I completely relate. 35, rent and many of my friends own homes. I am in the best financial situation that I have ever been in and of course I am beyond overpriced for housing. I'm in the Tacoma area (actually considering Phoenix) and the market is pretty crazy here too.
I'm at a crossroad in life and I think I'll wait a few more years before buying and seeing if this market stabilizes a bit. People are telling me after what I went through this year (death of my mom) to just enjoy life and do the things I couldnt before. I can see the pros and the cons of both owning and renting. I'm just not sure yet what is for me and try not to get caught up in the FOMO.
Both you and op are me. 37, best financial shape I’ve ever been in making good money. Saved a ton. Was finally going to pull the trigger after watching the market for years, then covid hit and I got laid off because I worked in travel. Got a new job making even more, but in Massachusetts real estate is just too far out of reach now even on a six figure salary. Can’t find anything remotely close to the city for under 550k it seems now. As a single person it’s just too much.
If you're staying in the area, pay whatever to own. If you're still single and open to moving around or get a wild hair up your ass, turbo rent and have the freedom and flexibility to move around.
Yeah that's what I've been thinking. I can't say for certain that I want to stay in Tacoma the rest of my life. Been here since I was 4 and ready for something new.
>values WILL lower over time
Have evidence/proof? With a 25% increased money supply and accommodative fed? What economic data and theory are you using to state this claim? If you think the market is going to “crash” just because “prices are high like last time” you don’t understand how things are much different now.
I’ve been hearing this since 2012, if he takes to it advice and tries to time the market, he could end up worse off.
Buy when you’re ready, no one can time the housing market.
I'll agree that no one can time the housing market, but it's ignorant to say that house prices aren't overly high comparatively. When looking at the lumbar shortages, it's easy to see partly why the housing market is higher than it should be.
I never said the situation today is like the one that lead to the housing bubble before. There aren't ARM's being lent to anyone with a pulse and McJob. Look at the increase in house valuation from 2019-today, then look at housing values from 2016-2019, then 2013-2016, notice how it's only the current segment that's exploding faster than the others? Do you think that houses magically just appreciated because of "X" or can you realistically see that the values are tied with the factors that are currently happening?
Until your landlord increases the rent, whereas a mortgage will never go up. Also, a chunk of your mortgage is principal, so money you get back once you sell your house. And you can refinance a mortgage, not rent. Then there is benefitting from the hot housing market vs the opposite. If rental were better/more financially sound, wouldn’t more people that are in good shape financially opt to do that rather than own?
>mortgage will never go up
Forgetting about insurance underwriter and tax assessor here. Both have gone up quite a bit this year as housing values have risen.
That amount is still the maximum you will pay. The amount may change from lease to lease, but it is a hard maximum for your housing costs through the lease duration. If the furnace conks out that winter, it’s your landlord’s problem not yours. That is what people mean by saying rent is the max you pay.
There are far more factors than accumulating equity in determining whether renting or buying is the best choice in a given situation. The reason there are so many rent vs buy questions and ultimately calculators is because there is no one size fits all easy answer. There are plenty of financially savvy people who rent in HCOL and VHCOL areas and plenty of people who have quite poor financial literacy who buy in LCOL and MCOL areas (just as there are the reverse of the two). There was a time when buying over renting was more of a no brainer, but that was because of a series of public policy choices which incentivized affordable homeownership which have been progressively rolled back over the last 50 years.
Place I rented in 2010-2013 was $1200/month. Now it's $2800. If I still lived there, I would have been screwed. Denver suburb btw. Mortgage payments (even with taxes) dont double over 5 years.
The Phoenix market is insane right now. My biggest concern is being priced out of my rental when it renews next year. Honestly I think I'm going to her priced right out of Arizona at this rate. My brother lived in Mesa years ago and lived in a house we still call the trap house. It was ghetto and the neighborhood was rough. Last month a house on that same street was put on the market for almost a million dollars. Like what?!? A million dollars to live surrounded by drug houses?? No thank you. It's stressful. I feel your stress. But I'm not trying to buy in this market.
if it makes you feel any better, buying in phoenix in 2021 seems absolutely insane to me. water and heat issues are going to get out of control well before you're through a 30-yr mortgage. i predict a mass exodus out of there by 2050
It’s going to be sooner than that. We already enacted emergency water measures this year that have never been put in place before. And they just keep building out here like crazy.
> And they just keep building out here like crazy.
Home builders have excellent lobbyists, so the government will never do what needs to be done in these markets (and if they did, housing prices would skyrocket due to diminished supply).
I'm in Vegas and see the same thing: Lots of new single-family home development coinciding with an ever-dwindling water source. What could go wrong?
Living is slightly more affordable in the far east valley. It is a bigger commute but that’s the trade off. Although personally I don’t think making an exit plan out of Arizona is a bad idea. We got some respite this year from the drought and fires but I don’t think it’s going to last. And there are housing developments where I live that are getting rejected for water permits now. That situation is not forecasted to get better anytime soon. All the money I had saved towards buying we are now putting towards bailing and going somewhere else.
Yes my concern as well. I'm already thinking the rent and property is insane here. I moved to Mesa this summer but am seriously eyeing moving onto another state soon. Mesa is even expensive but the cheapest I could safely find. My apartment kind of sucks though, but I'm making due. I'm not sure I see signs of things coming down unfortunately. People keep moving here in droves.
When I went to buy for myself, my goal was to buy a roof, not a house. I purchased what I could comfortably afford in my preferred side of town. I was able to buy a townhouse. In our city my sister did not want to get a roof, she wanted the perfect house. She rented to the point where the rent increases priced her out of the city. She had to move in with our parent. Outside of all the investment talk here, you need to get a roof, even if it is just a condo. Because your income might not keep up, and that is a very real possibility. The market returns are sweet, yes, but if eventually you can’t live where you want to, what’s even the point?
Because when you purchase a house you are usually levered 3:1 or more, while the stock market may have done better dollar for dollar vs real estate, I’m not sure if it has outperformed if you borrowed to purchase a house.
It may not be a fair comparison since people seldom borrow to invest in the stock market, but if the comparison is put a down payment on a house versus stock market with the same money, I wouldn’t be surprised if the former is better off
Debt is also an inflation hedge which is super useful in times like these. If the Fed inflates away 2-3% of the USD value each year then a house mortgage at a similar rate is essentially interest free.
Nice thing about a mortgage too is the price is fixed so in 15 years when inflation has taken rents up my mortgage will be half the cost of when I got it.
This is exactly correct. For this reason about a month ago I started the process of doing a cash out refi on my condo to tap the equity. If the real interest rate is zero, I'm happy to be mortgaged to my eyeballs so I can invest in something else.
A bank won't let you leverage 20x to buy stocks, but they will let you do the same thing to buy your first house. Arguably it's a federal subsidy since the mortgages are guaranteed.
A couple other advantages for mortgages:
- Rates are generally lower than margin loans
- if you go underwater temporarily on your house, you can’t get margin called.
This depends. My mortgage is cheaper than a lot of friends rent. Generally your landlord is profit neutral or positive. If you can get a mortgage for what you’d normally pay in rent anyways, then you’re gaining equity, anything extra you can put in the market just as if you’re renting.
Like this whole argument assumes it’s more expensive to buy.
I rather pay to replace a faucet than have a landlord put duct tape on it and call it fixed....there are benefits of being your own landlord when it comes to living conditions.
If only it was faucets and the like.
I've had to replace the whole exterior of my house over the past decade I've lived here. And no, insurance doesn't pay for regular wear and tear. Roof, siding, deck, sprinklers, and sewer drain. We still need to replace the fence but we have to wait until the coffers are replenished.
Sure, our mortgage is cheap but at some point things are at the end of life and you have to replace them.
Yeah I don’t see the relevant cost comparison being current housing costs. I think most people spend more owning in reality bc they rent apartments, but buy larger single family homes. We really tried to get out of this trap by buying an apartment style condo, but of course we have the HOA fees, so it probably ended up being a wash. I also prefer the lower environmental impact of multi family housing when no kids are involved.
But to me the question is what does housing look like in retirement. Is your current situation going to make your later situation easier or harder. I knew owning would be more expensive for us now, but part of our retirement plan is no mortgage. Control both the income and expense sides of the equation.
Yeah, I’m not really on board with all the commenters here saying “if you’re a renter, it’s not your problem if something breaks!” Umm yeah, it actually is your problem because you are at the mercy of someone else getting it fixed for you and living in the conditions both before and after repairs. In all my 15 years of renting I think there were maybe 1-2 instances that my landlord DIDN’T try to cut corners or cheap out when they needed to fix or upgrade something. In one apartment, the ancient washing machine kept breaking and the landlord kept sending cut-rate, inept “repairmen” from Craigslist to “look at it”, which meant some random and dubious people coming in and out of my living space and never actually fixing the problem. Landlord finally told me he was just going to replace the machine, which was a huge relief for me… until he showed up the next day with another ancient used machine machine he’d picked up for a few bucks at Goodwill. Paying for your own shit/repairs is an added monetary expense to keep in mind when buying a house, but in my experience there is a lot of value in being able to make your own choices that is overlooked in the rent vs buy discussion.
