ years from now depending on career moves and other considerations. And if things really do get dire due to longer-term effects from the pandemic, having money in savings and the luxury of being able to uproot and move where we need, without having to deal with selling a house, isn't a terrible position to be in by any means.

Pros and cons all around :)

[the bottle ride]

I would wait-
Unless the government steps in, this sadly will spur a spate of mortgage defaults (which someone else mentioned took about 2 years to bottom after 2008) - even with promise of the fed to backstop many businesses with their asset buying programs, we have not yet begun to feel the real economic damage since the start of the pandemic.

this is a resetting of asset values across all spectrums of asset classes.

the upside as a buyer, if you can wait long enough you could get your dream house 25-45% cheaper in time.

[Elefantino]

Durham primarily -- near Woodcroft/Hope Valley neighborhoods if you're familiar with the area.
Yep. Some beautiful homes there. And they don't last long!

[echappist]

And rent v. own calculators are great, but you can drive a truck through the assumptions embedded in most of them - and they can't account for the intangible benefits of putting down roots, not dealing with landlords, autonomy, etc. that some may value more than the calculators' calculations calculate.

I'm no personal finance advisor. I spend too much time and money on bikes. But I do enjoy my life..

Sent from my Pixel 2 XL using Tapatalk

Of course rent v own calculators have assumptions that leaves much to be desired (see NYT's calculator's glaring hole on the assumption that it would be more beneficial to itemize, with no way, at least last time I checked, to assume standard deduction). The point of the whole exercise is to understand what costs are sunk, what costs are recurring, and how one could recoup.

And of course the purchase of real estate has intangibles involved as well, but it is, first and foremost, one concerned with the boring (but necessary and pedantic) dollars and cents. That's why for the vast majority of us, considerations from that perspective represent the proper starting place.

I'm also afraid that you have projected way too much of your own circumstances into this (upthread you mentioned wanting to put down roots). There is nothing preventing one from doing so, when one is renting. As for autonomy, you are conflating real estate with owning of single family houses. Condominiums and townhouses are also forms of real estate, but both have significantly less autonomy (try putting up curtains of the "wrong" color when living under an HOA and see what sort of paroxysm that may elicit). In contrast, one could rent a single family home and have quite a bit of autonomy.

Durham primarily -- near Woodcroft/Hope Valley neighborhoods if you're familiar with the area.



My dad's place is about three miles from there. We still keep a good tab on it and the real estate of the surrounding areas. Knowing how much he would charge for rent, if he were to rent it to someone new, and knowing how much comparable properties go for, it would appear that the time period to break even is six years, assuming no real estate asset appreciation, 2% rent increase year-on-year, and 1% annual return on other investment.

In many ways, renting from a private party might not be the worst thing. Any time the property sits vacant is a time when the landlord has to dip into his/her own pocket to pay for upkeep. Commercial rental companies already have this built into their finances. During tough times, and especially as it sounds like you probably have the means to pay for a few years' worth of rent if needed, one can extract better terms from the landlord. Even during more prosperous times, private party landlords do not increase rent as much and as often as commercial companies do, if they realize that they have a good tenant. And with private party, one would be renting a place that meets one's own space needs.

[54ny77]

if you want to buy a place and can afford it, buy a place.

don't overthink it. it's a home, not a stock or financial instrument. mountains of intangible benefits, also mountains of direct costs.

and if you break even on sale, great. if not, oh well. chances are you'd have pissed the money away anyway on rent, assuming the rents are comparable to all-in costs of ownership.

[OtayBW]

In terms of the intangibles, I'll say that I just have never felt quite 'at home' in any place that I've rented....

[EDS]

we almost bought a house right before this hit. we were under contract, but it didnt work out because the sellers were idiots.

anyway, we dodged a huge bullet and were lucky.

many predictions are that the the value of real estate is going to plummet. i'm still keeping an eye on the market, because we need more space and need to do something soon, and prices seem stable at the moment.

i'm guessing between the looming recession, rate of unemployment, and the general malaise of the universe once restrictions start to lift in the US is going to drive down prices in a big way.

i would not buy right now. wait and see. you dont want to buy something now that the value of plummets in the next several months.

i would identify a few houses that interest you and keep an eye on their prices over the next weeks into months. i would also find a good realtor who has their finger on the pulse of the local market.

you are definitely in a good position. there will be people very very eager to sell soon, and you have nothing to sell yourself, so - win.

good luck!

I was also thinking prices would drop but in the NYC area I think the rush of city folks looking to move to the burbs, coupled with low inventory, is having the effect of stabilizing prices. Might not last, but interesting right now.

[Jeff N.]

If you got the bucks and your job(s) is (are) Covid-proof, I'd say go for it. No better time.

[verticaldoug]

All real estate markets are local. Local dynamics are the drivers. It's impossible to give you advice without knowing the industry that drives the areas you are looking at. If these industries are coronavirus recession proof, and you feel your job is also in an area unaffected, then do it. If you think this is not the case, then you don't have much down side in waiting. Have you seen anyone move out of your apartment complex yet? If rents go down, it's hard to believe home prices can rise.

For example, real estate in the NYC suburbs in Westchester/Fairfield Counties which were often dominated by finance, have been slow for a while now. With what is happening on Wall Street with work from homes, I think firms will downside thinking they need fewer and fewer people. I'd hate to be middle management on Wall Street now.

If you are in biotech, data science, you are probably continue on a tear.

[zmudshark]

The real estate market in PHX is insane. I can't believe what places are selling for, especially in the under $500k market. Easily over double what comparable homes would be in the Ann Arbor MI area, where my permanent home is.

[Alstra]

It is not crazy. Just pay attention to your feeling and the inner world because if it is the right choice, you will feel it in your heart. In general, if you want to buy a house, you need a large amount of money. Do you have this money now? If not another option would be to take credit and pay in installments because many do the same and have no problems. I can also help you with advice that if you still want to take out a mortgage, it is best to turn to companies like Mortgage Advice Hull (https://www.Hullmoneyman.com) that will help you with every step and detail so that you don't make mistakes.

[saab2000]

The real estate market in PHX is insane. I can't believe what places are selling for, especially in the under $500k market. Easily over double what comparable homes would be in the Ann Arbor MI area, where my permanent home is.

This is the case where I live as well, which is one of the 'burbs west of Chicago. I was told it was dumb to buy there, that everyone is leaving IL, taxes too high, horrible place, etc. The reality is that I could have sold at a profit the next day after I bought it. Of course, that doesn't account for my mortgage costs and the fact that I don't plan on leaving for a while. But the doom and gloom sayers (mostly with a political bent and obsessed with taxation or lack thereof.....) all predicted negative things. That hasn't turned out to be true.

Turns out there are plenty of people willing to make an effort to move into a place with a good school system.

I just refinanced my place too, getting 2.75%, a rate I thought was inconceivable not long ago.

[oldpotatoe]

It is not crazy. Just pay attention to your feeling and inner world.
:):)sorry, couldn't resist..