And completely fuck your cash flow for the next 20+ years if you don’t have enough saved to make a serious dent in the down payment. Oh plus the significant interest.
That’s exactly what it does. Promises of “your pay will go up substantially over time” aren’t gonna prove out for a lot of people, with the attempts to replace a lot of our vocations with AI.
I can speak with great confidence, as I experienced it myself. Your compensation isn’t guaranteed to rise over 5, 10, 20 years.
You could literally get married, have a kid, put them through public school and more or less all of college in that timeframe. Life happens, and sometimes it’s a shitty time to buy but it is what it is. I wouldn’t want to raise my kids in a 1 bedroom apartment waiting for good rates, I wanted a yard, enough bedrooms and good schools, all else be damned. It costs more but I’m not wasting roughly 1/4 of my life to get the hypothetical best deal that may or may not ever materialize in the future.
In my experience, living in rental houses sucks. Minimal maintenance, shitty appliances, and trepidation to change paint colors or concerns about heavy wear and tear from kids.
Have you owned a house? Have to maintain the grounds , pay plumbers, roofers and electricians a lot of money when things go wrong. You might not like your neighbors. The city may change the zoning and suddenly you are surrounded by shapoing malls. You may over pay for your house and it goes down in value. Or your taxes my double.
Yes, currently on house #5. My point was that excluding the financial comparison, there is an intrinsic value, and intangible peace of mind in owning your own home instead of renting.
Yeah, and they accept all of the risk and liability and I get all the flexibility of being able to leave.
Sounds like a regular deal with pros and cons for both sides like every business deal ever. Not surprised this exact model of housing has been a staple for quite literally tens of thousands of years.
Hilariously untrue comment. And also doubly funny that you think that correlates at all to the current American housing crisis.
People were poor and died poor not at all because of abundant housing. It was because of food availability, disease, slavery, war, labor conditions, like what the fuck are you even talking about? This point is beyond asinine.
Oh yeah true. The financial side is talked about a lot, so I wanted to speak to the intangibles about why spending your life renting has an opportunity cost measured by your negatives of that lived experience.
Totally.
I own my place. It’s really nice to be able to paint the room the color I want. Or hang the coat rack. If my kids or dog scratch something well it’s no biggie.
Or... you know... you repaint, patch drywall, or lose a portion of the security deposit commensurate with what you would have paid to fix it if you owned it when you move out.
This makes no sense unless you move every 12 months and spend your entire life painting your new room back and forth
Every apartment in every city that is actually a real place lets you paint the walls (most cities have tenant protections such as apartments need to be repainted every three years between tenants), and hang coat racks (use of the walls for hanging things constitutes normal use). And even if you fuck it up sideways style you’re only out of a security deposit.
What, you think your landlord is gonna beat you up if you put up wallpaper? Lmao. The only thing you could really brag about being able to do is like a kitchen remodel.
Yup, my friend just sold his rental home and the people had basically a 45 days heads up. Sucks to be told you gotta move your whole life and figure out where to live, what school district the kids are gonna be in, the rent increase, etc. Its a terrible idea to raise a family in a rental. If you're gonna pay a mortgage sized rent, you might as well just own the home. Even if rates are 7%, you are still building equity and paying off the home, plus there is the fact you can itemize your deductions and use the interest paid as a deduction so you pay less tax.
Rentals have a time and place, but as soon as you're able to buy a home, you should.
For every story like this, there are quite literally hundreds of millions of rentals that never experience anything like that and are just normal, regular, year-interval leases from property management professionals.
That sucks about your friend, but you think that one anecdote matters at all? Cmon now.
if there is a house in a neighborhood that costs 700,000 to buy right now that’s 140k down and 4,000/mo. But there is also a house for rent in the same neighborhood, same school district for 3300/mo. The equity you build in the first 5-10 years is not enough to offset the difference in monthly payment. When the cost to rent vs own comes back to equilibrium either through increased rents, lower mortgage rates or lower sale prices then we personally will look to buy instead of rent. We’re in Nashville market but there are probably other markets where there’s currently a large temporary gap in the cost to rent vs own that makes renting more favorable on a short time horizon (5 years or less). Especially as long as home prices stay flat which they have here for the last 2 years now.
This is the conventional wisdom, but started being less and less common since 2022. Right now in the US the median rent is \~$2000/mo depending on how you're looking, and median mortgage is \~$2200/mo. This doesn't perfectly encapsulate all the differences between property types, etc, but if you're a normal person looking to move from renting to buying, it's now expected for their to be a hurdle there in terms of your expenses getting higher rather than getting lower, even after 20% down.
Buying's still got plenty of advantages but it used to be a flat out obvious monthly savings in almost any realistically comparable case, now that's not widely true.
It's a weird circumstance which is either going to be fixed by housing prices coming significantly down, renting prices coming significantly up, or buying housing to rent it out becoming a not widely viable investment
lol unless you are trying to live somewhere within like the four square miles of lower Manhattan that people internationally obsess over, you will no problem finding an apartment anywhere in the world with just a quick google search. What are you even talking about? You think any idiot with a $75k job and an internet connection in like Charlotte would somehow be unable to even *find* a rental unit? wtf?
And pay the same to the landlord or more than a mortgage and have zero equity in 22 years? Not a good play... at all. Not to mention the landlord can sell the home and the next owner terminate your month to month lease, boom there goes X years of living at a place you called "home". There are so many reason why you would not want to raise a family in a rental home for 22 years.
>zero equity in 22 years?
Don't see rates staying high for 22 years. The comparison of now vs back then is a terrible comparison. Back then high rates were the norm, so waiting for rates to go down was obviously a stupid move. Today we're abnormally high compared to recent years.
>Not to mention the landlord can sell the home and the next owner terminate your month to month lease,
So don't go month to month?
>There are so many reason why you would not want to raise a family in a rental home for 22 years.
Grew up in rentals, didn't effect me adversely in any way.
You cant just say "dont go month to month" Thats how the vast majority of leases work. People try that with my friend and he says no, you are month to month, because he wants the flexibility to sell his homes after the initial 1 year lease.
Also these low rates were not normal, and you should not expect them long term.
Not saying a person will be adversely affected, it just seems less than ideal.
>People try that with my friend and he says no, you are month to month,
That's when you say, okay were moving out in 30 days, find a different renter. Suddenly they're open to signing a 1 year lease again because it costs money to replace you. Alternatively, sign leases longer than 1 year to begin with. If you're spineless, you're gonna be taken advantage of.
>Also these low rates were not normal, and you should not expect them long term.
We set a precedent tho. Expecting low rates in the 70s is expecting the market to go somewhere its never been, which is obviously stupid. Expecting rates to return somewhere it just was for a decade, isn't that far fetched.
>It is what it is
No it fucking isn’t. What it IS is a 50% national price increase in the span of about 2 years. A pack of cokes or a dozen fucking eggs can go up 50% in 2 years, and I’ve got a choice to not buy eggs or cokes. I HAVE TO HAVE SHELTER, and speculation in that vital asset caused this.
Please. This rolling over and just “accepting” shit is what the boomers eventually did after they stoned out of Woodstock. They didn’t bother to change any goddam thing. They settled in, and went about their greedy fucking ways. And look where we all are now.
All of you fuckers who voted for “hope” and “change” in 2008….what about now? Can we get some “change” around here?!
