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First time homebuyers have it rough…often it’s buying a condo/townhome, just to get something in their price range and get their foot in the door…and living there until they’ve got enough equity, and/or their financial situation improved enough to sell the condo and roll the equity into a home.
Otherwise you could look at a duplex…fha will let you live in one half and rent the other (and use that rent to qualify for the loan) with as little as 3.5% down. Then you could move out, rent both sides (use the positive cash flow to help with the mortgage on your next house), and keep the property and buy another home.
But don’t forget to factor in principal reduction and the tax benefits to your decision.
Realistically, $2700 a month still gives me plenty of breathing room. That’s approximately a 350K house.
There are no 250K listings unless I look into a trailer within a park. With that comes space rent which typically increases annually. As far as a duplex, I’m sure the neighbors won’t appreciate my headboard banging on the wall late at night and, the same goes for myself. Most duplexes are around 600K.
That’ll put me in over my head if I ever got laid off. Especially if the tenant isn’t good at paying rent on time and, I have to go through the whole eviction process. I don’t trust people enough to be willing to rely on them to pay my bills.
Right now, the listings I’ve seen for 350K are pretty far away and, add another 40 miles each way with my commute to work. I’m already in 2.5 hours of traffic each day. The additional 40 miles could add another 2.5 -3 hours going through downtown Seattle and, Tacoma. The houses are typically in need of immediate work.
The whole situation is a joke right now. Longer commute, come home angry and, have to work on a house later into the night or, stretch the finances so thin, you can’t afford two weeks off of it snows. Pick your poison. F*** all that.
You first need to buy land before starting and depending on where you are, it's expensive.
Where I'm at there's nothing under 125k-250k. Just 10-20 minutes away and it's anywhere from 300k-600k+ for land. That's for 1-2 acres. You don't need to pay the land outright, but it does facilitate things.
Then you need to get plans done, apply and pay for permits, pay a development charge, etc. Plans around here are anywhere from $2 a square foot to $10+ a square foot. Some places charge a percentage of the build cost. Permits where I'm at would be around 15k-20k. Ottawa would be double that for the same size house.
You then need funds to start the build process and bring it to a certain build stage before the bank releases you funds. Some banks won't lend you anything if you can't show proof of knowledge, so you then need to go with a builder or project manager.
Hiring a builder or project manager you'll get a new house, but you won't be saving much if anything as they need to make a profit. Some will let you do some work, but not all.
There also the fact that you also need a place to live while you build, so whether you're renting or paying a mortgage, you still need to pay for that.
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Man I cant believe some of the prices I'm reading from other places. No wonder so many people are moving here lately to poor little old NS. Market has been crazy hot here too for the last 1-2 years. But looks like still a big bargain compared to other areas.
I would say get your financing in order and check zillow/redfin on a daily basis and if a deal comes up, you'll have very little time to act but if you have your ducks in row, you might get lucky.
TM
to buy her first property. Credit Union has a great option. Starts out at 2.5% and in 5 years it can go to 4.5% for the next 5 years, and in 10 years it can go up to a max of 5.5% Which is not much worse than where she would start with a fixed right now. So she would start out a about $1,600 for a 4$00K loan. In 5-10 years it will be a rental for her and she will be in a bigger property. And sometime in the next 10 years the interest rates should get reasonable again and she can refi.
TM
we've been in the same boat, i have a TON of equity in our house and we have an in-ground pool so it's going to be a hot commodity. problem is the type/size/price of house we want just isn't adding up. the market is absolutely insane in Northern Utah (and i'm sure most of the country)
i'm currently on a 20 year at 3%, i'm having a hard time imagining dropping to a 30 year at +/-6%
Is it just not happening in Utah?
Having everything lined up took awhile but, to finally get to that point and, deal with this inflated market is a huge letdown.
What I’m not ready for is the 100K above asking price like most sellers are getting. I just can’t comprehend how this is the new normal.
Here’s a house that was listed for 410K in my neighborhood. It sold for 500K.
https://www.zillow.com/homedetails/2305-SW-341st-Pl-Federal-Way-WA-9802…
Don't know what to do but wait it out
I dunno why anybody would escrow their taxes and home owners rather than just pay them directly on their own when they are due, unless you are just absolutely terrible with money and cant set it aside, or you have less than 20% down (often required in order to self escrow), although some credit unions offer programs to self escrow with 10% down. You are quite literally giving the bank a free year of property taxes and home owners to just sit on ( yes you get it back when you sell, but why let them sit on your capital), because you are going to pay monthly from the moment you move in. That cash could be sitting in a growth account or being stashed away for a rainy day fund.