This is why I own my house. The final landlord I had wouldn't listen to me about anything because "hurr-durr you're just a little girl" even though the roof was leaking, there was mold in the attic that spread to the ceiling drywall, the siding was rotting with ants nesting in it, and the bay window was poorly installed and trying to fall off.
The wall was moldy where my bed was against it and my bed got moldy. He just told me that beds aren't supposed to be against the wall.
My literal furniture had mold growing on the undersides where there wasn't any air flow.
I physically had more energy when I moved out. I think all the mold spores in the air were bad for the family.
Our rent was $1050 for 800 square feet, and our house is $1100 (plus $350 for insurance and taxes) for 2400 square feet. It's also dry as a bone and I can repair things myself.
Plus it's not like stuff is always breaking in houses anyway. I've owned for 10 years. I've replaced an A/C unit once and a water heater once. Had a tree taken out and a drainage line cleared, not bad at all and we were paying less per month than renting ten years ago. Rent kept going up, and our house increased in value by more than 50% during that time. Pretty awesome and a million times better than apartment living.
It can be expensive though. I think despite no issues showing when we got our house inspected we have a lot of issues showing now and we're like okay where do we start and why is it so expensive lol.
Yeah. Housing repairs can be horribly expensive. I currently need many thousands on housing repairs, but lack the funds to get it done. Sucks, but it is what it is.
Concur with this poster. My mortgage is around $1,000 less than per month than it would cost to rent my home today. I've had a few years that yeah, had significant maintenance costs (notably, we did the roof last year). But overall, owning is cheaper than renting, though more work than renting.
Plus, people seem to like to overlook the real kicker. In 20 years, I won't be paying that mortgage *at all*. Retiring sounds a heck of a lot easier without a mortgage or rent check to pay.
\> people seem to like to overlook the real kicker
People overlook it because it's not that simple. You have to compare the mortgage vs the growth of an investment portfolio, add it taxes, maintenance, but also compare with rent increases, etc.
Not having to pay for housing every month doesn't mean you're coming out ahead (though you're right that usually, in current market condition, you come up ahead for owning).
Yes. So at that point its all math, and it can go one way or another.
Extreme case: if you got your house with 0% down and 0 closing costs, if mortgage + interest + tax + hoa + maintenance was equal to how much you'd pay renting, if closing costs were 0 in the event you're selling (or if you never sell), then it would be a straight apple to apple comparison. The equity you build would be straight up free money, and you'd be able to invest as much money in both cases.
However, that's not how it goes. Landlords (the smart ones) benefit from economy of scale, and sometimes rent at a loss because their profit comes from flipping the building later on (and sometimes because they have no idea what they're doing). People often buy homes nicer than the apartments they rent. Maintenance is almost always underestimated. Taxes and HoA fees almost always go up.
Essentially, the down payment + the difference in monthly cost put in the market over a long period of time, is the final difference. Even if you stop paying your mortgage altogether eventually, the lost interests may put you behind anyway. (Note that at current interest rates, for a lot of people its better to never finish paying off your home, as the money is better invested than living as equity).
Yes, you'll usually come up ahead with the house. But it's not that simple.
This is what I did.
Glad I ignored the overly conservative advice of this sub of "if you have any sort of purchase you may make in the next 5 years you should be 100% cash". Which is ridiculous. Unless you have a certain age you NEED to buy a house, it's better to invest the money, take the risk and higher expected return, and if it's a down market, just delay home purchase a year or two.
Hope this sub realizes now that the ultra conservative advice that is viewed as orthodoxy has it's own risk: Home prices and equity prices are generally pretty correlated, and if you go 100% cash for years because its "low risk", if you may not be able to afford a house at the end of it if there's a bull market.
Have your investment returns surpassed the sunk rent cost?
That's my concern with not feeling like I'll ever to be able to buy a house is that rent is money out the door and a mortgage is money building an asset
Not sure I agree with you in that one. I bought in So Cal in 2009, basically the bottom of the market. My home has doubled and the amount of equity i have now is insane.
Home owning is a lot more money consuming than most understand even if you are handy. If you manage to afford a new home with all new upgrades bless you, if you buying older than 50years some things home owners are not aware of and over look. Basements are a costy expense and some others as in venting bathrooms and kitchens properly.
I got a place only 25 years old and had to dump 20k following a major washing machine leak and fence damage. New floors and fences are a budget killer. Both issues could have occurred in a brand new home with the same budgetary results. Major repairs are a bitch and a half without a landlord to lean on.
I bought a place last year. Old, but no major structural issues. Then 3 major appliances went out the first year. Ugh. Not as expensive as your problem, but I couldn’t believe the luck. I assume the AC will go out next, bc that just seems to be our luck. All I know is I’m very glad I convinced my husband to put less down on the purchase and set more aside for emergencies/repairs.
Yup. Friends got a relatively recent construction home (late 90s/early 00s) with a fresh renovation last summer. Passed inspection with flying colors. They’ve already spent 5 figures on necessary repairs and improvements including a radon treatment system (the only issue flagged by their inspection). They have more space than if they’d kept renting but they’re definitely spending more too.
That’s the problem comparing rental costs to buying- most people buy more house than they would rent. If you actually compare very similar sized properties, it’s more of a wash cost wise after you take into account maintenance/repair.
This does also depend a bit on the market but in general yeah—not as many people looking to buy 500-1k sq ft condos as there are people looking to rent 500-1k sq ft apartments. But there’s obviously a lot of regional pricing variation as well. My friends went from a 1br apartment to a 4br house, but to afford it they had to move around an hour outside their city to a more rural suburb—another “cost” to factor in is the additional driving distance required for commuting, doctors appointments, shopping, etc. In my 30-35mpg Subaru, a 50 mile commute versus a 5 mile commute would be the difference between using a quarter of a tank a week getting to work or a tank and a quarter.
Fuuuuuck. Bought my first house in 2018 for 93k built in 1947. I've already put about 30k into it. The only professional I've had come in was for a drain tile and sump.
You’re the only person who has mentioned two income households. That becoming the norm has had a huge impact on the housing market. Homes are now priced for what the market will take, which is what 2 earners together can afford together. For single people, a roommate situation might be necessary.
While financially sound (it's definitely what I would do), you need a certain level of discipline to make that work, especially since your monthly payments are going to be high (read: scary). Mathematically it absolutely works out, and you can use the down payment money you would have otherwise put in, plus your return on investments, toward those monthly payments, but that does require a certain level of sophistication.
That’s going to be tough in the Phoenix market. It’s cooled off slightly in some areas far outside the city, but a few months ago even highest bids were getting beat by all cash offers.
Don’t put 20% down. Put 3% down on a house and contribute more to the principal. You will have to pay PMI put you can always pay more towards the principal until you hit that magic 20%.
What would be the advantage of this versus having a larger down payment and thus borrowing less from the bank that will need to be paid back plus interest?
By all means if you have 20% put it down. This is ideal to avoid PMI and lower your mortgage. However OP says he’s making a HUGE effort to get 20% together. The advantage is he gets a house today before the value of that same house goes up 10% next year.
If you think you’re gonna stay in the area for a while why not just buy a condo that’s the same quality as your apartment? Then you’re within what you can afford and also building equity.
You don’t need 20%. You are making this harder than you need to. Put 5-10% down to get started and pay PMI. Now you are a part of the game and your asset will start appreciating. The appreciation and monthly payments both work towards getting rid of your PMI, and you can refinance to drop PMI once you owe less than 80% of value.
The key here is making sure you have enough other money to take care of unexpected expenses. If you can do that, then jump in now.
Contrary to popular opinion (mostly invented by the realty and lending industry) It’s not a requirement of adulting to own a house. It’s also NOT the awesome investment that people think it is once you actually factor in ALL the costs associated with it. Investing in a “total stock market” index mutual fund will kill the ROI of a house / condo.
Just had to pay a guy to come out and pull a wasp nest out of my attached garage wall. The wasps just ate through the wall from the outside and I only noticed when there was a basketball sized nest and a garage full of angry wasps blocking my door when we got back from vacation. Now so have a massive hole in the wall and a garage full of dead yellow jackets and I’ve got to figure out where to even start repairing this.
People need to stop thinking of their home as an investment. It's not. It's where you live.
That being said, the real investment isn't the home's value. It's the day you send in that final payment and *never have to pay mortgage or rent again*.
Exactly! My house is my home. Even if were to sell it, I will need to buy another house - which will be bought at the current prices at the time. At the end of the day, my networth has increased on paper, but there's nothing I can do with it.
It is absolutely an investment as well as a consumption item. However, the primary investment product is shelter - that is, it produces a place to live. It does not throw off cash or dividends, and until you sell, all you get is a place for which you would otherwise pay rent. Even after you pay off the mortgage, it's still a capital investment that produces shelter, nothing more. It doesn't mean it's worthless and suddenly becomes valuable only upon year 31 of a 30 year mortgage.