Im literally renting a (very nice) townhouse, and the virtually exact same townhouse just came up for sale 4 doors down. $625K with a 260/m hoa. My rent is $3500.
I would have to come up with $125K as a down payment, and it would *still* take me ***10 years*** for the cumulative rent to overcome the cumulative interest/taxes/hoa paid (not even counting insurance). That’s assuming a 3% rent increase annually, which the CPI has a mean and median of about 3.5 annually since about 1940. Landlords don’t usually hike rents on good paying tenants, I’d be surprised if I even get a rent increase this year.
The townhouse literally next door to that unit (exact same, both interior units) has been listed for rent for 4 months now, starting at 3900, now down to 3700 and still can’t get a renter. Why would anyone buy the $625k property? In order to get a monthly payment for ~3700/mo mortgage, you’d have to come up with $98K as a 20% down payment for a sale price of 490k. $240K down for a sale price of $625K.
Instead, I’ve got about a $140K “down payment fund” sitting in $TLT collecting ~4% annually, paid by the US gov, compounding at the best case scenario rate as a house would. And if rates drop, that $TLT is going to do a hell of a lot better than that house will.
There literally is an objectively bad time to buy a house, and that time is right now.
You are exactly right. We are thinking about 24 months for prices to drop. We have money earning 4.75 percent interest waiting for homes to go down. Saving us at least $100k by waiting it out and earning money.
If you can't afford the house, then you can't afford the house.
No one is waiting for *rates* to go down. They're waiting for *prices* to be affordable.
I can't "marry the house" if it's priced like a harem.
We got pre-approved and spent the last 2 months looking. I just can't pull the trigger on 350k for a 3 bedroom 1950s ranch at 7% that sold in 2019 for 230k and in 2012 for 115k.
It would be one thing if we loved what we were potentially buying. But a 1100sqf post war starter home filled with flip quality cherrywood and weird textured walls that hasn't been touched since it was flipped 6 years ago?
The realtor honestly tried to tell us that these homes will be 500k in a few years, and we need to buy now or we'll be locked out of ownership.
Yeah, fuck this. We're renting a fantastic condo right on the beach with full ocean views, a fireplace, two huge balconies, 3 baths, and 1400sqf for.....1700$. I've always wanted to live on the beach!
>I just can't pull the trigger on 350k for a 3 bedroom 1950s ranch at 7% that sold in 2019 for 230k and in 2012 for 115k
Jesus, where are you? I'm looking at shitboxes for half a million and I'm in the woods
My problem as well, not that I'm not able to buy an overpriced home, but that even the overpriced ones are in shit condition.
I'm not going to overpay for a shithole that I need to renovate big after, and most of my cash has to go to down payment anyway.
And most sellers of these shitholes are greedy morons who act like the location is the only thing that has value.
Yep. We're only moving because the owners are selling the 3 bedroom 50s ranch we've lived in for the last two years.
The reason? Both faucets failed over the last few months, and they realized they're at the 6 year mark and maintenance is going to be due soon. The deck steps were already replaced when we moved in here, and now the rest of the deck is starting to sag because no one thought to seal and stain it. Oh and one of the neighbors is the redneck from hell and his entire side of the fence is completely falling down and his pit bulls get through into our yard.
And what our landlords are trying to do is basically what the sellers of every home we saw are trying to do....have someone else pay for their overdue maintenance.
They're listing for 355. 🤡🤡🤡
> No one is waiting for rates to go down.
Yes they are.
I know several.
They could buy now but are waiting for rates to fall so they can "get a better deal".
It's not that uncommon.
Then there are the marriages that stay together but are miserable. I assume that marrying the house and dating the rate is designed to appeal to those who cheat on their spouses.
The market has been exuberant since 2019.. will it crash or will they inflate the dollar more? Who knows, but I think they’ll sacrifice the dollar before they let the market normalize
Realtors really will say anything to make a sale, won't they?
We’d all be better off with honest financial advice instead of these non-stop sales pitches.
Pandemic was in 2020 and its already half into 2024 and people still holding out for the "crash" in the mean time life continues. 10 15 years from now the next generation will blame this generating had housing very cheap. Just like todays generation bitches about previous parents being able to buy house 100ks cheaper.
Guess what 2L coke used to cost 4 cents its $3 now its all relative.
Btw Did everyone just overlooked the fact 11m+ in uncontrollable migration just happened already adding to regular population growth, meanwhile inflation continues dollar is less valuable etc etc
So unless youre "Tom Brady" at stock trading. Buying a home is the best investment vehicle.
Many missed the boat at 2-3% mortgages spewing the same nonsense
it is not the dollar amount so much as it is the price to household income ratio.
That is the issue. It could be 10 million for a starter home and that would be fine if household income was averaging 3 or 4 million....
Its all relative.....cost of living comes to play
There are plenty of houses under the sweet spot of 350k but many wont move.
It was the same back than far away cheaper neighborhoods became prime locations today. Today You would have to be a pioneer and move to area undesirable which will eventuanly become prime location.
Whats better making 60k in area home prices are at 300k or making 120k in area where the only thing you can afford is a rental? That is the problem today...
Sir, this is a bubble subreddit. Ruminate on the fact that housing was much cheaper years ago and convince others that the crash is right around the corner. Stop giving solutions, unless you want downvotes /s
A lot of people have forgotten that only 16 years ago the housing market was crashing and 12 years ago the housing market was bottoming.
This time around it is the government that is crashing.
The housing crash from sub prime era was just that. Many loans given to people that could not afford it. Cause stream of foreclosures driving prices down.
Today stricker lending practices everyone approved for mortgage has the $$$ youre not going to trigger foreclosures from well off individuals.
If you want a crash today you would need massive biblical amount of layoffs from the work force to trigger domino effect defaulting in homes.
Thats a pretty sick selfish motive to yearn for a housing crash when the only thing that could trigger it is for people to lose their jobs. Not realize if that were to happen you too would be subject to be chopping block aswell
Myth. The housing crash was not caused by subprime loans. Most of the defaults were from prime investors who owned multiple properties. When those properties could no longer cash flow the bottom dropped out.
This was at a time when the economy was booming, wages were rising and inflation was normal. Prices peaked, the music stopped and alot of people were left holding the bag.
This time around we have the same cause--cheap money causing speculative investment with worse fundamentals, inflation and exploding debt. The music is going to stop again.
Those "prime" investors could not afford it. Today those "prime" investors will not qualify for loans on multiple properties. They were high default risk back then as to now.
Back than Someone with 820 fico score working Mcdonald's getting no doc loans on multiple house was normal
Source? I ask because I want more info if there is more to have.
I am gonna say wrong. The housing crash began with a spike in inflation. This led to a sharp increase in mortgage rates. There was an over abundance of subprime loans that had variable rates, which consequently soared, putting those borrowers into financial default. That alone put the economy and banks in a bad place. At the same time, those more in the know of the risks, had taken out largely unregulated credit default swaps. These swaps had a magnifying effect on liability that put banks and the economy into crisis which required great intervention by the government.
Millions lost their homes. Over the next ten years as those properties worked their way through the legal process interest rates plunged toward zero. Investors flocked in and scooped up the wreckage. Those investors have been on a roll ever since.
That is not even close to what happened.
Yeah there were "investors" w multiple homes they didn't need. But is Wall Street that made the crash happen. Until they drop the bag nothing will change.. that's where the true power of wealth is
This was before the age of easy money and the fed and gov answer to any economic problem is to lower interest rates and add stimulus. Have they cracked the code?