If my napkin math is correct, to hit 2300$/mo P&I on a 25 year rate, with an original principle of 550k, your rate is in the ball park of like 1.9%, which I've never seen anything that low. Did you buy down or something?
I avoided buying for a while until I found something that I really liked, and got lucky closing at the start of covid before the market when crazy, but rates were down. Home owners, property taxes, and interest, cost MORE than what I was paying in rent. Could of continued renting, put the principle away, and some of the interest cost away, and been further ahead.
Pit Row
My wife had sold her house previously so we had a pretty good chunk of money to put down, our mortgage payment is pretty low.
Our property value estimate went up $150K in 2.5 years....that's nuts.
i'm seeing about triple the amount of CA plates these days though.
Don’t listen to the “Professionals” when it comes to a home purchase. Unless they are retired and no longer rely on fools paying inflated prices on property to pad their bank accounts. There are a group of people who are loving what is going on right now and they are banking huge amounts of money. Brokers/mortgage lenders are making a killing right now, why would any of them encourage you to “wait it out”? If everyone waited it out then they would go broke. It would be like me telling clients “don’t have me do your remodel right now, wait until material cost come down”. It would be a good way for me to go out of business.
Look at history. These spikes have happened before and they will happen again. What is a given is a drop after the spikes.
A good example is when I bought our current house n 2005.
We sold a pc of shit track home for 525K, and bought a fixer for $525K. The market was at a peak so buying at the peak did not hurt us as we sold one at a inflated price. Within 3 years our home value had fallen to under $300K. It took years for it to climb up to its original purchase price, now it has increased 40-50% over the last couple of years. I have no doubt it will adjust and be worth less in the coming years.
Yes…let’s look at history…home values have been going up (“spiking”) since the early 1950’s and have only dropped significantly ONE time…2008…when the lending and secondary market practices where absolutely insane…that means real estate survived the massive inflation in the 70’s and 80’s…the dot com bubble, 9/11 attacks, without losing significant value…and it wasn’t until the finance sector completely lost their minds and created an artificial bubble that values declined significantly.
Nothing in the finance sector today is even close to what was going on leading up to 08…in most markets values are caused by demand, which is causing housing shortages…I.e. not a bubble, but real demand is causing the prices to go up…the vast majority are buying in cash or financing on fixed rate, fully amortized loans and documenting their income, assets, and employment…which means they can actually afford their loans, and their loans don’t have interest only, low teaser rates, negative amortization, prepayment penalty, or adjustable rate features that will make the loans unaffordable in the future. So if people can keep their jobs by and large they will be able to afford their mortgages.
Anyway, I don’t have a crystal ball…nobody does…and yes, I’m a mortgage lender, but my business and income isn’t dependent on anyone on this board, so I have no reason to lie….but to say “spikes have happened before and they will happen again” is short sighted and factually incorrect. It has happened ONCE in history, and the circumstances that caused that are no longer at play.
Last year around Oct lumber dropped to almost pre-covid prices- OSB was up to $48 a sheet last year then dropped to $20 a sheet in Oct ‘21. At that point I ordered all the wood and trusses for the detached garage I am building.
OSB then got back up to $48 a sheet this year, but is back down to $33. I don’t think prices will drop further right now.
I’ve been building the garage below myself since last Oct. The biggest price shock was the LP Smart siding. For pre-painted siding the cost was $10,000! I ended up buying the siding primed and am painting it myself. Saving me $6000!
I’ve also been waiting on Windows and the garage doors that I ordered in Feb. Windows eta is May 15. Garage doors eta is June 17.
All said and done this garage is going to cost me about $50k. The only thing I didn’t do was the concrete. I am guessing to have a builder put up this garage would be closer to $100k..It’s 36x50.
This will add a lot to our homes value- I keep reminding my wife it’s an investment. We have been paying as we go..