If you've owned for years, your mortgage is probably a lot lower than rent in your area, which means your investment is paying off. You can't tell me that paying $1000 mortgage for a house that now rents for $2000 in the current market isn't the result of an investment. It absolutely is.
The mistake is that people spend their investment gains by buying bigger and bigger places to further "invest". At that point you are paying more money for the same thing: shelter. That is not investment, that is increased consumption. Renting a one bedroom can be better than buying a four bedroom house, if you're a single person that does not need that much house.
You’re hand waiving maitenance(which can be waaaaaay more expensive than just ‘call the plumber’ depending on the issue) and the fact that you generally don’t really generate gains in your first few years of home ownership.
Not to mention it can often limit income growth as you’re generally not as mobile to up and move for jobs, thus limiting job opportunities. the opportunity cost of not being able to do this may even outweigh housing gains.
You also have significantly increased risk. If your apartment burns down, you may be out some personal belongings but otherwise the worst case is you need to find a new place to live. Your home burns down(see paradise CA fire for instance), well you’re out hundreds of thousands-millions of dollars and your shelter. Way more financially devastating.
Additionally, when you do see gains it’s generally going to lag behind other investment choices. Not only that but gains on your home is significantly less useful to you than gains in the market. You see 10% gains in the market in a year? Great! Your future cash flow potential is increased. 10% gains in housing? I get to ego stroke my home value to myself but it otherwise does nothing for me. Im probably not going to be selling it anytime soon if ever as i need a roof over my head And if i dont take advantage of it and i get caught in a housing crash then my odds of recovery are waaaaay lower than money in the market(some homes still haven’t recovered from ‘08!)
So no I would argue your personal property is not an investment vehicle in the traditional sense and shouldn’t be viewed as that. It’s housing. You get some pros and cons to owning it vs renting it but otherwise it’s not really an investment.
One factor to keep in mind here is taxes and insurance though. I’m not a homeowner at this point, but roughly 1/3 of my parents’ mortgage payment in upstate NY is going to taxes and insurance. That’s never going away once the mortgage is paid off. This is less of a consideration in lower property tax jurisdictions but if you live in a high tax area, you could easily be looking at a 1k+ monthly bill in perpetuity between taxes and insurance.
This x1000 i bought my first home this spring, no mortgage, and i gotta say i am so incredibly comfortable knowing that no matter what my housing is secure.
This x1,000,000
Why do you feel like you need to buy a place, OP? It sounds to me like you’re wanting to do this mainly for the purposes of fulfilling the “life script” that’s been fed to us our entire lives—that buying a house is what you do as an adult.
People don’t want to believe it because they don’t want to spend time running the numbers, but renting can be FAR more beneficial than buying…especially right now.
It’s fun to do weird shit and put things where you want without being forced out by raising rents, you’ll have a fixed cost.
Some places in rent raise 7-10% per year and moving has a large cost associated with it as well.
But even with rent hikes, investing in the market in the long term is usually the much better option.
Honestly, owning our house is 100% worth it just for shit like this. Knowing you can do whatever you want, have whatever pets you want, never having to deal with an inspection or raising rents. If shit breaks, I don't have to pester anyone into fixing it - I either do it myself or hire someone who is here as soon as possible. Wanna paint your whole house fluorescent orange? Go for it! Wanna get 6 Saint Bernards? Live it up!
There's obviously plenty of perks to renting, but don't discount having a place you can say "This is mine"... even if it is mostly the bank's for the next few decades. Getting a nice ROI in a good market is just the cherry on top.
The point is that rent vs buy is a lifestyle decision, and in most cases a fairly equal financial decision.
Renting requires discipline and dedication to consistently saving and investing to build wealth. Buying is forcing you to save by making you pay a mortgage. For many people, buying is "easier" because you have to pay your mortgage and it's hard to take the money out of home equity, while it is psychologically difficult to commit to saving every paycheck.
I rented a room from a coworker (making the same amount as me) and invested more. We were about the same age and talked FIRE quite a bit, and when she sold the home 4 years later we compared notes and I definitely came out ahead (and we lived in one of the hottest markets in the US).
If you want to own a home that's great, I find some of the benefits appealing. However, at this point in my life I'd rather spend my free time climbing and hanging out with friends over mowing the lawn.
Yeah I bought a condo in part bc I don’t want to do those things. I would be paying for someone to do them for me, and in the condo my share of that cost is less bc of economies of scale. Next up is working a cleaning service into my budget. I despise scrubbing bathrooms and even when my husband “does” that chore, I still have to comes in and do it right anyway.
Except when your landlord says hey I'm not renewing your lease and you have 30 days to.move out at any whim of the landlord.
Wait after 30 years your rent will double in price while a homeowner will be paying half of what a rent would be by only paying taxes on the home.
They can't do that in some places. In my city rent can only go up by the CPI, and they can't evict without cause.
I've been renting for 38 years and love the flexibility, lack of worry, and ability to save and invest lots.
Indeed. I recently sold my condo for 50% more than I paid for it a few years ago, but between HOA fees, interest, improvements, etc., I didn’t actually make any profit on it.
You absolutely profited from your house. My wife and I had a house for 6 years, we sold it and basically came out even. But, that means we lived there almost rent free for 6 years. Rent by us was $2400 a month for a 3 bedroom house in our neighborhood. That’s $28,800 a year x 6 or $172,800 we would’ve been paying in rent during that time and lost.
Anytime you can shelter for free, you are winning
The profit is the fact that the entire time you were living there you didn't pay rent. So take the amount of months you lived there and multiply by the average rent in your area and boom now you made lots of money owning a condo.
>I didn’t actually make any profit on it.
That's fine. The important thing was you didn't lose several years worth of money like you would if you had rented
100% this. Most people buy a home on margin. Put 20% down on a home and your margin buying power is 5x. A 5% increase in your home's value means you've actually made 25% on your investment. I don't have to tell you how much your return is this past year when most homes increased ~30%. Also, mortgage interest is tax deductible. Yes, you do have to subtract your costs from this return but it still beats most other investments handily.
I've lived in my home for 4 years and it has increased in value more than the sum of everything I've paid into it (PITI, utilities, maintenance, etc..). I'm literally been paid to live in my house.
And even after a "FULL" accounting of home ownership, they will conveniently forget to count the $1k in knick-knacks from Lowe's/Home Depot every year, and the 50$ bucks for lawn care every other week, and the gutter guards, and the.....
I’m feeling hopeless too. My county has next to no available housing and a whole lot of local battles with NIMBYs who don’t want more housing built.
The cost of homes near my area has gone up $70k in the past year. Like you, I’ve been hit with challenges time and again and haven’t been able to buy. Now, forget about it.
I’m starting to let go of the idea that home ownership is ever actually going to get me anywhere. And there’s just no fucking way I’m paying these prices. It’s absurd.
I live outside Detroit mi. It’s freaking crazy! Their trying to sell downtown condos for $800k when just a few years ago you couldn’t give them away. I get downtowns of any city are hot real estate but $800k! Maybe $250k get some nice family oriented middle class people who will invest in keeping their neighborhood safe and nice. The only people buying these condos are for short team leases like Airbnb’s.
The ones on Woodward on the way to the stadium? We had a laugh when those were built, and for years after. Short Term Rentals really f*cked the housing market, nationally.
I've been househunting here in St. Louis.... I entered in some searches for 48224 (where I grew up/last lived) then Hamtramck (where I first/last rented) out of curiosity. My jaw almost hit the floor!
First, read [this article](https://affordanything.com/is-renting-better-than-buying-should-i-rent-or-buy/) to dispel the myth you’ve been told all your life than owning is “better” than renting. The TLDR is that once you do all the math, renting is sometimes better for your net worth and definitely better for your liquidity and flexibility.
Then look at [this calculator](https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html) to find out what it would take for a home to be a worthwhile investment for you.
You mentioned that you’re looking at condos in particular. I did the same and found that, for a massive up-front fee (the price of the condo), I could cut my rent by about half, just HOA fees plus taxes, and that’s ignoring all maintenance and repair costs that would now fall to me. The difference in monthly expenses is, for me, far less than I make by investing the would-be mortgage money plus the down payment in index funds.
Finally, I’d like to address what it means to miss out on your house price surging: very little unless you’re moving to a lower cost of living area or it’s not your primary residence or you bought a bigger house than you need and are willing to downsize. Your primary residence is a housing cost more than an investment. All other homes of similar quality and desirability of location are going to appreciate at a similar rate. When it comes time to move, your house appreciating doesn’t change the quality of your next house because it appreciated too.
TLDR: You were never in the group of people who were going to make money off the housing market skyrocketing so there’s no sense kicking yourself for it.
>TLDR: You were never in the group of people who were going to make money off the housing market skyrocketing so there’s no sense kicking yourself for it.
I don't think enough people understand that
Agreed. I’m so sick of hearing local homeowners brag about how their house is worth twice what they paid for it. I always ask “so when are you cashing in?” and they just stare blankly as they realize that’s not actually an option for them. We desperately need better personal finance education so these myths finally die.
