Does it make any sense to buy a house right now?
Not sure what to do with lease coming up..really want to buy but supply sucks, prices high, interest rates high. Am I missing anything?
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Here's a key question in this environment in my opinion. How good is your credit and ability to make a down payment?
I think prices are going lower from here. However, if the banking system seizes up more, you don't want to be in a situation where prices are down but it's impossible to get credit even for good borrowers.
Im not in RE and am biased toward renting but have values gone down enough to reflect the higher borrowing costs? I’ve heard from a small sample size of people looking that they haven’t come down enough to justify the considerably higher borrowing costs.
I'm a potential first-time home buyer, and this is my take. Yes, prices have come down (slightly) but with the mortgage interest spike, you're paying a lot more. It's hard to be patient, but that patience will be rewarded. There's not many active buyers/sellers, but motivated sellers will set a new market clearing price, and it will be more buyer-friendly.
Just remember visavis the 2020-2022 housing bubble: whatever can't go on forever won't. It is popping now, so continue renting rather than catch a falling knife. my take
How long are you thinking of holding off? In a similar boat and tempted to bite the bullet this summer but prices just haven’t motivated me enough yet.
EDIT: So many variables that will impact this decision re: motivation for buying. Obviously if buying as an investment, clearly not the best time in general with higher rates and prices not having dropped too significantly, assuming you want to buy anywhere remotely desirable. My thoughts below are from the view of a looking for a home as a long term primary residence.
I find the macro data not all that helpful re: prices. It all just depends on exactly where/what you're looking for.
In the areas I'm interested in buying, prices haven't started to come down at all and in fact have continued to go up since last summer/fall, even with recent sales. I'm still seeing houses sell $100-150k over asking, all contingencies waived, and even some all cash in addition to the former two conditions.
If you're in a major market and there's limited great public school districts and there's high barriers/virtually no new single family home supply that's remotely affordable for middle to upper middle class (many people don't want to live in cookie cutter new townhome developments), chances are prices haven't budged, because demand is still very high and will remain so. And the eventual catchup in supply, in my opinion/prediction, is simply less desirable to the average person compared to owning your own traditional single family home.
Absent a major recession or larger scale financial crisis where huge swaths of the broader economy see layoffs, I don't see prices going down in highly desirable areas for traditional single family homes (not apartments, townhomes, etc.). Particularly for the homes within the range of what's affordable to upper middle class folks that don't have any major drawbacks, such as lack of a garage or basement when it's customary in the area, not pegged against a noisy highway, major repairs needed, etc.
I actually think now is an intriguing time to buy if you are 1) committed or at least prepared to hold on to the property on a 5-10 year horizon and 2) confident in your employment or have reserves to cover payments for 6-12 months. Depending on the market you are in I think it is likely prices will drop more over the next 12-24 months but if rates continue to rise your ability to borrow may be further restricted even if prices are lower. I'd be looking for properties that may be sitting on the market longer than others and making aggressive offers to see what sellers in the market are actually motivated to make a deal.
If you don't have an agent, find a good one who understands the process and is happy to help you find the right deal and is not just looking for a quick commission. Good ones are out there and if you find one the process will be significantly easier and will require much less of your time. Many times having a strong agent that is well known can be the difference between having your offer accepted and finding yourself in a pile of back-up offers. Do some research online and find a few candidates, a good indicator is to call them yourself, the good ones almost always answer or will get back to you very quickly. Ask a few basic questions about the process, you'll know in 5 minutes if the agent is seasoned or not. If you have a bad one, terminate the relationship as soon as you realize the problem as a bad agent can actually make the process more difficult than it would be if you represented yourself.
Not all sellers are ready to play ball yet but as the economic landscape develops more it is possible some sellers will shift from a position of consideration to a more urgent need to sell. If you find an opportunity that lines up take it. If not, sign another lease and continue to watch the market. Not sure what your current lease terms are but I would check for early termination and if you don't have that ability currently you could try and negotiate that at renewal, or lease somewhere else that offers better flexibility so you can be prepared to exit/buy out your lease early if you find an opportunity to buy. I've seen early exit clauses that don't require a buyout fee and instead only require 3 months notice and payment of rent for that period. A typical escrow on a home is 30 days, you could try and negotiate a 60 day close and only effectively be on the hook for 30 additional days of rent at this scenario, which could actually be nice during the process of moving especially if you buy a property that needs any sort of work before you want to move in.
Do you want to own a home? Do you want to own a home in the near future? If so, now is a fine time to buy. If this is a primary residence you expect to be in for a long time, don't bother trying to time the market. Buy less house and take less mortgage and the rates won't matter so much; you can always refinance out in the future if rates drop.
If you need a huge mortgage in order to buy enough house, then maybe rent another year. Generally speaking, supply issues are years away from receding in the most optimistic scenarios, which means that if rates go down again, prices will just go up to match.
It is market specific. Some people who were laid off, in the next 12 mos-24 mos may have need to sell. I would be interested to see where the air bnb market is. Stats from BB resi lenders have shown that houses under 1.5mm are more prone to softer metrics. Higher home prices 1.5mm+ are likely to keep their prices.
Don't forget, the money supply just increased by what 40%?! People's salaries are going to increase but just not at the rate of inflation. SO you will see it will be easier to afford the higher monthly payment long term.
Currently on the hunt right now and it’s brutal.
It makes zero sense to buy right now unless you have tons of cash in the bank or know for sure you will stay at the home for 5+ years. High interest rates aren’t the concern..it’s overpaying for a home and in 2 years wanting to refi and my appraisal comes down 10%-20%. There is limited supply which is why prices have not yet reflected increased borrowing costs. $500K+ for a less than 2Ksf home built in 1960 in some markets? GTFO
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