Let me ask you something. If you were to have children looking to buy a home, would you encourage them to buy right now during a period in time where they will pay over asking price, be in bidding wars, most likely purchase something that will be worth less money in a matter of 1-2 years? Or would you encourage them to wait out the madness and buy a home when they can actually do it the right way. Or choose from a inventory, make a decision on which neighborhood they like and the amenities of the home they will be living in. To buy right now is foolish, you will be stuck in the first place where you get a accepted offer, even though it’s 80K over its value. People will figure it out, the market will soften, inventory will increase, and people like Damien can go buy a house that is worth what they are paying for it. It is discouraging to be upside down in a home and this country is going to have thousands of people in that predicament in the next few years. Then they will walk away, short sales will happen along with repos and there goes the peak.
Texas is booming and I don’t think will be as affected by any price fluctuations as other areas of the country could be.
First step: 30 year fixed mortgage rates rise(check).
Second Step: Homes go for sale due to cost
Third step: Prices start to drop as supply of homes increase and demand goes down
Fourth Step: Rich start buying properties
Fifth Step: Regular Joes jump back in to buy homes
Sixth Step: Rates finally start to drop back down
Like you send, Home values will always end up higher than where they are today (big picture, they will keep on "spiking")...so there is no reason to panic if values drop...just live in your house, make your payments, and don't worry about the value. I bought in 05...I was upside down from about 09-13...I didn't freak out, I just lived in my house...I sold it in 2017 for more than I paid in 05.
The reason people walked away from homes during the 08 bust was largely because they couldn't afford their payments (or saw the writing on the wall and knew once their loan recasts they couldn't afford the payment) because they didn't document their income or assets or employment and financed on an ARM, with I/O or NegAm and those loans began recasting...they couldn't sell because they were upside-down so they walked away (which exasperated the problem and accelerated depreciation)...
Today people are financing on fixed rate full AM loans where they documented their income and employment (they can afford their loans)-so so so many people are currently financed under 3% on their fixed rate loans, no smart person will walk away from that to rent-so if they find themselves upside down, WAY more homeowners (compared to 08) will just live in their homes make their payments, and in a few years they won't be upside down any more.
Outside of appreciation rates, NOTHING today is like it was leading up to 08. (and 08 is the only real "crash" in the past 70 years-since the great depression.)
Correction? Probably to Very Likely (due largely to rising interest rates)...Crash? Probably not to very unlikely (with the exception of small local markets with population decline and rising unemployment...baring another full on economic depression).
Local markets are far more important than national numbers...Utah is one of the fastest growing states in the nation with one of the lowest unemployment rates...there is a drastic housing shortage here...as long as people keep moving here, and can keep their jobs, home values will keep going up...they won't go up 20%/year (maybe they only go up 3%-5%/year...if rates keep going up, they might even flatten, or possibly even drop a percent or two)...but they aren't going to "crash" unless those two things (population growth and unemployment rate) start to change.
If you live in a market with a stagnant population growth and high/rising unemployment...then their housing market could very well crash.
If you can afford the payment on the house you want (on a fixed rate, fully amortized mortgage)...and are going to be in the home for a while...buy a house. Live in that house. Take care of that house. The value doesn't matter until you needed to sell it.
And if when you have you sell your home to relocate, you are upside down, rent it (because if values are falling their is more renters than ever!). Let someone else pay that mortgage until you aren't upside down, and eventually you won't be upside down any more. No reason to panic...
I'm not in the housing business, but I am not aware of anyone who has ever sold a house to a corporation, or rented a house from a corporation, etc.
I would love to see actual data that might show the impact of corporations on housing prices.
I looked up one specific house and it shows they still own it. I’ll always remember that house because it was right behind ours and the first year it was unoccupied and the grass was never cut..
We started building last Sept and are hopefully within a week or two of moving in. We got really lucky on lumber prices but took a pretty good hit on metal. We also bought a lot of our stuff right before things got crazy so we got lucky there too. We have had a few things that we have had to wait on. Overhead doors, regular doors and windows took longer than they said they would. Cabinet hardware was virtually none existent for a few months and we're still waiting on some easy close drawer systems and tile, tile has been moved back on us three times, but overall things went pretty well.
My best advice would be to keep saving as much as you can because like others I believe within a couple years there's going to be quite a few people looking to downsize and get out from under some of these crazy numbers.
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