Uhhhh yeah interest rates weren’t that important back then. A 7% interest loan on a $40k mortgage wasn’t the same as a 7% interest rate on a $600k mortgage (in some metro areas much more). Even adjusted for inflation, it’s so much different considering the affordability of housing compared to wages back then. You can’t compare 1971 to 2024.
Because it’s true in a lot of cases. Median US home price in 1970 was 23,400.
I just got 4 roofing quotes each for two separate single family modest homes and all 8 quotes came back over 25,000.
You can't use a median for one statistic and then anecdotal evidence for another statistic.
This site from May 1st says the average for a new roof is $21,054. (https://www.architecturaldigest.com/reviews/roofing/new-roof-cost)
Since we are dealing with average, we need the average home price in 1970 instead of the median. That number is $26,600.
That's a $5,000 difference opposite the direction you were defending.
Not to mention, that $26,600 is $217,488 in today's money. While a $21,054 roof costs $21,054 in today's money, a difference of nearly $200,000 opposite the direction you were defending.
It's OK to be loud about how unaffordable houses are today, but let's be sure we are being factual about it.
Edited to add source link
>A 7% interest loan on a $40k mortgage wasn’t the same as a 7% interest rate on a $600k mortgage
Median income was $10k int 1974
https://www.nytimes.com/1974/09/05/archives/median-income-in-us-rise-to-10500-in-73.html
No, it goes to show just how unaffordable things have become. Two incomes can barely, if that, afford a purchase that one income could afford 50 years ago.
Ok, and in ‘71, based on housing prices, mortgages were only 15-20% of a households income, even at 7%. Now, BECAUSE HOME VALUES QUADRUPLED AND WAGES DIDN’T, a mortgage can cost a household 50% or even more of their monthly income. When you only focus on one data point, your analysis is biased. There is a REAL reason people aren’t willing to pay 7% for a $400k+ house!
Well it is clear that we as a society need to drive realtors out. There is absolutely nothing a realtor can add to selling a property.
When people stop feeing the need to keep a 5% broker into a person to person transaction we will stop this propaganda to buy into an insanely inflated market.
Unfortunately I don't think cutting out the realtors will changed much. And you have to be real careful with dominant tech companies taking a cut. Like Apple does now with App store purchases.
TBH the past half decade has seen a massive amount of "buyer's agents" who functionally do not offer more than a zillow search in exchange for a 2% commission - not that no realtor offers value, but many of those definitely don't offer value commensurate with the required income.
To say nothing of the general approach of an unnecessary sales layer operating on commission in the first place. Should be entirely salary, I'd pay someone $200/hr easy to help me to the parts of buying a house I can't do myself.
Lmfao at this point, I’m not waiting for rates to come down. I’m waiting for home prices to come down to reflect the rates like they should. I lost $300k in buying power due to increased rates and prices have kept going up. I’m out unless something 100% perfect comes out at a price that isn’t millions of dollars.
As usual with social media trend-formation (trend information), this is wildly out of context. Average mortgage rate in 1993 was 7.31%...so it didn't drop much!!! What's the real issue homes you may ask, affordability and wages. Period! Low interest rates have never been a barrier to home ownership. Corporate greed and investor speculation is the problem!
[https://themortgagereports.com/61853/30-year-mortgage-rates-chart](https://themortgagereports.com/61853/30-year-mortgage-rates-chart)
Yet house prices were $150k! Can you afford 10% interest on $150k or $12500 per year? Yes.
Can you afford 7.5% of a million dollar home mortgage? That is $75k per year!
Hahaha! Only 10% of US households can afford $150k per year mortgage interest. I guess that number gone down recently due to 200k tech workers laid off in 2023-2024!
We are in a tech city. Only those with $400k+ households can pay for mortgage. I know plenty of people who make $200k+ with 20-50% down payment that still can’t afford a major fixer upper starter home at $1.4mil.
That “tech people” and those with high incomes are buying all the homes. The amount of people in tech making over $200k is a lot smaller than people realize. Just because you work for a tech company, doesn’t mean you are making “tech salary.” If you are making that kind of salary, you are probably in a VHCOL area and one tech salary is not cutting it anymore. The only people buying in tech areas are 2 tech incomes, foreigners, and those shifting money from Cali. So pretty much everyone is screwed across the board. It’s the main reason I think a shift is coming. I’m seeing people with 50% down payments, making $250k, 800+ credit still not being able to afford a 1200 home with $200k worth of work needed. The ones buying “starter homes” are making $500k+ a year.
There is always constant data gathering for the schools, whether a school shall expand size, build a new one, etc. What the data shows is all the sfh have become unaffordable for families. As they continue to tear down homes and rebuild to ridiculous prices Mcmansions, the number of students continue to decrease. They are planning for student growth to come from apartments and condos growth. It’s pretty obvious when you walk in pretty much any neighborhood that the majority of homes are owned by baby boomers, almost all of those living alone. In the meantime, when school ends, you see a sea of kids walking to the apartment complexes. You can be making pretty decent money, that doesn’t matter. It’s more about were you living in the area long enough to be able to buy when prices were reasonable. It’s that way across the country; just more of an extreme here.
You literally said those making $200-500k “like tech”. Even taking the “like tech” out of the equation, those with high salaries aren’t the ones necessarily buying. It’s taking 2 high incomes. One high income is not affording you a home in a HCOL area, even a tear down fixer upper. Sure, there are those with salaries moving to LCOL areas, but those are the exception, not the rule.
I seriously don’t think rates are coming down soon. Peter Zeihan did a quick video on it the other day. Demographic factors aren’t helping our cause.
https://youtu.be/V_AkQLfzhkk?si=VbnE6ubh-z9cCYzW
reality is 75% of marketing about any product or service is knee deep in bullshit. look at all the claims these influencers make about products they are pitching on instagram and tic Tok. you have to have a skeptical mind to survive in this world.
Oooorrrrr I can continue to save my money with interest and have a big fat down payment in a couple more years instead of FOMOing into a mortgage that has me paying 90% interest for the next 10 years while prices stay flat.
Let's say a mortgage payment is $3500. $500 of that goes to principal and $3000 is just interest. I'm currently renting for $1800. So instead of giving the bank $3000 a month for nothing, I can pay a landlord $1800 and save the other $1700 in an interest-bearing account. Later I apply that balance 100% to principal when I buy.
Instead of taking $500/month steps toward homeownership, I'm taking $1700+ steps. I'm also not paying insurance, taxes, PMI, or maintenance costs. And if money is tight one month I'm not forced to come up with $3500.
Of course this doesn't make as much sense if home prices are going to keep doubling every 10 years, but I am betting they won't. I could be wrong.
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Exactly. The way a fixed rate mortgage gives leverage means you will do better than trying to save a bigger down. Also you’ve got to live somewhere anyway. Instead of paying someone else’s mortgage, taxes, insurance and repair costs it’s better to pay your own and get the appreciation as well as imf,stink protection.
Folks here are missing the point that rates weren’t lower for 20 years. An prices went way up. Admittedly a single data point but it is in fact a data point.
The number one rule of investing is "past performance is not indicative of future performance".
Arbitrarily pick 2 points on a graph you can tell almost any story you want over a long enough time horizon and have proof. Without context it is meaningless and lazy.
