What would you do? Housing market stress!

[Immadismom]

How can you say this with any certainty without knowing the local market?

Renting is like 40% cheaper than buying in the area we live. It's not even close.

Our rent is $3700, locked in until June 2023. If our landlord decided to sell us this house right now, it would cost us almost $6000/month to keep living here.

There is not one house for sale here that we could purchase and keep our monthly payment at $3700.

Yikes! That’s a reality check for sure.

Our current rent is $1,200 per month. If we rented this house in the current market, it would be $2,000 per month. We really need slightly more space now that we both work from home, which means rent would be more like $2,500 per month. For the houses we’re looking at, our mortgage will be about $2,200-$2,700 per month. Of course I’d prefer to be in the $2,200 range. But realistically, with the houses we’re finding, it’s going to be more around $2,500-$2,700.

 

[dvcgirl67]

Are you sure you didn’t get that post mixed up? The Federal Reserve running the printing press 24/7 is a major contributor to housing price inflation. And is the reason that prices won’t collapse. The value of the US dollar will collapse but not housing prices

Only if all of those dollars created out of thin air....remain cheap and easy to get. The Fed is now dealing with the monster they created.....trying to slow down that printing press while maintaining growth in a hot inflationary period....that the printing presses around the world created in the first place. And I'm not calling for a massive bubble burst like we saw in 2008-09, but I would not be surprised if we saw a 5-10% drop in values....followed by a long plateau with minimal price movement.

There are also a lot of other balls still in the air with respect to housing and the economy overall. China is shutting down large manufacturing cities due to covid outbreaks that will impact supply chains. And if this invasion of Ukraine goes sideways and there's greater involvement by other nations (NATO)....we could see a global recession that would severely impact the overall economy and the housing market. As it is, just with the drop in Russian GDP output, the world will be affected on some level.

 

[Immadismom]

I guess it depends on your market. Here, the market to buy a house is crazy, but the market to rent is far worse. That is one of the factors driving people to buy and overbid on houses, they can no longer afford to rent.

This is our market. Buying will be the same or cheaper per month. We just have to factor in maintenance, etc., which we can afford. We just did not want to be locked into the town we live in currently after our kids finished high school. DS graduated in December, so the timing fits.

 

[RamblingMad]

Your biggest risk is rising rates. That should slow down the rise of home prices as more and more homes will become unaffordable.

There is no right answer today. We have a housing shortage due to baby boomers having too many kids. And this is made worse by supply shortages of building materials.

And rents are likely to continue to rise as they lag behind home prices by around a year.

The current home I live in is up nearly $300k since the start of the pandemic. That's pretty nuts. But it keeps going up. Rents around me are all up double digits too.

 

[Immadismom]

Your biggest risk is rising rates. That should slow down the rise of home prices as more and more homes will become unaffordable.

There is no right answer today. We have a housing shortage due to baby boomers having too many kids. And this is made worse by supply shortages of building materials.

And rents are likely to continue to rise as they lag behind home prices by around a year.

The current home I live in is up nearly $300k since the start of the pandemic. That's pretty nuts. But it keeps going up. Rents around me are all up double digits too.

This is my thought as well. We’ll press on & hope for something to pop up in the next 4-6 weeks. If not, we’ll rent again.

 

[BK2014]

We decided to buy now even with the crazy prices. We expect our rent to increase significantly if we were to renew in August. I am not a real estate expert, but we decided that it seems possible that home price increases may slow down, but we didn't think that there was any reason to believe there would be significant drop in home prices in the next 6 months to a year.

 

[barkley]

We have a housing shortage due to baby boomers having too many kids.

before us boomers get blamed yet again for something-please keep in mind that according to the stats that are kept on this kind of stuff-'we' (those of us born during the baby boom) gave birth to smaller numbers of children per person/household than previous generations. with some it was due to personal choice, with others it was due to new advents in birth control. stats show that upwards of 20% of female boomers never had children. when it comes down to running numbers-we had less kids than previous generations it's just that there were more of us so the result was higher.

but we didn't think that there was any reason to believe there would be significant drop in home prices in the next 6 months to a year.

i'm wondering what fuel prices will do to the housing market, at least in the market i live in. i live rural such that unless someone has a work from home job they are looking, at minimum, at a 30 minute (non traffic-just distance) one way commute to the closest/most common employment hub. when the pandemic hit/housing market exploded rural properties went nuts-listings getting multiple offers of 20% above asking. as new neighbors moved in i noticed that they must commute to jobs b/c i see a line of headlights going down the roads before the sun rises along with a similar line coming back in after the sun sets. now, we live in a state that bases property taxes in part on values but also on what you paid so these folks who (i.m.h.o.) grossly overpaid for their homes are also paying 2-3x what others of us are paying for taxes. tack onto that having to get specialized overpriced homeowner's insurance (their lenders require minimum coverage for the amount of their loans, traditional insurance carriers value the rebuild at actual rebuild vs. the inflated prices they paid so they are doing costly additional coverage to make up for the shortfall) and now add in our rapidly exploding gas prices.............it's got to take a hit to someone's budget.