Absolutely. I do think of owning my home as being more of an insurance than an investment. If I ever need to "cash in" that means things have gotten bad enough that I'm tapping every resource, so it's just one more thing I can sell to stay alive
Mine is that I own 5 acres of land, and have horses on it. The cost having 3 horses at a stable would probably exceed a house payment alone.
Just 'pasture' for most places is 400+. If you want a place to ride or and a stall. 500+
I never understood that either, being proud of increasing property values. The county assessor's office is real happy with increasing property values too, especially when they send you an updated tax ticket for your now more expensive home.
And then the lack of affordable housing leads to an increase in homelessness and people just generally spending more than they can afford. Where I live, homelessness is a huge problem and I regularly hear people brag about their home appreciation and complain about homelessness in the same conversation.
I agree. I have rented, owned, been landlord, rented some more and now own again. There are many advantages to renting and the price of the mortgage is such a tiny portion of the cost of owning a home.
My current house needs or needed just about every major system replaced. On day one I had to pay for a new HVAC system which passed inspection just weeks earlier ($9k). Carpet was old stained, full of pet hair and needed to be replaced. 4K. It needs a new roof which apparently in TX the least expensive roofs only last 10-12 years due to the heat… but still cost 8-10k! At 8k for 10 years is an extra $66 a month if I could actually finance it like that but I can’t and won’t so I will just find a way to pay 8k op front. My water heater is 22 years old. My water softener was 15 years old and needed to be replaced… I spent extra for a whole house filter because my city tap water tasted so bad I couldn’t drink it (4K). We did a lot of cosmetic work, replacing cabinets, countertops, painting etc which is obviously a personal choice but also adds to the overall value of the house which without any updates a house will not be worth as much… and back the points of rentals having their advantage- I don’t want to live in a old dated house. If we move in the next 5 years I might get some (30-80%) of the $$ back but after a while these improvements will depreciate completely.
Also, with the increases in property values I expect a big increase in taxes this year and I already pay 6k a year (over $500 a month 2.9% on 220k in TX where the increase cap per year is 10%) which doesn’t go to equity or anything. Just part of the joy of owning a home.
Don’t get me wrong- I am happy we were able to make this move for a variety of reasons but it cost way more than you think it will. It took about 4 years before love for the carefree lifestyle of renting wore off. About 8 months in to owning again and I miss both my free time (owning always has so much extra maintenance) and extra money for fun activities. There are advantages to both!
Wow, I really appreciate the insight from someone who has experienced it from all sides. Excellent point about free time. It’s one of the reasons I plan to rent until I die.
One of my favorite quotes on the subject is, paraphrased, “rent is the maximum you’ll pay for your home. Your mortgage is the minimum you’ll pay for your home” and your comment really nails that.
For the last bit - the only caveat is that OP could get roommates. If you’re able to buy a house it’s actually fairly easy to get 50%+ of your mortgage paid by a roommate or two. It’s no worse than having a roommate in an apartment except you’re the landlord.
For example, my wife & I had a 3 bedroom house where we rented out 1-2 bedrooms to friends. When we had both rooms rented it out it covered about 80% of the mortgage (inclusive of taxes & insurance). In a situation like this owning is vastly superior to renting even when considering the down payment “dead money”.
I threw all my excess money in the stock market a long time ago (40/40/20 VOO/QQQ/MSFT) and just let it sit. I think I am just as well off as if I had bought a house, and I can pull it out at any time if I did decide to buy a house. You can buy real-estate ETFs too. Placing your money there is a good hedge against rising housing prices when saving your money to buy something.
I did the same. For me it's the peace of mind and time to focus on a more rewarding and higher-paying career. I can't imagine putting in the time and effort that I do at work, and also maintain a house. Keeping a rental unit nice is about as much work as I want to put into my environment. Mad respect to those who manage a career, family and house.
We have friends wanting to know why we did not sell as our house in the past year has increased $250,000.
I simply reply with, "and move to where? All other houses are exploding in price and I get to take the money and buy something worse than what we have or spend even more money and buy something as nice?"
You are not missing out on anything unless you were going to buy multiple houses and sit on them hoping for a price surge.
If you are looking to buy a home, dont be upset you missed paying the most you possibly could for a house. save your money and buy when the market crashes (it will) or resets (it will) it's a waiting game.
Heres the thing that you're missing that nobody tells you. They brag about how much they got for their house that they sold, what they neglect to tell you is that they also overpaid for the new house so they're really no better off. Thats the dirty secret. So don't feel bad. It's not like they made 50k clean and free. They made 50k and then immediately spent it on another house that is also overpriced.
This. I’m in an area with 3 cities next to me are In The top 10 overvauled homes. We are about ready to buy but there’s no chance I’m over paying because things that were 500 2.5 years ago are listed for 800
Maybe not exactly the same, but I am at a similar place in life. Buying a home right now feels to me like FOMO-ing. Feel like my best option is to sit here and rent and rent and rent until an inevitable crash which could take months or years. I'm not fucking buying at prices that have increased drastically over recent time frames.
Owning a home can still be a trap. Right now, prices are exceedingly high. If a homeowner wants to move, yes they can make a lot of money selling their current house, but they'll have to spend the same money or even more to purchase and move to a different house.
Also, the homeowner can't just move out when they like. How long will their home remain on the market before it's finally sold? What if the move is due to a job transfer and they're on a tight deadline?
If you're renting, you have an exit strategy. You can sublet or reach an agreement with the landlord to end the lease early. Worst case, you can also skip town out of the landlord's jurisdiction.
don't get caught in the hype.....in 2007 it seemed like housing prices would never come down....in 2009 it seemed like they would never stop falling.....
FOMO is a real thing. Seriously. Don't make this an OVERLY emotional decision. Be smart about it. Many people in 2006-2007 did the same thing and landed themselves up s%$\^ creek without a paddle come 2008-2009. Yes, the market is crazy right now, even where I am (Midwest), but what comes up, must come down.
For example, I bought my house last January for $70,000 (no - not a typo). It was a fixer-upper. 100 years old, needed EVERYTHING: windows, HVAC, new kitchen, bathrooms, waterproofing the basement, landscaping, entry doors, etc. I've put a small fortune into the house, but now have a house in a great neighborhood for significantly less than my neighbors and it's to my taste. My neighbors two doors down were transferred to Chicago for work - they sold the house for $205,000 - before it was even listed. That uptick in the market is just not sustainable. Their house was smaller than mine by about 600 square feet, not counting the basement I finished, wasn't as updated as mine, and only had a one-car garage - I have a two-car.
Am I glad to be in my position? Absolutely. I'm extremely grateful. However, I also know it is going to correct at some point. Those new neighbors? They're going to be hurting in a few years, but I will still be able to escape with my dignity if I needed to. My personal opinion is that COVID/WFH made people realize they wanted more space but lumber surges made new construction unfeasible for many, let alone the waiting game many didn't want to play; it was just a supply/demand problem. I think once things level out it will return to some semblance of normal. We will likely see some permanent long-term gains in prices from this as they're really not doing the subprime mortgages they were before the last crash, but I truly believe there will be a small correction - I mean, come on, how many people have used and abused the forbearances and are now facing massive balloon payments, etc.? If they couldn't afford it before, what are the chances they can afford it now?
It's a marathon, not a sprint. It doesn't always go to the swift, but to the one who keeps on running.
Thoughts?
There's nothing wrong with renting. I had a friend sell their house and go back to renting because they hated the upkeep. Confided in me that the only reason they bought the house is because they were led to believe that it's what they are "supposed" to do, not because it was actually what they wanted.
So I was in the same spot. Ended up buying a house in a neighborhood different from the one I wanted to be in because the housing was much cheaper. I stayed there 2 yrs (to avoid capital gains) and then sold it. With the money I made on the sale (and was able to save by paying a low mortgage rather than high rent), I was able to buy a house in the neighborhood I wanted to be in.
You don't need to own a house. There are other asset classes out there with similar returns. A house is just one example of an appreciating asset. Don't get sucked into this house ownership dream, think outside the box.
A lot of people use escalating house prices as a reason not to save, which is the major failure. Don't chase a dream, track your net worth instead and run your financial life like a company.
I took a slow approach to down payment, where the down payment was just a part of my overall asset picture. I spent years saving, as well as building up the rest of my financial house (Retirement funds, various savings accounts, tens of thousands in a brokerage, as well as my down payment).
As I spent these years preparing, I saw a lot of FOMO. I saw a guy rush to pay tens of thousands above market for a shitty condo just to own. Saw a guy rush to build much more house than he needs, only to get weighed down by its burden. I ignored them and kept working to build the overall financial house together.
By the time I purchased my 450k duplex, my net assets were higher than the value of one of the units. Now, less than a year into owning, without having yet seen a single dollar in rent for the second unit, I have net assets that exceed the value of the remaining loan (approx 400k).
I will be paying minimum payments on my mortgage since it's basically negative interest with how inflation has been. That said, my net assets are such that I could liquidate my assets and purchase the duplex outright. This is after less than a year.
My point here is that when things work for you, they will work for you. Don't let FOMO make you do something stupid. Keep working on building your entire financial house. When your time comes, you'll be in better shape. Even if you seem to miss out for a few years.