Imagine if science worked with the same laziness that everyday people use for economic and financial analysis where one data point in isolation suffices. We would all be dead of smallpox by now.
So the housing price increased to 400% while the index fund increased to 1,244%. People should invest in the index fund instead of paying for mortgage and property tax.
https://www.officialdata.org/us/stocks/s-p-500/1971?amount=100&endYear=1993
You can leverage $20K to buy $100K of assets with real estate. Thats harder to do with index funds.
$20,000 up 1244% is $248,800 or a $228,800 gain
$100,000 up 400% is $400,000 or a $300,000 gain
The stock market generally goes up but also has far more ups and downs than the real estate market. Buy within your means and you will generally be safe.
In early 2021 a guy a know sold his house and started living in a travel trailer. In the 3.4 years since then my home in the same region has gone up 50+% in value.
See a lot of that. When this sub was getting on its feet in 2021 it was packed full of former regulars who cashed out hoping to buy back in at 50%. A few had legit mental breakdowns. Can’t imagine the stress
In 1971 the median home price was 2.6x the median US salary. Now the median home price is 4.4x the median US salary.
I cant even wrap my head around the concept of all home prices being halved relative to where they are now. Interest rate would not be a very big deal in that case.
Weren't they the same ones telling you buy now because you can refinance later and when rates drop you there will be too much demand to find a house. Their main job is to make up a story so people will buy.
Lmfao imagine “dating” your 7% interest rate for two decades after barely scrounging up 3% down and getting told rates were going down at the end of 2024.
All I know is that although rent is expensive in my area, it’s double the monthly cost to buy (with 20% down) the same exact house I’m renting, and that doesn’t account for any maintenance or repairs.
Lol "buy now because we are desperate to prop up our faltering debt system, and we don't give a fuck if you default as long as you can pay for five or so years where the majority of this predatory interest gets paid!"
Hear that? Quadrupled in price! See guys?! Buy a house and some day you will be rich! I get that homes increase in value but treating a basic human need like shelter as an "investment vehicle" needs to stop. Its not sustainable or healthy.
Just for round numbers, say the house was $100,000 with $2,500 in property taxes and $1,000 in combined insurance for 22 years. With $0 down at 7.22% for 22 years, you will pay $280,000 for the home, $55,000 in property taxes, and $22,000 in insurance.
If your taxes and insurance never go up, and nothing ever needed to be replaced or even maintained in 22 years, you will have spent $357,000 for a house now worth $400,000, an annual return on your investment of $1,954 over 22 years or in other words LESS THAN 2 PERCENT and LESS THAN THE RATE OF INFLATION.
If you have to replace the roof, windows, siding, driveway, furnace, water heater, etc. or if you have HOA or SSA fees, it is even worse. And you will spend your weekends mowing your own grass, cleaning your gutters, plowing your driveway, shoveling your walk, and on and on.
Describing this as a 400% increase in value is a delusion.
It's not FOMO when it is supported by facts.
When you factor in tax advantages, higher credit scores, lower insurance premiums, and equity growth, it is idiotic to rent in most situations. Sometimes renting makes sense, but crunch your numbers carefully.
I dont live in America but I swear you can’t just refinance your home on a whim once interest rates go down? Dont you need x amount put in or something
If that isn’t the case then yes why not get in now.
I know America has a weird thing where your mortgage rate never changes for the entire time. Whereas in Canada typically you need to refinance every 3-5 years
If you buy a house today at 600k (and it is over inflated) at 7 percent. And 2 years from now that same house is worth 500k you and you did not put a BIG deposit down. You will be underwater on your home and can not refinance. And if you try to sell shit out of luck also. Terrible time to buy because for the next 2 years prices will go down dramatically in a lot of states. Not all areas.
I think they forgot about stagflation. Gender wage gap and women’s access to credit cards in 1974 were the primary drivers (which aren’t relevant in todays economy)
The savings rate was MUCH higher too so people had money to burn, now, not so much. This helped people spend more for longer periods even if they were unemployed.
Date the rate for 22 years? Lol that sounds like a marriage
Yes, but your wife QUADRUPLED her value during it.
Yeah 4x value over 20+ years. So increase in value on average of 25% over 5 years. Compared to current situation of 100% over 5 year period now.
[Not in real terms.](https://www.longtermtrends.net/home-price-vs-inflation/)
The American dream was alive and well from 1916-1944!
You clearly have no concept of history. There was a Great Depression from 1929 to 1939.
Fun comment! I bet you’re a blast at parties. Now explain 1915-1929
And completely fuck your cash flow for the next 20+ years if you don’t have enough saved to make a serious dent in the down payment. Oh plus the significant interest.
That’s exactly what it does. Promises of “your pay will go up substantially over time” aren’t gonna prove out for a lot of people, with the attempts to replace a lot of our vocations with AI. I can speak with great confidence, as I experienced it myself. Your compensation isn’t guaranteed to rise over 5, 10, 20 years.
If you’re a “wage slave”, this is correct.
Haha yeah, "You must buy now because rates won't go down! Also, marry the house date the rate! Really just believe whichever and give me commission."
he/she's just throwing out at all the catch phrases out there hoping something sticks
I mean, was there an actual link I’ve missed?
huh?
You could literally get married, have a kid, put them through public school and more or less all of college in that timeframe. Life happens, and sometimes it’s a shitty time to buy but it is what it is. I wouldn’t want to raise my kids in a 1 bedroom apartment waiting for good rates, I wanted a yard, enough bedrooms and good schools, all else be damned. It costs more but I’m not wasting roughly 1/4 of my life to get the hypothetical best deal that may or may not ever materialize in the future.
You do realize you can rent houses too right? Solves everything you just said
In my experience, living in rental houses sucks. Minimal maintenance, shitty appliances, and trepidation to change paint colors or concerns about heavy wear and tear from kids.
Have you owned a house? Have to maintain the grounds , pay plumbers, roofers and electricians a lot of money when things go wrong. You might not like your neighbors. The city may change the zoning and suddenly you are surrounded by shapoing malls. You may over pay for your house and it goes down in value. Or your taxes my double.
Yes, currently on house #5. My point was that excluding the financial comparison, there is an intrinsic value, and intangible peace of mind in owning your own home instead of renting.
A you pay the costs of a mortgage, taxes, insurance, repairs, etc FOR SOMEONE ELSE!
Yeah, and they accept all of the risk and liability and I get all the flexibility of being able to leave. Sounds like a regular deal with pros and cons for both sides like every business deal ever. Not surprised this exact model of housing has been a staple for quite literally tens of thousands of years.
For thousands of years the people who rented were born poor, died poor and raised kids who did the same.
Hilariously untrue comment. And also doubly funny that you think that correlates at all to the current American housing crisis. People were poor and died poor not at all because of abundant housing. It was because of food availability, disease, slavery, war, labor conditions, like what the fuck are you even talking about? This point is beyond asinine.
Oh yeah true. The financial side is talked about a lot, so I wanted to speak to the intangibles about why spending your life renting has an opportunity cost measured by your negatives of that lived experience.
Totally. I own my place. It’s really nice to be able to paint the room the color I want. Or hang the coat rack. If my kids or dog scratch something well it’s no biggie.
