I own a house?

[Johnny English]

Unless you're planning to flip it quickly it shouldn't really matter. Now's a good time to buy because money is still cheap, so you can lock in a decent long term rate. There's no real reason for prices to crash any time soon - economic fundamentals are fairly solid unless Emperor Fuckwit decides to break excrement, which is obviously possible - so as long as you're comfortable with your payments and looking for a medium to long term home (i.e. five years or more) I don't think there's any reason to be overly concerned about market stability.

[Miamipuck]

Ive been saving for a house but I'm hesitant on buying because the market seems inflated in the North Jersey/NYC Metro area. A shitty little 2 or 3 bedroom house goes for minimum 300k. I don't see that being sustainable considering everyone in their 20s to early 30s is saddled with tens of thousands of student loan debt

This is a non sarcastic, serious response.

A couple of things here I think over ride the frothy market. I have owned a home for 20 years and currently renting. I have seen the hills and valley's in the market in that time.

1.) Rates are at a historic low. If you have good credit, you can get a very low rate. A rate that is about as low as you could have received in the last 40-50 years. This will save you tens of thousands in interest payments. I am not sure how long rates will stay this low and it really doesn't matter. You can get a 15 or 30 year fixed rate mortgage. All things equal it's better for you to pay a little more for the price of a house and much less on the interest.

2.) As long as you buy a house you can afford, with payments you can afford, and get lowest term for your mortgage you can afford, it doesn't matter how much you pay for your house. The daily, weekly, monthly and yearly fluctuations in the market are just noise. You just keep making the mortgage payments and eventually your principal will start going up and up and up. Certainly, some years will make your house purchase seem like a good investment and other years not so much. However, after 10-15-20-30 years however long the mortgage is for, after an appreciable amount of time, you will have a good deal of equity.

3.) The deductions and write offs will be substantial enough to really make up for the price of the house even if it was a little bit higher than you would have liked to pay. For instance, from 2011-2015 I was getting back a substantial amount on my taxes in part because I was writing off the interest and the taxes on my house. You can not do that as a renter.

Again, it all depends on what you can afford. If interest rates climb substantially there will be some carnage in the real estate market to be sure. I don't think it will be nearly as bad as what happened in 2007-08, where the market collapsed by at least 50% and in many area's way way worse. However, you will be paying a ton more in interest and the banks would be happier lending to you because they're going to make a bundle on your mortgage.

 So it's a catch 22, buy now with much lower rates or buy later and pay higher interest. There are good deals out there, you just have to find them. When you do find them don't be concerned with the day to day pricing of real estate, unless of course you're strictly doing it for the investment. If that's the case then it's a completely different conversation.

edit: I don't think there's a danger of interest rates climbing substantially. They will probably climb slow and steady if at all. I don't think the economy both here and abroad is all that great right now. So we have a period of time that's more or less price stable. At least I don't see any catalysts other than a terrorist attack or something stupid perpetrated by N. Korea. That's stuff way beyond anyone's capacity for prediction.

[Badger]

the market seems inflated in the North Jersey/NYC Metro area.

Slight understatement, it's like saying the bubonic plague seems like a bad time.

[Pope]

Slight understatement, it's like saying the bubonic plague seems like a bad time.

Well this area will naturally be much more expensive but I think it's grown even beyond the typical NYC+burbs rates. West coast is even worse, something's gotta give

Sent from my SM-G900A using Tapatalk

[Johnny English]

Well this area will naturally be much more expensive but I think it's grown even beyond the typical NYC+burbs rates. West coast is even worse, something's gotta give

Sent from my SM-G900A using Tapatalk

Why does it? A 2/3 bedroom house for $300K is incredibly reasonable, and well within a huge amount of household budgets. A $350K house with 5% down over 25 years is probably going to cost around $1500 a month. I don't see that crashing, at all, without massive employment issues occurring.

Bear in mind as well that houses get cheaper on long term fixed mortgages, because barring economic crisis your $1500 will actually be worth less in five years' time than it is now. Reasonable and normal inflation combined with the fact that your salary is likely to increase as a combination of market forces and promotions.

I think that people standing by with the ability to buy in the current market but waiting for the market to crash so that they can jump in and get a steal are doing themselves a disservice, because if the market crashes it's likely because of some far more significant economic factors that will likely affect their employment security, and as a result they're going to find it far harder to get the mortgage they need to buy that bargain house. There are lots of good reasons someone might have for not buying a home, but waiting for a price correction isn't one of them.

[Pope]

Why does it? A 2/3 bedroom house for $300K is incredibly reasonable, and well within a huge amount of household budgets. A $350K house with 5% down over 25 years is probably going to cost around $1500 a month. I don't see that crashing, at all, without massive employment issues occurring.