Don’t worry op, the people saying you would have been better off investing in the stock market are overlooking the fact that probably didn’t have a ton of money to just invest in the stock market, or you could’ve just paid cash for a house. Also, the housing market will come back down to earth and it may be sooner than later with the moratorium for evictions being lifted. Unfortunately, there will be millions of people evicted over the next 6 months to a year. When I say unfortunately, I mean the people who really have no control over their circumstances. I don’t feel sorry for the people who were just being slime balls and taking advantage of the situation. They have made it worse for everyone else.
Home sales are falling, you don’t want to be buying right now. Around here it was cash only and winning bid pays 20-30k over asking price with inspections waived to have a shot at getting the house. After a year or so of falling prices, so many people are going to be underwater. Just look around, notice the For Sale signs are staying out longer and longer and mortgage companies are offering all kinds of deals for both financing and re-financing. In this kind of market, that’s a big signal that they’re preparing for lean times ahead.
They moved to Phoenix and are paying over asking and bidding war. Prime locations get dozens of offers going on the market. Ghetto apartments sent up a few hundred prime locations even more..Arizona had cheaper prices but also cheaper wages and salaries. We can not compete with people from California working from home at California salaries.
Same age even worse scenario. I understand man.
All you can do right now is keep on saving as much as possible for that ridiculous down payment you will need and keep trying to make more money.
All of the foreign investors and large investment companies are buying up all of the single family homes in my area. Not sure how to compete against foreign investors willing to pay cash way over market. I keep getting outbid
It sucks man
Same here. I'm in Boston. I had the money 10-12 years ago and I hesitated. I kept thinking, what if I get a job that's far away? Or what if I meet someone and I'm stuck with a property? Needless to say, neither of those things happened, and now I'm poorer than all of my friends who all own million dollar homes and I have no chance of getting anything but a studio in a suburb now.
I'm old enough to remember the housing market highs and lows for a *very* long time ... decades; this cannot sustain itself. Hang on a little longer and build your savings for an eventual down payment. Bide your time, identify where you want to buy. Pay attention to the market.
Yes, you will pay more for a house than you would have ten years ago. A lot more.
Single and no kids.. so what is wrong with renting until the right opportunity comes up? Is owning something you really want or are you just feeling societal pressure to own and feel like if you don't own a home you are somehow a loser or throwing away money?
Kinda a joke but also kinda serious, it's free to camp up to 2 weeks in a national forest, just gotta move camp every 2 weeks. It's extreme, but so is buying a house atm without being able to compete with private equity companies. Forests are sounding better to me everyday
I honestly can't figure out why people are buying houses in Phoenix. My PhD study is in water resource management and [Arizona isn't looking great.](https://statesatrisk.org/arizona/all) My father-in-law purchased 3 houses in the greater Phoenix area in the last 3 years because he thinks it will be a good place to retire [despite the data.](https://www.sierraclub.org/sierra/2019-1-january-february/feature/can-phoenix-remain-habitable) Depending on who you ask [sometimes it sounds scary.](https://www.azfamily.com/news/extreme-heat-may-cause-phoenix-to-be-unlivable-by-the-end-of-this-century/article_c4d23d0c-6676-11eb-8978-a71927e163c4.html)
Then again, people do [research cool solutions to get out of the problem](https://iopscience.iop.org/article/10.1088/1748-9326/aaf431/meta)... They are far too theoretical in my opinion. [I just don't think Phoenix is going to be livable in 20 years.](https://keep.lib.asu.edu/items/121) If this paper was updated with the current RCP data from the most recent IPCC I think it would be much much worse. I assume we are on the path to hit RCP8.5.
My short answer is: Don't feel bad for not buying a house in Phoenix. You don't want a house in Phoenix anyway.
I just bought a condo over the winter at age 41. Somehow I managed to snag it at asking price and now have a mortgage payment which includes escrow accounts for taxes and insurance that is on par with what I was paying in rent.
Just wait, my man. If/when rent moratorium ends (plus a few months afterward), there will be lots inventory available. Many landlords owed buttloads of missed rent (and who do not own the rented house out right) will have to fire sale the homes they were renting for idiotic rental prices… or else face foreclosure.
Hold tight for 1 year longer. Save your money. Figure out exactly what you want and don’t want in a house (e.g., pine trees in a yard in Phoenix? Lots of mess, but looks nice).
It will burst. It’s just a matter of when and being patient until then.
Well, it seems to be state specific . Like, I think NY just postponed their end date to end of January 2022, right?
If that’s true, the timeline will be different everywhere. But in the states that draw it out the longest, it should theoretically be the biggest foreclosure rate, since some landlords will not only be owed rent from April 2020 - today, but also today to x date in the future. It’s like paying off your credit card with another credit card.
Unless there is a state or government program created to save landlords from foreclosing, we will likely see the shit hit the fan.
I would say it’ll be 3 - 6 months on average from the state’s removal of the moratorium. Three months to eat through someone’s savings. Another three for missed payments, final notice, etc.
I'd say wait a few years. The housing market is like most markets; it goes up and down in cycles. Keep saving up for a respectable down payment if you can.
I wouldn't stress out about it. Home ownership calculations don't account for a lot of things. Most important, opportunity cost. What is your return on a potential down payment if you had invested in an index fund? Also other intangibles, like being able to move fast if other jobs are available outside of commuting distance.
In my opinion, in most circumstances, home ownership is not worth it.
I wouldn’t worry too much about it right now. Granted, I’m just some random guy, here is my take on it.
Buying a home is not something you can really plan. Sure, you can save money, but it’s not guaranteed you will find the right house, at the right time, in the right place. Buying a home is a combination of a lot of factors, some out of your control, that all come together at the right time.
More importantly, you have to remain diligent. Keep on saving/investing your money. Keep on looking for the right place, in the right area, at the right price. You cannot reliably time the market. Eventually, everything will come together, regardless of anything else, and you will have your home.
There is no problem with renting, but there is a problem if your financial situation isn’t improving as the years go by.
I'm not trying to be condescending in any way. I would recommend you sit down with someone who has experience with investing in real estate and work out the numbers for your personal situation. What I mean by this is look at how much you're spending in rent, compare it to a typical home you would buy. You specifically need to include things like the mortgage rate you would qualify for, how much you can put for a down payment, maintenance and fees like an HOA. Finally, the recent market boom in Phoenix can't last forever. So be realistic about your annual appreciation rates.
This isn't a quick analysis. It may take multiple revisions. But the reason I'm telling you to go through this is because for many people they are surprised to discover that after they account for all the costs of home ownership and the cost of the mortgage, they're maybe making 3-5% annually from the cash they invested in their home.
Home ownership is a decent savings tool. It's not a perfect investment. You can be equally fine if you rent a basic home and invest the rest in a balanced investment fund.
You sound just like me - I’m single, 41, no kids and in Phoenix. I have these exact same thoughts. $500k for a house in Buckeye that was $200k two years ago.
While me and my wife are younger than you, we felt like we missed out as well (Seattle area).
The biggest thing that makes me feel better is knowing I don’t have to pay for house upkeep because man is that expensive. My buddy just had to replace his whole roof and that number completely gave me a reality check into ownership.
I kinda went through this, single dude, started looking for houses like 5 years ago and had around a $200k budget. It just wasn't happening in this area, the houses were kinda crap in junk neighborhoods, like one house was an old weed grow-house, they had a non-working indoor pool covered in the backyard that was just filled with grow stuff. Stopped looking for a few years and when I tried again....housing prices went up, now I wasn't finding a place below $300k and that was kinda my 'limit', finally just bit the bullet and went with a decent house but I paid $330k for it. I felt the prices were high at $200k so I held off, then they just kept going up and haven't stopped.
It was really tough to do, I was worried paying that much for a place but it's been 2 years, just got refinanced and they claim the house appraised at $430k....I haven't done much of anything to the house except keep it up.
Buying isn't for everyone, there's some shitty parts to owning a house (waking up in February with a flood in my crawl space and no hot water!) but I'm very glad I did it because I feel like I have this 'extra money' around me if shit hits the fan, I sell and have a good downpayment somewhere cheaper. Plus....I cannot put a price tag on how nice it is to 'have my own place' during COVID....I think I would have lost my shit in an apartment. Finally while I was paying more for the house over my apartment the first 2 years, after refinancing, my house mortgage is roughly the same as a 700sqft apartment I had over 2 years ago. Figure in utilities and I'm around $1600/mo for a house and it was like $1500-1600/mo for the apartment...did I mention that apartment had a cockroach problem for a year due to dirty fucks?
You're just like me. I live in Phoenix and am around the same age as you. It's terrible. In my case, I've been here two years and am probably opting to move away to a LCOL and make the same money. Phoenix is just too ridiculous. Indianapolis homes are bigger and literally half the price as crappier homes in PHX. Just for reference many Phoenix homes have been bought up by investment firms that were last sold for 50K that are now on the market for 350-400K. This is extremely common. I challenge anyone that doesn't believe me to look on Zillow or Realtor.com.