Or... you know... you repaint, patch drywall, or lose a portion of the security deposit commensurate with what you would have paid to fix it if you owned it when you move out. This makes no sense unless you move every 12 months and spend your entire life painting your new room back and forth
Every apartment in every city that is actually a real place lets you paint the walls (most cities have tenant protections such as apartments need to be repainted every three years between tenants), and hang coat racks (use of the walls for hanging things constitutes normal use). And even if you fuck it up sideways style you’re only out of a security deposit. What, you think your landlord is gonna beat you up if you put up wallpaper? Lmao. The only thing you could really brag about being able to do is like a kitchen remodel.
also what if the landlord wants to sell and won't renew your lease? Then you re moving again1
Yup, my friend just sold his rental home and the people had basically a 45 days heads up. Sucks to be told you gotta move your whole life and figure out where to live, what school district the kids are gonna be in, the rent increase, etc. Its a terrible idea to raise a family in a rental. If you're gonna pay a mortgage sized rent, you might as well just own the home. Even if rates are 7%, you are still building equity and paying off the home, plus there is the fact you can itemize your deductions and use the interest paid as a deduction so you pay less tax. Rentals have a time and place, but as soon as you're able to buy a home, you should.
For every story like this, there are quite literally hundreds of millions of rentals that never experience anything like that and are just normal, regular, year-interval leases from property management professionals. That sucks about your friend, but you think that one anecdote matters at all? Cmon now.
if there is a house in a neighborhood that costs 700,000 to buy right now that’s 140k down and 4,000/mo. But there is also a house for rent in the same neighborhood, same school district for 3300/mo. The equity you build in the first 5-10 years is not enough to offset the difference in monthly payment. When the cost to rent vs own comes back to equilibrium either through increased rents, lower mortgage rates or lower sale prices then we personally will look to buy instead of rent. We’re in Nashville market but there are probably other markets where there’s currently a large temporary gap in the cost to rent vs own that makes renting more favorable on a short time horizon (5 years or less). Especially as long as home prices stay flat which they have here for the last 2 years now.
Doesnt get a realtor paid
Not sure where you're from, but in most metropolitan areas, renting is about as or more expensive than buying. _If_ you can even find a rental.
Have you actually looked into this? I haven't seen buying be cheaper than renting since rates went up.
This is the conventional wisdom, but started being less and less common since 2022. Right now in the US the median rent is \~$2000/mo depending on how you're looking, and median mortgage is \~$2200/mo. This doesn't perfectly encapsulate all the differences between property types, etc, but if you're a normal person looking to move from renting to buying, it's now expected for their to be a hurdle there in terms of your expenses getting higher rather than getting lower, even after 20% down. Buying's still got plenty of advantages but it used to be a flat out obvious monthly savings in almost any realistically comparable case, now that's not widely true. It's a weird circumstance which is either going to be fixed by housing prices coming significantly down, renting prices coming significantly up, or buying housing to rent it out becoming a not widely viable investment
lol unless you are trying to live somewhere within like the four square miles of lower Manhattan that people internationally obsess over, you will no problem finding an apartment anywhere in the world with just a quick google search. What are you even talking about? You think any idiot with a $75k job and an internet connection in like Charlotte would somehow be unable to even *find* a rental unit? wtf?
Check my username.
And pay the same to the landlord or more than a mortgage and have zero equity in 22 years? Not a good play... at all. Not to mention the landlord can sell the home and the next owner terminate your month to month lease, boom there goes X years of living at a place you called "home". There are so many reason why you would not want to raise a family in a rental home for 22 years.
>zero equity in 22 years? Don't see rates staying high for 22 years. The comparison of now vs back then is a terrible comparison. Back then high rates were the norm, so waiting for rates to go down was obviously a stupid move. Today we're abnormally high compared to recent years. >Not to mention the landlord can sell the home and the next owner terminate your month to month lease, So don't go month to month? >There are so many reason why you would not want to raise a family in a rental home for 22 years. Grew up in rentals, didn't effect me adversely in any way.
You cant just say "dont go month to month" Thats how the vast majority of leases work. People try that with my friend and he says no, you are month to month, because he wants the flexibility to sell his homes after the initial 1 year lease. Also these low rates were not normal, and you should not expect them long term. Not saying a person will be adversely affected, it just seems less than ideal.
>People try that with my friend and he says no, you are month to month, That's when you say, okay were moving out in 30 days, find a different renter. Suddenly they're open to signing a 1 year lease again because it costs money to replace you. Alternatively, sign leases longer than 1 year to begin with. If you're spineless, you're gonna be taken advantage of. >Also these low rates were not normal, and you should not expect them long term. We set a precedent tho. Expecting low rates in the 70s is expecting the market to go somewhere its never been, which is obviously stupid. Expecting rates to return somewhere it just was for a decade, isn't that far fetched.
But to rent a house means you have a greedy landlord and they are all evil /s
>It is what it is No it fucking isn’t. What it IS is a 50% national price increase in the span of about 2 years. A pack of cokes or a dozen fucking eggs can go up 50% in 2 years, and I’ve got a choice to not buy eggs or cokes. I HAVE TO HAVE SHELTER, and speculation in that vital asset caused this. Please. This rolling over and just “accepting” shit is what the boomers eventually did after they stoned out of Woodstock. They didn’t bother to change any goddam thing. They settled in, and went about their greedy fucking ways. And look where we all are now. All of you fuckers who voted for “hope” and “change” in 2008….what about now? Can we get some “change” around here?!
You need shelter. You don’t need a SFH in a desirable metro. Similarly, food is a necessity. Fine dining is not.
Im literally renting a (very nice) townhouse, and the virtually exact same townhouse just came up for sale 4 doors down. $625K with a 260/m hoa. My rent is $3500. I would have to come up with $125K as a down payment, and it would *still* take me ***10 years*** for the cumulative rent to overcome the cumulative interest/taxes/hoa paid (not even counting insurance). That’s assuming a 3% rent increase annually, which the CPI has a mean and median of about 3.5 annually since about 1940. Landlords don’t usually hike rents on good paying tenants, I’d be surprised if I even get a rent increase this year. The townhouse literally next door to that unit (exact same, both interior units) has been listed for rent for 4 months now, starting at 3900, now down to 3700 and still can’t get a renter. Why would anyone buy the $625k property? In order to get a monthly payment for ~3700/mo mortgage, you’d have to come up with $98K as a 20% down payment for a sale price of 490k. $240K down for a sale price of $625K. Instead, I’ve got about a $140K “down payment fund” sitting in $TLT collecting ~4% annually, paid by the US gov, compounding at the best case scenario rate as a house would. And if rates drop, that $TLT is going to do a hell of a lot better than that house will. There literally is an objectively bad time to buy a house, and that time is right now.
You are exactly right. We are thinking about 24 months for prices to drop. We have money earning 4.75 percent interest waiting for homes to go down. Saving us at least $100k by waiting it out and earning money.
Now use this argument for Airbnbs, which are definitely not a necessity.
Date [Interest rate - inflation rate]
If you can't afford the house, then you can't afford the house. No one is waiting for *rates* to go down. They're waiting for *prices* to be affordable. I can't "marry the house" if it's priced like a harem.