 

[aprilgail]

Our rent is $3700, locked in until June 2023. If our landlord decided to sell us this house right now, it would cost us almost $6000/month to keep living here.

There is not one house for sale here that we could purchase and keep our monthly payment at $3700.

That is not a bad rent for a house- my daughter graduated college in May and she and her boyfriend are renting a 3 bedroom house near his job and they are paying 4400 a month plus utilities (their gas and electric bill last month was 875.00 for the month!) They could never afford to buy where they are living right now.

 

[MamaBelle4]

I'm another vote for rent for a year.

You never know how things are going to go, but I'm a huge believer in looking at historical trends. And I'm obviously not saying this is what is going to happen because so much has changed and there are so many variables. But.

The last pandemic and simultaneous world crisis and the ending results to the economy and other mitigating factors led to the great depression.

Are things different right now? Of course they are! Are they different enough? Probably not. There's not a lot of fail safes in place to prevent a complete collapse.

I, personally, wouldn't choose this moment in history to buy a home for more than it's worth and hope for the best.

 

[OhMari]

Do you have friends, family in a neighborhood that you want to maybe buy a house near them. When we built our home in 2014, there were only 20 homes. Now there are 50. In the last 5 years, no one, and I mean no one used a realtor. Some neighbors would post in our neighborhood Facebook page, that they have friends or neighbors looking to buy and is anyone welling to sell. Some post that they are retiring and moving and letting everyone know, and they pretty much have an offer and are naming their price and getting it. They get papers written up by lawyers, pay the title company for the transfer of ownership. Last summer we had people come to our neighborhood and they were knocking on neighbors doors, asking if they are interested in selling their home. My neighbor gave them a ridiculous high amount, the house was assessed at $300,000 and he said $750,000 and the people said yes. My neighbor built a new home a subdivision over for $450,000. In the midwest, building is at $220 a square foot.

 

[BK2014]

I, personally, wouldn't choose this moment in history to buy a home for more than it's worth and hope for the best.

But that is the question/dilemma, isn't it . . . that people are only paying more than homes are worth if the prices eventually come back down. If the prices only level off or increase at a slower rate, than buyer who bought at today's prices weren't actually paying more than what they are worth. And in some areas, like Orlando where I live, the high number of people constantly moving here make it less likely that prices will do anything other than keep increasing, even if at a slower pace.

 

[RamblingMad]

But that is the question/dilemma, isn't it . . . that people are only paying more than homes are worth if the prices eventually come back down. If the prices only level off or increase at a slower rate, than buyer who bought at today's prices weren't actually paying more than what they are worth. And in some areas, like Orlando where I live, the high number of people constantly moving here make it less likely that prices will do anything other than keep increasing, even if at a slower pace.

People aren't paying more than homes are worth. Homes are only worth as much as people are willing to pay for them. Given the supply the shortages and delays in building materials, there is no guarantee that home prices will go back down. Now, higher mortgage rates should shrink potential buyers, but that's more likely to slow down price increases, not decrease them since we have about a third of the supply compared to pre-COVID supply levels.

The reason why homes dropped last time was a lot of foreclosures that dumped too much supply. Today, the underwriting is still strict enough that that event is not likely to happen in the short term.

 

[Immadismom]

OP here…we have an offer in on a house at this very moment. We saw the house yesterday as soon as it hit the market, and made the offer in hopes that they’d accept and go under contract. Unfortunately the sellers have opted to wait for weekend showings Before making their decision. As we sit now, our Offer is $35k over asking price and is our very highest we are willing to offer. However, it still may not be enough to seal the deal.

 

[MillauFr]

People aren't paying more than homes are worth. Homes are only worth as much as people are willing to pay for them.

Exactly correct. What you think the house is worth is completely irrelevant.

 

[barkley]

The reason why homes dropped last time was a lot of foreclosures that dumped too much supply. Today, the underwriting is still strict enough that that event is not likely to happen in the short term.

i dunno. i've heard of far too many sales wherein the appraisal came back far below what the buyer offered yet somehow the buyer manage to miraculously come up with upwards of 50K more in a down payment overnight. seems to me that if i had that kind of change sitting around liquid and accessible i would have planned it into my original down payment (cuz liquid these days sure isn't earning anything sitting in a s/a or m/m account). me thinks there's some just as sketchy financing going on these days as there was back prior to the bubble bust.

 

[MamaBelle4]

People aren't paying more than homes are worth. Homes are only worth as much as people are willing to pay for them.

Right BUT OP just posted that she offered 35K over the asking price and she's not sure she's going to get that house (I hope she does if it's what she's looking for!).

That kind of bidding is driving prices up and up and up. The house was appraised and listed for sale for less than that. It is currently a seller's market. It will not permanently be a seller's market. These things fluctuate all the time.