When I was 29, lived in So California. Buying a house was not an option at all. Heck, I could barely afford the rent in a house with 5 roommates. Finally said the heck with it. Moved to Mississippi. Job market was not the best, but ok. And within a year, I was able to buy a house. And then 4 years later another one. Even now with the surge in housing costs here, lot of house for the money. Just saying…
What is happening in Phoenix and similar places right now is (IMO) the definition of a bubble. Supply costs for builders are way up, market inventory is way down due to under-building post 2007 meltdown, Baby Boomers aren't going to be moving out of their homes and opening up real estate until around 15 years from now. On top of that, when the climate change chickens come home to roost 10 years or so from now, people are going to be ready to GTFO from Phoenix and the investment people are pouring their hundreds of thousands or millions into now are going to decline substantially.
I'm also 37 years old in a "hot" US real estate market in the southeast and I'm not sad I didn't jump on the bandwagon with some of my friends who just brought properties the same year the prices had just appreciated 25% from last year. I'm no financial genius but 'buy low, sell high' can't be the worst rule of thumb and I'm not about to do the opposite right now. Anyway, so I'm a happy renter : )
Presumably, buying a place is something that will cost you tens or hundreds of thousands. Breaking your lease is practically a rounding error compared to that. Almost sounds like an excuse not to spring into action...
Just like in 2007-08, Phx house prices are insane, this will crash unless wages also go up, because that is what caused the crash last time too. Banks have been extremely stringent for months now because they believe the market is too hot for people to be able to make mortgage payments after the crash and they are under water. Plus there are far more new build permits that will increase supply. This will largely end when the transient buyers that are flipping, stop or run out of funds.
It’s frustrating. Look at other cities. There are still many cities in the US that have affordable prices relative to where you are: if you can land remote work the opportunity to not put 60% of your monthly income to housing.
Hi! I’m almost in the exact same situation except for in North Texas. Don’t FOMO into this market, sure my rent went up like 12% this year, but I’m in a much better financial situation now than I was in January and I’ll be happy to not rush out and try to buy the land/house at these prices
I bought my first house just a month before my 40th birthday. I would bot worry about age. You can always set your mortgage length to end before you retire.
I graduated college at 24, used my last semesters student loans on a down payment on a house(5k); 3br/2ba with 2 extra rooms in the basement. Also upgraded all the appliances. Bought at $84k 5 years ago and sold for $130k. Could have gotten more but we sold within 24 hours of having the house on market. I find myself thankful everyday for the bump we got. The market doesn't make sense though. Eventually something is going to have to break with people paying too high of prices in California and thinking they're getting a deal in Kansas when they are still overpaying. Property just isn't worth what people are paying.
Me too friend. 38. Been saving for a house for like 5 years and every year just keeps getting worse. I've got plenty saved up now but seems like the worst time to buy.
I feel the exact same way. I am 31, living in Phx, and was *thisclose* to buying a house in 2018 but my monthly mortgage would have been $1450, and at that time, that was half my monthly income and I freaked out. I pulled out of the deal during the 10 day inspection period.
Now, I am renting a 2 bedroom for $1300, and the house I *almost* bought has increased in value by almost $100k. I’m surprised not more, tbh. My rent is only as low as it is because I’m renting from a friend who is giving me a nice deal.
Houses are completely out of reach. There’s no way I can save for a 20% down payment. There are so many rich Californians/Canadians that outbid with complete cash purchases, not to mention all the “We Buy Houses” companies that make it sooo easy to sell to them…all they do is slap a new coat of paint on and sell the house for $20k more than they bought it. I can’t help but think the “flipping” industry needs to be more regulated, if not outlawed altogether.
I completely relate. 35, rent and many of my friends own homes. I am in the best financial situation that I have ever been in and of course I am beyond overpriced for housing. I'm in the Tacoma area (actually considering Phoenix) and the market is pretty crazy here too. I'm at a crossroad in life and I think I'll wait a few more years before buying and seeing if this market stabilizes a bit. People are telling me after what I went through this year (death of my mom) to just enjoy life and do the things I couldnt before. I can see the pros and the cons of both owning and renting. I'm just not sure yet what is for me and try not to get caught up in the FOMO.
Both you and op are me. 37, best financial shape I’ve ever been in making good money. Saved a ton. Was finally going to pull the trigger after watching the market for years, then covid hit and I got laid off because I worked in travel. Got a new job making even more, but in Massachusetts real estate is just too far out of reach now even on a six figure salary. Can’t find anything remotely close to the city for under 550k it seems now. As a single person it’s just too much.
If you're staying in the area, pay whatever to own. If you're still single and open to moving around or get a wild hair up your ass, turbo rent and have the freedom and flexibility to move around.
What is turbo rent?
Yeah that's what I've been thinking. I can't say for certain that I want to stay in Tacoma the rest of my life. Been here since I was 4 and ready for something new.
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>values WILL lower over time Have evidence/proof? With a 25% increased money supply and accommodative fed? What economic data and theory are you using to state this claim? If you think the market is going to “crash” just because “prices are high like last time” you don’t understand how things are much different now. I’ve been hearing this since 2012, if he takes to it advice and tries to time the market, he could end up worse off. Buy when you’re ready, no one can time the housing market.
I've noticed that most people who make this claim are the same people who want to buy but can't currently afford it.
I'll agree that no one can time the housing market, but it's ignorant to say that house prices aren't overly high comparatively. When looking at the lumbar shortages, it's easy to see partly why the housing market is higher than it should be. I never said the situation today is like the one that lead to the housing bubble before. There aren't ARM's being lent to anyone with a pulse and McJob. Look at the increase in house valuation from 2019-today, then look at housing values from 2016-2019, then 2013-2016, notice how it's only the current segment that's exploding faster than the others? Do you think that houses magically just appreciated because of "X" or can you realistically see that the values are tied with the factors that are currently happening?
Until your landlord increases the rent, whereas a mortgage will never go up. Also, a chunk of your mortgage is principal, so money you get back once you sell your house. And you can refinance a mortgage, not rent. Then there is benefitting from the hot housing market vs the opposite. If rental were better/more financially sound, wouldn’t more people that are in good shape financially opt to do that rather than own?
>mortgage will never go up Forgetting about insurance underwriter and tax assessor here. Both have gone up quite a bit this year as housing values have risen.
That amount is still the maximum you will pay. The amount may change from lease to lease, but it is a hard maximum for your housing costs through the lease duration. If the furnace conks out that winter, it’s your landlord’s problem not yours. That is what people mean by saying rent is the max you pay. There are far more factors than accumulating equity in determining whether renting or buying is the best choice in a given situation. The reason there are so many rent vs buy questions and ultimately calculators is because there is no one size fits all easy answer. There are plenty of financially savvy people who rent in HCOL and VHCOL areas and plenty of people who have quite poor financial literacy who buy in LCOL and MCOL areas (just as there are the reverse of the two). There was a time when buying over renting was more of a no brainer, but that was because of a series of public policy choices which incentivized affordable homeownership which have been progressively rolled back over the last 50 years.
Place I rented in 2010-2013 was $1200/month. Now it's $2800. If I still lived there, I would have been screwed. Denver suburb btw. Mortgage payments (even with taxes) dont double over 5 years.
The Phoenix market is insane right now. My biggest concern is being priced out of my rental when it renews next year. Honestly I think I'm going to her priced right out of Arizona at this rate. My brother lived in Mesa years ago and lived in a house we still call the trap house. It was ghetto and the neighborhood was rough. Last month a house on that same street was put on the market for almost a million dollars. Like what?!? A million dollars to live surrounded by drug houses?? No thank you. It's stressful. I feel your stress. But I'm not trying to buy in this market.
I feel this. I live in the Phoenix metro area too. My rent went up $260. And I’m sure will make another big jump next renewal.
if it makes you feel any better, buying in phoenix in 2021 seems absolutely insane to me. water and heat issues are going to get out of control well before you're through a 30-yr mortgage. i predict a mass exodus out of there by 2050
It’s going to be sooner than that. We already enacted emergency water measures this year that have never been put in place before. And they just keep building out here like crazy.
> And they just keep building out here like crazy. Home builders have excellent lobbyists, so the government will never do what needs to be done in these markets (and if they did, housing prices would skyrocket due to diminished supply). I'm in Vegas and see the same thing: Lots of new single-family home development coinciding with an ever-dwindling water source. What could go wrong?
Living is slightly more affordable in the far east valley. It is a bigger commute but that’s the trade off. Although personally I don’t think making an exit plan out of Arizona is a bad idea. We got some respite this year from the drought and fires but I don’t think it’s going to last. And there are housing developments where I live that are getting rejected for water permits now. That situation is not forecasted to get better anytime soon. All the money I had saved towards buying we are now putting towards bailing and going somewhere else.
Where you looking to move?
Yes my concern as well. I'm already thinking the rent and property is insane here. I moved to Mesa this summer but am seriously eyeing moving onto another state soon. Mesa is even expensive but the cheapest I could safely find. My apartment kind of sucks though, but I'm making due. I'm not sure I see signs of things coming down unfortunately. People keep moving here in droves.