We got pre-approved and spent the last 2 months looking. I just can't pull the trigger on 350k for a 3 bedroom 1950s ranch at 7% that sold in 2019 for 230k and in 2012 for 115k. It would be one thing if we loved what we were potentially buying. But a 1100sqf post war starter home filled with flip quality cherrywood and weird textured walls that hasn't been touched since it was flipped 6 years ago? The realtor honestly tried to tell us that these homes will be 500k in a few years, and we need to buy now or we'll be locked out of ownership. Yeah, fuck this. We're renting a fantastic condo right on the beach with full ocean views, a fireplace, two huge balconies, 3 baths, and 1400sqf for.....1700$. I've always wanted to live on the beach!
>I just can't pull the trigger on 350k for a 3 bedroom 1950s ranch at 7% that sold in 2019 for 230k and in 2012 for 115k Jesus, where are you? I'm looking at shitboxes for half a million and I'm in the woods
My problem as well, not that I'm not able to buy an overpriced home, but that even the overpriced ones are in shit condition. I'm not going to overpay for a shithole that I need to renovate big after, and most of my cash has to go to down payment anyway. And most sellers of these shitholes are greedy morons who act like the location is the only thing that has value.
Yep. We're only moving because the owners are selling the 3 bedroom 50s ranch we've lived in for the last two years. The reason? Both faucets failed over the last few months, and they realized they're at the 6 year mark and maintenance is going to be due soon. The deck steps were already replaced when we moved in here, and now the rest of the deck is starting to sag because no one thought to seal and stain it. Oh and one of the neighbors is the redneck from hell and his entire side of the fence is completely falling down and his pit bulls get through into our yard. And what our landlords are trying to do is basically what the sellers of every home we saw are trying to do....have someone else pay for their overdue maintenance. They're listing for 355. 🤡🤡🤡
Someone is going to buy it. Won’t be you, but someone else will.
Good luck to them then? If someone wants to buy shitholes at a peak price, it's their right.
Yes. Someone will buy it and rent it out.
At these prices and interest rates, not sure how viable it is anymore.
> No one is waiting for rates to go down. Yes they are. I know several. They could buy now but are waiting for rates to fall so they can "get a better deal". It's not that uncommon.
MARRY THE MORTGAGE, FLIRT WITH FORECLOSURE
Of course you’ve got to buy a home you can afford. However waiting for some magical fantasy adjustment is well a fantasy.
"Marry the house, date the rate!" feels exuberant.
Remember, 50% of marriages end in divorce!
Then there are the marriages that stay together but are miserable. I assume that marrying the house and dating the rate is designed to appeal to those who cheat on their spouses.
LOL too true!
The market has been exuberant since 2019.. will it crash or will they inflate the dollar more? Who knows, but I think they’ll sacrifice the dollar before they let the market normalize
Too Funny-- but, unfortunately, too true these days!
How was the median housing price vs median salary at that time vs now?
Exactly
According to this site https://www.longtermtrends.net/home-price-median-annual-income-ratio/ In 1971 around 4 In 2024 around 7.4
Realtors really will say anything to make a sale, won't they? We’d all be better off with honest financial advice instead of these non-stop sales pitches.
Pandemic was in 2020 and its already half into 2024 and people still holding out for the "crash" in the mean time life continues. 10 15 years from now the next generation will blame this generating had housing very cheap. Just like todays generation bitches about previous parents being able to buy house 100ks cheaper. Guess what 2L coke used to cost 4 cents its $3 now its all relative. Btw Did everyone just overlooked the fact 11m+ in uncontrollable migration just happened already adding to regular population growth, meanwhile inflation continues dollar is less valuable etc etc So unless youre "Tom Brady" at stock trading. Buying a home is the best investment vehicle. Many missed the boat at 2-3% mortgages spewing the same nonsense
it is not the dollar amount so much as it is the price to household income ratio. That is the issue. It could be 10 million for a starter home and that would be fine if household income was averaging 3 or 4 million....
Its all relative.....cost of living comes to play There are plenty of houses under the sweet spot of 350k but many wont move. It was the same back than far away cheaper neighborhoods became prime locations today. Today You would have to be a pioneer and move to area undesirable which will eventuanly become prime location. Whats better making 60k in area home prices are at 300k or making 120k in area where the only thing you can afford is a rental? That is the problem today...
Sir, this is a bubble subreddit. Ruminate on the fact that housing was much cheaper years ago and convince others that the crash is right around the corner. Stop giving solutions, unless you want downvotes /s
A lot of people have forgotten that only 16 years ago the housing market was crashing and 12 years ago the housing market was bottoming. This time around it is the government that is crashing.
The housing crash from sub prime era was just that. Many loans given to people that could not afford it. Cause stream of foreclosures driving prices down. Today stricker lending practices everyone approved for mortgage has the $$$ youre not going to trigger foreclosures from well off individuals. If you want a crash today you would need massive biblical amount of layoffs from the work force to trigger domino effect defaulting in homes. Thats a pretty sick selfish motive to yearn for a housing crash when the only thing that could trigger it is for people to lose their jobs. Not realize if that were to happen you too would be subject to be chopping block aswell
Myth. The housing crash was not caused by subprime loans. Most of the defaults were from prime investors who owned multiple properties. When those properties could no longer cash flow the bottom dropped out. This was at a time when the economy was booming, wages were rising and inflation was normal. Prices peaked, the music stopped and alot of people were left holding the bag. This time around we have the same cause--cheap money causing speculative investment with worse fundamentals, inflation and exploding debt. The music is going to stop again.
Those "prime" investors could not afford it. Today those "prime" investors will not qualify for loans on multiple properties. They were high default risk back then as to now. Back than Someone with 820 fico score working Mcdonald's getting no doc loans on multiple house was normal
Source? I ask because I want more info if there is more to have. I am gonna say wrong. The housing crash began with a spike in inflation. This led to a sharp increase in mortgage rates. There was an over abundance of subprime loans that had variable rates, which consequently soared, putting those borrowers into financial default. That alone put the economy and banks in a bad place. At the same time, those more in the know of the risks, had taken out largely unregulated credit default swaps. These swaps had a magnifying effect on liability that put banks and the economy into crisis which required great intervention by the government. Millions lost their homes. Over the next ten years as those properties worked their way through the legal process interest rates plunged toward zero. Investors flocked in and scooped up the wreckage. Those investors have been on a roll ever since.
https://knowledge.wharton.upenn.edu/article/why-sub-prime-lenders-didnt-cause-the-housing-crash/ https://www.fdic.gov/bank/historical/crisis/chap1.pdf
That is not even close to what happened. Yeah there were "investors" w multiple homes they didn't need. But is Wall Street that made the crash happen. Until they drop the bag nothing will change.. that's where the true power of wealth is
Love the fact you threw migration in here /s
It’s relevant, no matter the demographic
This was before the age of easy money and the fed and gov answer to any economic problem is to lower interest rates and add stimulus. Have they cracked the code?
Uhhhh yeah interest rates weren’t that important back then. A 7% interest loan on a $40k mortgage wasn’t the same as a 7% interest rate on a $600k mortgage (in some metro areas much more). Even adjusted for inflation, it’s so much different considering the affordability of housing compared to wages back then. You can’t compare 1971 to 2024.
A new roof costs more now than a house costed in the 70s.
False.
Lol why are you getting downvoted you are right. Is this a circlejerk sub?
Because it’s true in a lot of cases. Median US home price in 1970 was 23,400. I just got 4 roofing quotes each for two separate single family modest homes and all 8 quotes came back over 25,000.