When it's a buyer's market again, some people are going to eat some serious losses because they over-bid on the value of the home and they won't be able to re-coup it.

 

[tmg4612]

DH and I have been looking for a house since mid-January. We’ve been renting a house for 8 years, but our landlord is selling it when our lease ends at the end of May. He has said he’d work with us on time if we need an extra month-ish of time to finalize our new location.

The housing market STINKS! We have had to expand our radius a LOT to get any hits in our budget. We’ve seen at least 20 houses, if not more. We’ve been outbid on two. We’re REALLY kicking ourselves for not bidding $10-15k more on house #1 (we bid $16k over asking, as it was) because it was perfect in every way (Size, location, features). Not positive that would have gotten us the house, but would have been a better shot. Now, nothing else has lived up to house #1.

We have 4-6 weeks left to find something before it’s panic time and we have to look at renting something else for another year.

I feel like our realtor is super frustrated with us. We almost cancelled a showing this afternoon because we just weren’t feeling it. But she did a FaceTime showing with us instead, because she felt the house could be “the one”. It was ok. But we didn’t get that feeling we have had on the other two we’ve bid on where we could see ourselves living there. It was simply ok. And in this market, we both feel like that’s not enough. In a normal market, this house would be $300-325k. It’s listed at $435k. Our realtor does feel it’s overpriced for the condition of the house, and recommends an offer of $400k. BUT….this is a big but for us….we will be going into this house (or any house an the moment) knowing we’ll have to stay there for quite some time to be able to recoup our investmeant, as we’ll be buying at the top of the market. This is not our dream location, by any means. We’re already settling on the location, because we’re priced out of where we’d prefer to buy.

With all of this said, do we keep on trecking & hope for something we really like/love? Or do we settle for just ok, since we’re having such a hard time finding anything?

I’m also house hunting, finding it difficult, and being steered toward renting. But rents are really high now too and I can’t justify paying a rent that’s higher than what a mortgage would be.

 

[tinkerbellandpeterpan]

I am currently renting in Philadelphia and although the location isn't ideal for my husband's commute there is no way we are moving now. Rents are way too high and we are lucky we locked in and our landlord (who lives across the street) is happy to have tenants who pay on time and maintain the property. We would easily pay double for the same property we have now if we were to move. Buying a house isn't even on our radar right now with the sky high prices. We have lived in the area 6 years and housing prices have seriously doubled at a minimum. It's insane.

 

[Cadiewampus]

DH and I have been looking for a house since mid-January. We’ve been renting a house for 8 years, but our landlord is selling it when our lease ends at the end of May. He has said he’d work with us on time if we need an extra month-ish of time to finalize our new location.

The housing market STINKS! We have had to expand our radius a LOT to get any hits in our budget. We’ve seen at least 20 houses, if not more. We’ve been outbid on two. We’re REALLY kicking ourselves for not bidding $10-15k more on house #1 (we bid $16k over asking, as it was) because it was perfect in every way (Size, location, features). Not positive that would have gotten us the house, but would have been a better shot. Now, nothing else has lived up to house #1.

We have 4-6 weeks left to find something before it’s panic time and we have to look at renting something else for another year.

I feel like our realtor is super frustrated with us. We almost cancelled a showing this afternoon because we just weren’t feeling it. But she did a FaceTime showing with us instead, because she felt the house could be “the one”. It was ok. But we didn’t get that feeling we have had on the other two we’ve bid on where we could see ourselves living there. It was simply ok. And in this market, we both feel like that’s not enough. In a normal market, this house would be $300-325k. It’s listed at $435k. Our realtor does feel it’s overpriced for the condition of the house, and recommends an offer of $400k. BUT….this is a big but for us….we will be going into this house (or any house an the moment) knowing we’ll have to stay there for quite some time to be able to recoup our investmeant, as we’ll be buying at the top of the market. This is not our dream location, by any means. We’re already settling on the location, because we’re priced out of where we’d prefer to buy.

With all of this said, do we keep on trecking & hope for something we really like/love? Or do we settle for just ok, since we’re having such a hard time finding anything?

Don't settle. Last year my sister and her husband sold their house in Florida and moved back to Georgia and moved in with us. They were with us a couple of months and thought they were imposing on us (they weren't). They saw a lot of houses but they would sell almost immediately. Anyway they settled for a house that needed some repairs and they didn't really love it. Couple months of living there, they sold it and found a house they really liked and bought.

 

[Forevermarypoppins]

My parents always said to buy the worst house in the nicest neighborhood you can afford. Are there any fixer uppers or foreclosures in your preferred locations? I would settle at the right price, but it sounds like you're settling and not getting a good deal. I don't think I could settle in the current market, but that's just me.

This ,this, and this for any first time buyer! **** Unless, said buyers are very ,very financially secure.

Ask yourself repeatedly "would I pay 5% -15% over sticker price for a car"? Would I be willing to pay more for all else that I want and buy?

I admit though, I can not fathom what is going on in the housing market right now!