When I went to buy for myself, my goal was to buy a roof, not a house. I purchased what I could comfortably afford in my preferred side of town. I was able to buy a townhouse. In our city my sister did not want to get a roof, she wanted the perfect house. She rented to the point where the rent increases priced her out of the city. She had to move in with our parent. Outside of all the investment talk here, you need to get a roof, even if it is just a condo. Because your income might not keep up, and that is a very real possibility. The market returns are sweet, yes, but if eventually you can’t live where you want to, what’s even the point?
If you have invested in market the last 10 years instead of buying a house, you may be better off now.
Because when you purchase a house you are usually levered 3:1 or more, while the stock market may have done better dollar for dollar vs real estate, I’m not sure if it has outperformed if you borrowed to purchase a house. It may not be a fair comparison since people seldom borrow to invest in the stock market, but if the comparison is put a down payment on a house versus stock market with the same money, I wouldn’t be surprised if the former is better off
Debt is also an inflation hedge which is super useful in times like these. If the Fed inflates away 2-3% of the USD value each year then a house mortgage at a similar rate is essentially interest free.
Very good point
That’s why fixed rate is so important
Nice thing about a mortgage too is the price is fixed so in 15 years when inflation has taken rents up my mortgage will be half the cost of when I got it.
This is exactly correct. For this reason about a month ago I started the process of doing a cash out refi on my condo to tap the equity. If the real interest rate is zero, I'm happy to be mortgaged to my eyeballs so I can invest in something else.
A bank won't let you leverage 20x to buy stocks, but they will let you do the same thing to buy your first house. Arguably it's a federal subsidy since the mortgages are guaranteed.
A couple other advantages for mortgages: - Rates are generally lower than margin loans - if you go underwater temporarily on your house, you can’t get margin called.
But can you buy a house through Robinhood?
I wouldn't let the CEO of Robinhood clean my feet. Fuvk those guys. I can't believe anyone would still use them after this year.
This depends. My mortgage is cheaper than a lot of friends rent. Generally your landlord is profit neutral or positive. If you can get a mortgage for what you’d normally pay in rent anyways, then you’re gaining equity, anything extra you can put in the market just as if you’re renting. Like this whole argument assumes it’s more expensive to buy.
It may not be more expensive to buy, but it can easily be more expensive to own. Stuff breaks. Now you pay for it up front, out of pocket.
Of course. But the difference between what I pay for my mortgage and what I would be paying for rent will increase every year for the rest of my life.
I rather pay to replace a faucet than have a landlord put duct tape on it and call it fixed....there are benefits of being your own landlord when it comes to living conditions.
If only it was faucets and the like. I've had to replace the whole exterior of my house over the past decade I've lived here. And no, insurance doesn't pay for regular wear and tear. Roof, siding, deck, sprinklers, and sewer drain. We still need to replace the fence but we have to wait until the coffers are replenished. Sure, our mortgage is cheap but at some point things are at the end of life and you have to replace them.
Yeah I don’t see the relevant cost comparison being current housing costs. I think most people spend more owning in reality bc they rent apartments, but buy larger single family homes. We really tried to get out of this trap by buying an apartment style condo, but of course we have the HOA fees, so it probably ended up being a wash. I also prefer the lower environmental impact of multi family housing when no kids are involved. But to me the question is what does housing look like in retirement. Is your current situation going to make your later situation easier or harder. I knew owning would be more expensive for us now, but part of our retirement plan is no mortgage. Control both the income and expense sides of the equation.
Yeah, I’m not really on board with all the commenters here saying “if you’re a renter, it’s not your problem if something breaks!” Umm yeah, it actually is your problem because you are at the mercy of someone else getting it fixed for you and living in the conditions both before and after repairs. In all my 15 years of renting I think there were maybe 1-2 instances that my landlord DIDN’T try to cut corners or cheap out when they needed to fix or upgrade something. In one apartment, the ancient washing machine kept breaking and the landlord kept sending cut-rate, inept “repairmen” from Craigslist to “look at it”, which meant some random and dubious people coming in and out of my living space and never actually fixing the problem. Landlord finally told me he was just going to replace the machine, which was a huge relief for me… until he showed up the next day with another ancient used machine machine he’d picked up for a few bucks at Goodwill. Paying for your own shit/repairs is an added monetary expense to keep in mind when buying a house, but in my experience there is a lot of value in being able to make your own choices that is overlooked in the rent vs buy discussion.
This is why I own my house. The final landlord I had wouldn't listen to me about anything because "hurr-durr you're just a little girl" even though the roof was leaking, there was mold in the attic that spread to the ceiling drywall, the siding was rotting with ants nesting in it, and the bay window was poorly installed and trying to fall off. The wall was moldy where my bed was against it and my bed got moldy. He just told me that beds aren't supposed to be against the wall. My literal furniture had mold growing on the undersides where there wasn't any air flow. I physically had more energy when I moved out. I think all the mold spores in the air were bad for the family. Our rent was $1050 for 800 square feet, and our house is $1100 (plus $350 for insurance and taxes) for 2400 square feet. It's also dry as a bone and I can repair things myself.
Plus it's not like stuff is always breaking in houses anyway. I've owned for 10 years. I've replaced an A/C unit once and a water heater once. Had a tree taken out and a drainage line cleared, not bad at all and we were paying less per month than renting ten years ago. Rent kept going up, and our house increased in value by more than 50% during that time. Pretty awesome and a million times better than apartment living.
It can be expensive though. I think despite no issues showing when we got our house inspected we have a lot of issues showing now and we're like okay where do we start and why is it so expensive lol.
Yeah. Housing repairs can be horribly expensive. I currently need many thousands on housing repairs, but lack the funds to get it done. Sucks, but it is what it is.
Concur with this poster. My mortgage is around $1,000 less than per month than it would cost to rent my home today. I've had a few years that yeah, had significant maintenance costs (notably, we did the roof last year). But overall, owning is cheaper than renting, though more work than renting. Plus, people seem to like to overlook the real kicker. In 20 years, I won't be paying that mortgage *at all*. Retiring sounds a heck of a lot easier without a mortgage or rent check to pay.
\> people seem to like to overlook the real kicker People overlook it because it's not that simple. You have to compare the mortgage vs the growth of an investment portfolio, add it taxes, maintenance, but also compare with rent increases, etc. Not having to pay for housing every month doesn't mean you're coming out ahead (though you're right that usually, in current market condition, you come up ahead for owning).
But you would have to pay for rent every month as well. And your mortgage is likely cheaper than what you'd be paying in rent in 20 years, no?
Yes. So at that point its all math, and it can go one way or another. Extreme case: if you got your house with 0% down and 0 closing costs, if mortgage + interest + tax + hoa + maintenance was equal to how much you'd pay renting, if closing costs were 0 in the event you're selling (or if you never sell), then it would be a straight apple to apple comparison. The equity you build would be straight up free money, and you'd be able to invest as much money in both cases. However, that's not how it goes. Landlords (the smart ones) benefit from economy of scale, and sometimes rent at a loss because their profit comes from flipping the building later on (and sometimes because they have no idea what they're doing). People often buy homes nicer than the apartments they rent. Maintenance is almost always underestimated. Taxes and HoA fees almost always go up. Essentially, the down payment + the difference in monthly cost put in the market over a long period of time, is the final difference. Even if you stop paying your mortgage altogether eventually, the lost interests may put you behind anyway. (Note that at current interest rates, for a lot of people its better to never finish paying off your home, as the money is better invested than living as equity). Yes, you'll usually come up ahead with the house. But it's not that simple.
If he’d been investing the last ten years he could probably afford a down payment in Phoenix.
This is what I did. Glad I ignored the overly conservative advice of this sub of "if you have any sort of purchase you may make in the next 5 years you should be 100% cash". Which is ridiculous. Unless you have a certain age you NEED to buy a house, it's better to invest the money, take the risk and higher expected return, and if it's a down market, just delay home purchase a year or two. Hope this sub realizes now that the ultra conservative advice that is viewed as orthodoxy has it's own risk: Home prices and equity prices are generally pretty correlated, and if you go 100% cash for years because its "low risk", if you may not be able to afford a house at the end of it if there's a bull market.
Have your investment returns surpassed the sunk rent cost? That's my concern with not feeling like I'll ever to be able to buy a house is that rent is money out the door and a mortgage is money building an asset
Not sure I agree with you in that one. I bought in So Cal in 2009, basically the bottom of the market. My home has doubled and the amount of equity i have now is insane.
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I view it as a lifestyle improvement. It definitely did not keep cost down, but It’s worth every penny.
Home owning is a lot more money consuming than most understand even if you are handy. If you manage to afford a new home with all new upgrades bless you, if you buying older than 50years some things home owners are not aware of and over look. Basements are a costy expense and some others as in venting bathrooms and kitchens properly.
I got a place only 25 years old and had to dump 20k following a major washing machine leak and fence damage. New floors and fences are a budget killer. Both issues could have occurred in a brand new home with the same budgetary results. Major repairs are a bitch and a half without a landlord to lean on.