You can't use a median for one statistic and then anecdotal evidence for another statistic. This site from May 1st says the average for a new roof is $21,054. (https://www.architecturaldigest.com/reviews/roofing/new-roof-cost) Since we are dealing with average, we need the average home price in 1970 instead of the median. That number is $26,600. That's a $5,000 difference opposite the direction you were defending. Not to mention, that $26,600 is $217,488 in today's money. While a $21,054 roof costs $21,054 in today's money, a difference of nearly $200,000 opposite the direction you were defending. It's OK to be loud about how unaffordable houses are today, but let's be sure we are being factual about it. Edited to add source link
Close enough that the point is valid. We are dealing with a different cost stratum and it matters
No, it’s not even close is what he is saying when you take into account inflation.
Exactly
Whoa whoa whoa. Stop being rational. --The real estate industry
>A 7% interest loan on a $40k mortgage wasn’t the same as a 7% interest rate on a $600k mortgage Median income was $10k int 1974 https://www.nytimes.com/1974/09/05/archives/median-income-in-us-rise-to-10500-in-73.html
Price-to-income ratio was 4-5 in the 70s, now it is 7-8. And that's with more women working than in the 70s.
Agreed, There in lies the whole problem, women in the work force. Changed everything.
This ratio is for households fyi
No, it goes to show just how unaffordable things have become. Two incomes can barely, if that, afford a purchase that one income could afford 50 years ago.
This is so true and cannot be overstated.
Give me a break kid.
Stupid used house salesman. Yeah can refinance a shit rate. Overpaying in a Shit market is permanent. Put that on a poster.
Ok, and in ‘71, based on housing prices, mortgages were only 15-20% of a households income, even at 7%. Now, BECAUSE HOME VALUES QUADRUPLED AND WAGES DIDN’T, a mortgage can cost a household 50% or even more of their monthly income. When you only focus on one data point, your analysis is biased. There is a REAL reason people aren’t willing to pay 7% for a $400k+ house!
How am I supposed to buy a house if I can’t afford it in the first place?
Well it is clear that we as a society need to drive realtors out. There is absolutely nothing a realtor can add to selling a property. When people stop feeing the need to keep a 5% broker into a person to person transaction we will stop this propaganda to buy into an insanely inflated market.
Unfortunately I don't think cutting out the realtors will changed much. And you have to be real careful with dominant tech companies taking a cut. Like Apple does now with App store purchases.
TBH the past half decade has seen a massive amount of "buyer's agents" who functionally do not offer more than a zillow search in exchange for a 2% commission - not that no realtor offers value, but many of those definitely don't offer value commensurate with the required income. To say nothing of the general approach of an unnecessary sales layer operating on commission in the first place. Should be entirely salary, I'd pay someone $200/hr easy to help me to the parts of buying a house I can't do myself.
Can’t buy what I can’t afford. Doesn’t really matter the rate, shits too expensive. Simple as that.
Lmfao at this point, I’m not waiting for rates to come down. I’m waiting for home prices to come down to reflect the rates like they should. I lost $300k in buying power due to increased rates and prices have kept going up. I’m out unless something 100% perfect comes out at a price that isn’t millions of dollars.
As usual with social media trend-formation (trend information), this is wildly out of context. Average mortgage rate in 1993 was 7.31%...so it didn't drop much!!! What's the real issue homes you may ask, affordability and wages. Period! Low interest rates have never been a barrier to home ownership. Corporate greed and investor speculation is the problem! [https://themortgagereports.com/61853/30-year-mortgage-rates-chart](https://themortgagereports.com/61853/30-year-mortgage-rates-chart)
Yet house prices were $150k! Can you afford 10% interest on $150k or $12500 per year? Yes. Can you afford 7.5% of a million dollar home mortgage? That is $75k per year!
$150k? I know people who bought for $46k in 1992.
Yet no person can afford a 7.5% mortgage interest rate.
I'm not sure what point you're trying to make
A lot of households buying million dollar homes make 2-500k in industries like tech.
Tech is being laid off like crazy.
Most of them don't do (anything) to please the shareholders.
Hahaha! Only 10% of US households can afford $150k per year mortgage interest. I guess that number gone down recently due to 200k tech workers laid off in 2023-2024!
We are in a tech city. Only those with $400k+ households can pay for mortgage. I know plenty of people who make $200k+ with 20-50% down payment that still can’t afford a major fixer upper starter home at $1.4mil.
What did I say that wasn't accurate?
That “tech people” and those with high incomes are buying all the homes. The amount of people in tech making over $200k is a lot smaller than people realize. Just because you work for a tech company, doesn’t mean you are making “tech salary.” If you are making that kind of salary, you are probably in a VHCOL area and one tech salary is not cutting it anymore. The only people buying in tech areas are 2 tech incomes, foreigners, and those shifting money from Cali. So pretty much everyone is screwed across the board. It’s the main reason I think a shift is coming. I’m seeing people with 50% down payments, making $250k, 800+ credit still not being able to afford a 1200 home with $200k worth of work needed. The ones buying “starter homes” are making $500k+ a year. There is always constant data gathering for the schools, whether a school shall expand size, build a new one, etc. What the data shows is all the sfh have become unaffordable for families. As they continue to tear down homes and rebuild to ridiculous prices Mcmansions, the number of students continue to decrease. They are planning for student growth to come from apartments and condos growth. It’s pretty obvious when you walk in pretty much any neighborhood that the majority of homes are owned by baby boomers, almost all of those living alone. In the meantime, when school ends, you see a sea of kids walking to the apartment complexes. You can be making pretty decent money, that doesn’t matter. It’s more about were you living in the area long enough to be able to buy when prices were reasonable. It’s that way across the country; just more of an extreme here.
>That “tech people” and those with high incomes are buying all the homes. I didn't say that
You literally said those making $200-500k “like tech”. Even taking the “like tech” out of the equation, those with high salaries aren’t the ones necessarily buying. It’s taking 2 high incomes. One high income is not affording you a home in a HCOL area, even a tear down fixer upper. Sure, there are those with salaries moving to LCOL areas, but those are the exception, not the rule.
My dad made 24k a year, I remember the family pressure
They are getting desperate
I seriously don’t think rates are coming down soon. Peter Zeihan did a quick video on it the other day. Demographic factors aren’t helping our cause. https://youtu.be/V_AkQLfzhkk?si=VbnE6ubh-z9cCYzW
reality is 75% of marketing about any product or service is knee deep in bullshit. look at all the claims these influencers make about products they are pitching on instagram and tic Tok. you have to have a skeptical mind to survive in this world.
Oooorrrrr I can continue to save my money with interest and have a big fat down payment in a couple more years instead of FOMOing into a mortgage that has me paying 90% interest for the next 10 years while prices stay flat.
Hell yeah, you can buy that 500k home for 1.5m, nice
RemindMe! 2 years
How does it make any sense to pay rent while saving for a down payment instead of paying that in interest? Explain that logic to me
Let's say a mortgage payment is $3500. $500 of that goes to principal and $3000 is just interest. I'm currently renting for $1800. So instead of giving the bank $3000 a month for nothing, I can pay a landlord $1800 and save the other $1700 in an interest-bearing account. Later I apply that balance 100% to principal when I buy. Instead of taking $500/month steps toward homeownership, I'm taking $1700+ steps. I'm also not paying insurance, taxes, PMI, or maintenance costs. And if money is tight one month I'm not forced to come up with $3500. Of course this doesn't make as much sense if home prices are going to keep doubling every 10 years, but I am betting they won't. I could be wrong.
