What would you do? Housing market stress!

[GiaR]

Also appraisers don’t chase the latest monthly housing price increases. So buyers can enjoy covering the gap after a low appraisal. Few sellers are willing to reduce there price much once under contract. It's all a hugh extra money grab & warning shot....Wait... Keep renting if at all possible.

 

[MillauFr]

But many will probably learn what it means to be stuck with an underwater mortgage, along with a higher assessed property tax bill.

No way prices are going to drop that much.

 

[MillauFr]

It is easy to say....just continue to rent. The OP indicates in the original post that they feel like the houses that they are looking at are overpriced. The market is what it is....when a seller and buyer agree on a price. However, the rise in prices in this market is unsustainable. Up 25% in 2021 alone....in an industry where we typically see 3-4% a year. When I read the OP's post...I see someone trying to force a square peg into a round hole. It's hard to resist the house fever frenzy that is still going on out there....but patience will pay off in this environment.

I agree that prices increasing 25% per year is unsustainable. I don't believe we will see a housing price crash like we did 10 years ago though. I agree with the general consensus here that it is best for the OP to continue to rent.

 

[DLgal]

As long as you can afford the underwater mortgage, it's still cheaper than renting.

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.

 

[mom2rb]

agreed. i know someone who recently sold that would have made a very good deal to their renter to buy b/c of the savings on sale's commissions and the odds and ends of 'refreshing' the property to list it for sale. renter would have also saved b/c no moving costs and the seller would have thrown in the appliances that normally don't transition from a rental to a house for sale. renter passed-likes being a renter.

We sold our rent house to our long term renters for this reason. It was just easy.

 

[CaptainAmerica]

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. 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.

You're mixing "cash flow" with "expense."

Rent is 100% flushed down the toilet. A mortgage consists of both principal and interest. You shouldn't be comparing rent to total mortgage payment, you should be comparing rent to (Interest + Property Taxes) * (1 - Marginal Tax Rate).

 

[DLgal]

You're confusing "cash flow" with "expense."

Rent is 100% flushed down the toilet. A mortgage consists of both principal and interest. You shouldn't be comparing rent to total mortgage payment, you should be comparing rent to interest plus property taxes.

Um, okay, well interest plus property tax plus HOA fees would STILL be over $3700. 3 bedroom homes here are selling for anywhere between $1.2 and $1.5M. Property tax is 1.3-1.8%, dependening on neighborhood. Every home in this city has an HOA (average fees $150-450). You get to $3700 with those alone, then add in the mortgage. This is how we arrive at $6000/month.

Rent is paying for a shelter. You get something in return. It is not flushing your money down the toilet.

 

[SirDuff]

You're mixing "cash flow" with "expense."

Rent is 100% flushed down the toilet. A mortgage consists of both principal and interest. You shouldn't be comparing rent to total mortgage payment, you should be comparing rent to (Interest + Property Taxes) * (1 - Marginal Tax Rate).

You're missing opportunity costs that need to be factored into the costs of owning rather than renting.

 

[DLgal]

You're missing opportunity costs that need to be factored into the costs of owning rather than renting.

And the maintenance costs.

 

[tvguy]

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.

 

[GiaR]

No way prices are going to drop that much.

If we hand't created trillions of fresh dollars out of thin air and used them to prop up our financial system, I might have agreed with you.

 

[Christine]

We are not in a housing bubble. Waiting thinking that prices are going to collapse is a big mistake. Supply is very low and not likely to increase anytime soon. The economy is doing very well and there are plenty of jobs available.

Maybe bubble was the wrong word. I am not predicting a collapse, but prices where I am are pretty extreme and are starting to cool. So while I view it as a bubble that has blown up very quickly in 2020, it seems to be leaking a bit of air.

 

[georgina]

We bought in Dec 2020, prices had started rising more than usual. In this area the huge price increases have cooled, but not declined, and I don't expect them to drop. (Amazon is building their 2nd headquarters up the road.)

We sold our old house in April 2021 in the peak of the buying rush. When I looked back at our suburban Pittsburgh neighborhood last summer, there were a lot of houses on the market. I just looked last week and there is very little for sale now. Not sure why.

 

[aprilgail]

Dont settle- just try to find a rental for another year or two. The housing market is insane right now- my neighbor put his house up for sale on a satruday and had an open house the same day- line was down two houses to see it. He got 70+ bids that first day and his 600,000 house sold for over 50,000 more than asking price with a full cash offer!

 

[mikehn]

If this wont be your forever home, no need to look for a unicorn right now.

 

[QueenIsabella]

Another vote for "get a rental". Get month-to-month, if it makes you feel better. Then the stress is off, and you can look as long as you like/need to. My concern is, you might make a poor decision due to the time crunch, and regret either the house you buy, or the price you paid. Or both.

 

[MillauFr]

If we hand't created trillions of fresh dollars out of thin air and used them to prop up our financial system, I might have agreed with you.

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

 

[Immadismom]

agreed. i know someone who recently sold that would have made a very good deal to their renter to buy b/c of the savings on sale's commissions and the odds and ends of 'refreshing' the property to list it for sale. renter would have also saved b/c no moving costs and the seller would have thrown in the appliances that normally don't transition from a rental to a house for sale. renter passed-likes being a renter.

This is not an option for us. We know ALL the things wrong with this house, and we know what he is listing it for. He offered to us for slightly lower, but it’s still not worth it to us. We never intended to stay in the town we’re in, just to get our kids through high school. This is why we rented. DS just graduated in December, so we’re free to cut ties & run.

 

[Immadismom]

I would probably change realtors, because they should not take out their frustration on you. It's a tough market and everyone knows that.

Oh, our realtor has not taken any frustration out on us. She is AMAZING! I just feel like she must be frustrated due to all of the things we’ve put her through to see numerous houses, schedule & cancel showings due to having second thoughts, etc. She does this all with a smile and reassurance that this is 100% market driven, not us. But I can imagine she goes home after spending hours with us and let’s out a huge sigh of frustration!

 

[Immadismom]

As long as you can afford the underwater mortgage, it's still cheaper than renting.

This is what we’re facing, for sure. To rent a house the size we need (kids are not fully flown yet and we both work at home) we’re seeing rent in the $2,000-$2,500+ range. That makes me ill after paying $1,200 a month for the past 8 years!!