Bear in mind as well that houses get cheaper on long term fixed mortgages, because barring economic crisis your $1500 will actually be worth less in five years' time than it is now. Reasonable and normal inflation combined with the fact that your salary is likely to increase as a combination of market forces and promotions.

I think that people standing by with the ability to buy in the current market but waiting for the market to crash so that they can jump in and get a steal are doing themselves a disservice, because if the market crashes it's likely because of some far more significant economic factors that will likely affect their employment security, and as a result they're going to find it far harder to get the mortgage they need to buy that bargain house. There are lots of good reasons someone might have for not buying a home, but waiting for a price correction isn't one of them.

The number is not insane I agree, especially compared to the Bay area and places like Vancouver and Toronto. I think where the issue is is that many young adults are facing a mortgage payment in their student loans before they even buy a home. My girlfriend pays $1100 a month for her student loans and I'm sure she's not too unique in that regard.

There is a huge group of people in my age group that are in no position to buy because they're already in the process of paying off these huge sums. It is going to be a renters market for a long time and as a result I think you will see housing decline. Granted I'm no expert, just going off gut feeling

Sent from my SM-G900A using Tapatalk

[bojanglesman]

Why does it? A 2/3 bedroom house for $300K is incredibly reasonable, and well within a huge amount of household budgets. A $350K house with 5% down over 25 years is probably going to cost around $1500 a month. I don't see that crashing, at all, without massive employment issues occurring.

Bear in mind as well that houses get cheaper on long term fixed mortgages, because barring economic crisis your $1500 will actually be worth less in five years' time than it is now. Reasonable and normal inflation combined with the fact that your salary is likely to increase as a combination of market forces and promotions.

I think that people standing by with the ability to buy in the current market but waiting for the market to crash so that they can jump in and get a steal are doing themselves a disservice, because if the market crashes it's likely because of some far more significant economic factors that will likely affect their employment security, and as a result they're going to find it far harder to get the mortgage they need to buy that bargain house. There are lots of good reasons someone might have for not buying a home, but waiting for a price correction isn't one of them.

It's a bit more than $1500 when you include property tax and homeowner's insurance in the escrow acct.  Probably up above $2000.  And that's a 30 year mortgage.  25 year would be more.

[Johnny English]

I calculated the number on a 25 year amortization at 2.29% with $17500 down.

You're right about tax and insurance, but you're paying those anyway if you rent.

[bojanglesman]

I calculated the number on a 25 year amortization at 2.29% with $17500 down.

You're right about tax and insurance, but you're paying those anyway if you rent.

Damn, wish I could get 2.29% here.  I don't remember paying property tax when renting.  I bought renter's insurance, but didn't have to.   Do they make you do that stuff in Canada or UK when renting?

Either way, you're right.  If you are buying a house for the long haul most anytime is a decent time if you buy what you can afford.  We bought our house at the absolute worst time.  In 2006, right before the housing bubble burst.  Ridiculously inflated prices on homes, high mortgage rates (compared to now anyway).  Ugh.  Hindsight is 20/20, but man we'd have saved so much money if we waited a couple of years to buy.  Can't predict the future I guess.

Refinanced once to get our rate down.  Doing well.  We weren't buying to upgrade later.  If it happens, it happens.

[Johnny English]

You definitely paid property tax and full property insurance when you were renting. You may not have received a separate bill for it and your landlord may have called it something like "rent", but you definitely paid it.

[bojanglesman]

You definitely paid property tax and full property insurance when you were renting. You may not have received a separate bill for it and your landlord may have called it something like "rent", but you definitely paid it.

In that case, I probably paid for the landlord's wife's fake funbags too.

[Johnny English]

In that case, I probably paid for the landlord's wife's fake funbags too.

That's the problem with renting. You're buying a house for someone else.

[Badger]

Why does it? A 2/3 bedroom house for $300K is incredibly reasonable, and well within a huge amount of household budgets. A $350K house with 5% down over 25 years is probably going to cost around $1500 a month. I don't see that crashing, at all, without massive employment issues occurring.

My chances of surviving 25 years decrease slightly after I move in to my $350K house in Jamaica, Queens.

[Pope]

I'm also taking into account the golden rule of 20% down when buying. I'm pretty convinced a huge majority of people in my age group (I'm 28) do not have 60k to readily out down on a $300k home, and I'm using 300 as a minimum. It's probably closer to $350k when taking into account homes not needing extensive work, where that number climbs to nearly $70k down.

Sent from my SM-G900A using Tapatalk

[Badger]

I'm also taking into account the golden rule of 20% down when buying. I'm pretty convinced a huge majority of people in my age group (I'm 28) do not have 60k to readily out down on a $300k home, and I'm using 300 as a minimum. It's probably closer to $350k when taking into account homes not needing extensive work, where that number climbs to nearly $70k down.

Sent from my SM-G900A using Tapatalk

On a scale of 1 to buying a house in 2007, how bad of an idea is it to take out a separate loan for the down payment?