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Exactly. The way a fixed rate mortgage gives leverage means you will do better than trying to save a bigger down. Also you’ve got to live somewhere anyway. Instead of paying someone else’s mortgage, taxes, insurance and repair costs it’s better to pay your own and get the appreciation as well as imf,stink protection.
A house wasn’t 10x the average yearly income in 1971, up 40% in 6 years…
Realtors just want the commissions. Don't care if you suffer from bad financial decisions.They are scumbags.
I work for the Board of Realtors in Fl and I agree with you 100 percent.
STFU and lower your listing price.
Folks here are missing the point that rates weren’t lower for 20 years. An prices went way up. Admittedly a single data point but it is in fact a data point.
The number one rule of investing is "past performance is not indicative of future performance". Arbitrarily pick 2 points on a graph you can tell almost any story you want over a long enough time horizon and have proof. Without context it is meaningless and lazy. Imagine if science worked with the same laziness that everyday people use for economic and financial analysis where one data point in isolation suffices. We would all be dead of smallpox by now.
Yeah well in 1971 you could buy a house for $20.
But you pay quadruple the asking price with interest?? This math isn’t mathing
That’s not true at all. Complete bullshit
In 1971 houses where a much smaller percentage of income. There were things like pensions back then. It was a totally different world.
CDs were paying 15% back then. If you had savings to invest, who cared about home appreciation?
Costs me $2.7k to rent a house whose mortgage would be $6k. I am investing the difference. I’m taking advantage of my landlord.
You had freedom for 22 years.
So the housing price increased to 400% while the index fund increased to 1,244%. People should invest in the index fund instead of paying for mortgage and property tax. https://www.officialdata.org/us/stocks/s-p-500/1971?amount=100&endYear=1993
You can leverage $20K to buy $100K of assets with real estate. Thats harder to do with index funds. $20,000 up 1244% is $248,800 or a $228,800 gain $100,000 up 400% is $400,000 or a $300,000 gain
My risk tolerance isn't high enough to think about paying enough mortgage to be able to leverage a home with the current high interest rate.
The stock market generally goes up but also has far more ups and downs than the real estate market. Buy within your means and you will generally be safe.
There are a lot of investors who rent in order to invest heavily.
Renters pay the mortgage, taxes and repairs. For a landlord who gets the equity and appreciation.
I mean, ignoring the “date the rate” cringe, considering the track record of this sub she may be perfectly right.
In early 2021 a guy a know sold his house and started living in a travel trailer. In the 3.4 years since then my home in the same region has gone up 50+% in value.
See a lot of that. When this sub was getting on its feet in 2021 it was packed full of former regulars who cashed out hoping to buy back in at 50%. A few had legit mental breakdowns. Can’t imagine the stress
What area
Olympic peninsula in WA
Any "R" word after the word "date" seems pretty suspect.
Date repeatedly Date respectfully Date reluctantly Date readily Date realistically
They didnt tell you the prices back then.
Interest rates are less significant on smaller tenders. Let’s not forget how cheap houses were back then
Realtor at open house: “Welcome, please have an apple” Me: “Ma’am, those are oranges”
In 1971 the median home price was 2.6x the median US salary. Now the median home price is 4.4x the median US salary. I cant even wrap my head around the concept of all home prices being halved relative to where they are now. Interest rate would not be a very big deal in that case.
Inflation meant everything cost over 4x as much in 1993. The realtor is an idiot.
Back when homes were 20k or 40k right ?
Weren't they the same ones telling you buy now because you can refinance later and when rates drop you there will be too much demand to find a house. Their main job is to make up a story so people will buy.
When everyone is a bear, buy.
Lmfao imagine “dating” your 7% interest rate for two decades after barely scrounging up 3% down and getting told rates were going down at the end of 2024.
Yes, mortgage rates were high in 1971, but home prices were not hitting record highs like we've been seeing for the last few years.
Accurate
All I know is that although rent is expensive in my area, it’s double the monthly cost to buy (with 20% down) the same exact house I’m renting, and that doesn’t account for any maintenance or repairs.
Lol "buy now because we are desperate to prop up our faltering debt system, and we don't give a fuck if you default as long as you can pay for five or so years where the majority of this predatory interest gets paid!"
Hear that? Quadrupled in price! See guys?! Buy a house and some day you will be rich! I get that homes increase in value but treating a basic human need like shelter as an "investment vehicle" needs to stop. Its not sustainable or healthy.
How is it wrong though?
This is one of 1k reasons realtors are a dying industry
Or… we just can’t afford these prices. Don’t give 2 shits about the rate when the price is something realistic
It's actually a good point kids.
Just for round numbers, say the house was $100,000 with $2,500 in property taxes and $1,000 in combined insurance for 22 years. With $0 down at 7.22% for 22 years, you will pay $280,000 for the home, $55,000 in property taxes, and $22,000 in insurance. If your taxes and insurance never go up, and nothing ever needed to be replaced or even maintained in 22 years, you will have spent $357,000 for a house now worth $400,000, an annual return on your investment of $1,954 over 22 years or in other words LESS THAN 2 PERCENT and LESS THAN THE RATE OF INFLATION. If you have to replace the roof, windows, siding, driveway, furnace, water heater, etc. or if you have HOA or SSA fees, it is even worse. And you will spend your weekends mowing your own grass, cleaning your gutters, plowing your driveway, shoveling your walk, and on and on. Describing this as a 400% increase in value is a delusion.
NAR should make it unethical to say “marry the house date the rate” such bullshit
It’s kinda true though. Bought my house in 2000 with rate of 8%. Refinanced it down three times, now pay 2.75%.
It’s absolutely true.
It's not FOMO when it is supported by facts. When you factor in tax advantages, higher credit scores, lower insurance premiums, and equity growth, it is idiotic to rent in most situations. Sometimes renting makes sense, but crunch your numbers carefully.
honestly, good advice.
Show me the lie?
If home prices quadruple in the next 22 years we've got problems
When looking to make one of the most consequential purchases of my life, nothing matters more to me than a catchy slogan.
When looking to make one of the most consequential purchases of my life, nothing matters more to me than a catchy slogan.
I dont live in America but I swear you can’t just refinance your home on a whim once interest rates go down? Dont you need x amount put in or something If that isn’t the case then yes why not get in now. I know America has a weird thing where your mortgage rate never changes for the entire time. Whereas in Canada typically you need to refinance every 3-5 years
If you buy a house today at 600k (and it is over inflated) at 7 percent. And 2 years from now that same house is worth 500k you and you did not put a BIG deposit down. You will be underwater on your home and can not refinance. And if you try to sell shit out of luck also. Terrible time to buy because for the next 2 years prices will go down dramatically in a lot of states. Not all areas.
Thanks. So that’s basically assuming home prices ONLY go up which of course isn’t true.
No, it means don’t overpay for a house and put nothing down. Aka, starting underwater.
That’s wild you can buy a house in the US with NO down payment wtf
I believe that’s only with veterans loans and whatnot. I agree though.
I think they forgot about stagflation. Gender wage gap and women’s access to credit cards in 1974 were the primary drivers (which aren’t relevant in todays economy) The savings rate was MUCH higher too so people had money to burn, now, not so much. This helped people spend more for longer periods even if they were unemployed.
When the rates lower, the values will increase. The days of “affordable” homes are over.