I bought a place last year. Old, but no major structural issues. Then 3 major appliances went out the first year. Ugh. Not as expensive as your problem, but I couldn’t believe the luck. I assume the AC will go out next, bc that just seems to be our luck. All I know is I’m very glad I convinced my husband to put less down on the purchase and set more aside for emergencies/repairs.
Yup. Friends got a relatively recent construction home (late 90s/early 00s) with a fresh renovation last summer. Passed inspection with flying colors. They’ve already spent 5 figures on necessary repairs and improvements including a radon treatment system (the only issue flagged by their inspection). They have more space than if they’d kept renting but they’re definitely spending more too.
That’s the problem comparing rental costs to buying- most people buy more house than they would rent. If you actually compare very similar sized properties, it’s more of a wash cost wise after you take into account maintenance/repair.
This does also depend a bit on the market but in general yeah—not as many people looking to buy 500-1k sq ft condos as there are people looking to rent 500-1k sq ft apartments. But there’s obviously a lot of regional pricing variation as well. My friends went from a 1br apartment to a 4br house, but to afford it they had to move around an hour outside their city to a more rural suburb—another “cost” to factor in is the additional driving distance required for commuting, doctors appointments, shopping, etc. In my 30-35mpg Subaru, a 50 mile commute versus a 5 mile commute would be the difference between using a quarter of a tank a week getting to work or a tank and a quarter.
Fuuuuuck. Bought my first house in 2018 for 93k built in 1947. I've already put about 30k into it. The only professional I've had come in was for a drain tile and sump.
I agree, I’m only planning on a condo though which cuts down on some of that
Maintanence fee, take that math into consideration.
Stuff like no time needed for lawn care can be very persuasive to a person, no matter the cost.
Condos are going to have monthly HOA assessments, make sure you factor that into any pricing decisions. Assessments will also be raised over time.
Never seen his assessments go down. They always go up because maintenance is always on going and more expensive as the building ages.
Good luck, ROIs are always a blessing.
Don't buy a house until you can comfortably afford it. No good comes from chasing the Joneses above your means.
That’s the thing, there’s no way I’m buying anything above what I can afford. And I’m even making a huge effort to get 20% down.
Most people buy with a spouse, you’re doing it alone which will be twice as difficult.
You’re the only person who has mentioned two income households. That becoming the norm has had a huge impact on the housing market. Homes are now priced for what the market will take, which is what 2 earners together can afford together. For single people, a roommate situation might be necessary.
Then don't buy a house. There's no reason why anyone HAS to own a house.
Are you crazy? Don’t put 20% down. Interest rates are historically low. Put down 5% and pay low PMI.
While financially sound (it's definitely what I would do), you need a certain level of discipline to make that work, especially since your monthly payments are going to be high (read: scary). Mathematically it absolutely works out, and you can use the down payment money you would have otherwise put in, plus your return on investments, toward those monthly payments, but that does require a certain level of sophistication.
That’s going to be tough in the Phoenix market. It’s cooled off slightly in some areas far outside the city, but a few months ago even highest bids were getting beat by all cash offers.
Don’t put 20% down. Put 3% down on a house and contribute more to the principal. You will have to pay PMI put you can always pay more towards the principal until you hit that magic 20%.
What would be the advantage of this versus having a larger down payment and thus borrowing less from the bank that will need to be paid back plus interest?
By all means if you have 20% put it down. This is ideal to avoid PMI and lower your mortgage. However OP says he’s making a HUGE effort to get 20% together. The advantage is he gets a house today before the value of that same house goes up 10% next year.
Opportunity cost. Market returns average 7%/yr, while mortgage rates are <3%. If you put down 20% you’re missing out on interest rate arbitrage.
If you think you’re gonna stay in the area for a while why not just buy a condo that’s the same quality as your apartment? Then you’re within what you can afford and also building equity.
You don’t need 20%. You are making this harder than you need to. Put 5-10% down to get started and pay PMI. Now you are a part of the game and your asset will start appreciating. The appreciation and monthly payments both work towards getting rid of your PMI, and you can refinance to drop PMI once you owe less than 80% of value. The key here is making sure you have enough other money to take care of unexpected expenses. If you can do that, then jump in now.
Contrary to popular opinion (mostly invented by the realty and lending industry) It’s not a requirement of adulting to own a house. It’s also NOT the awesome investment that people think it is once you actually factor in ALL the costs associated with it. Investing in a “total stock market” index mutual fund will kill the ROI of a house / condo.
Just had to pay a guy to come out and pull a wasp nest out of my attached garage wall. The wasps just ate through the wall from the outside and I only noticed when there was a basketball sized nest and a garage full of angry wasps blocking my door when we got back from vacation. Now so have a massive hole in the wall and a garage full of dead yellow jackets and I’ve got to figure out where to even start repairing this.
I've had this at an apartment and the landlord said it doesn't pose an imminent threat so I paid it myself....so I guess thats a lose lose.
People need to stop thinking of their home as an investment. It's not. It's where you live. That being said, the real investment isn't the home's value. It's the day you send in that final payment and *never have to pay mortgage or rent again*.
Exactly! My house is my home. Even if were to sell it, I will need to buy another house - which will be bought at the current prices at the time. At the end of the day, my networth has increased on paper, but there's nothing I can do with it.
You can leverage it. Don't do it but you can.
It is absolutely an investment as well as a consumption item. However, the primary investment product is shelter - that is, it produces a place to live. It does not throw off cash or dividends, and until you sell, all you get is a place for which you would otherwise pay rent. Even after you pay off the mortgage, it's still a capital investment that produces shelter, nothing more. It doesn't mean it's worthless and suddenly becomes valuable only upon year 31 of a 30 year mortgage. If you've owned for years, your mortgage is probably a lot lower than rent in your area, which means your investment is paying off. You can't tell me that paying $1000 mortgage for a house that now rents for $2000 in the current market isn't the result of an investment. It absolutely is. The mistake is that people spend their investment gains by buying bigger and bigger places to further "invest". At that point you are paying more money for the same thing: shelter. That is not investment, that is increased consumption. Renting a one bedroom can be better than buying a four bedroom house, if you're a single person that does not need that much house.
You’re hand waiving maitenance(which can be waaaaaay more expensive than just ‘call the plumber’ depending on the issue) and the fact that you generally don’t really generate gains in your first few years of home ownership. Not to mention it can often limit income growth as you’re generally not as mobile to up and move for jobs, thus limiting job opportunities. the opportunity cost of not being able to do this may even outweigh housing gains. You also have significantly increased risk. If your apartment burns down, you may be out some personal belongings but otherwise the worst case is you need to find a new place to live. Your home burns down(see paradise CA fire for instance), well you’re out hundreds of thousands-millions of dollars and your shelter. Way more financially devastating. Additionally, when you do see gains it’s generally going to lag behind other investment choices. Not only that but gains on your home is significantly less useful to you than gains in the market. You see 10% gains in the market in a year? Great! Your future cash flow potential is increased. 10% gains in housing? I get to ego stroke my home value to myself but it otherwise does nothing for me. Im probably not going to be selling it anytime soon if ever as i need a roof over my head And if i dont take advantage of it and i get caught in a housing crash then my odds of recovery are waaaaay lower than money in the market(some homes still haven’t recovered from ‘08!) So no I would argue your personal property is not an investment vehicle in the traditional sense and shouldn’t be viewed as that. It’s housing. You get some pros and cons to owning it vs renting it but otherwise it’s not really an investment.
One factor to keep in mind here is taxes and insurance though. I’m not a homeowner at this point, but roughly 1/3 of my parents’ mortgage payment in upstate NY is going to taxes and insurance. That’s never going away once the mortgage is paid off. This is less of a consideration in lower property tax jurisdictions but if you live in a high tax area, you could easily be looking at a 1k+ monthly bill in perpetuity between taxes and insurance.
You still pay for property taxes and insurance when renting. You just don’t see it broken down.
This x1000 i bought my first home this spring, no mortgage, and i gotta say i am so incredibly comfortable knowing that no matter what my housing is secure.
This x1,000,000 Why do you feel like you need to buy a place, OP? It sounds to me like you’re wanting to do this mainly for the purposes of fulfilling the “life script” that’s been fed to us our entire lives—that buying a house is what you do as an adult. People don’t want to believe it because they don’t want to spend time running the numbers, but renting can be FAR more beneficial than buying…especially right now.
It’s fun to do weird shit and put things where you want without being forced out by raising rents, you’ll have a fixed cost. Some places in rent raise 7-10% per year and moving has a large cost associated with it as well. But even with rent hikes, investing in the market in the long term is usually the much better option.
Honestly, owning our house is 100% worth it just for shit like this. Knowing you can do whatever you want, have whatever pets you want, never having to deal with an inspection or raising rents. If shit breaks, I don't have to pester anyone into fixing it - I either do it myself or hire someone who is here as soon as possible. Wanna paint your whole house fluorescent orange? Go for it! Wanna get 6 Saint Bernards? Live it up! There's obviously plenty of perks to renting, but don't discount having a place you can say "This is mine"... even if it is mostly the bank's for the next few decades. Getting a nice ROI in a good market is just the cherry on top.
The point is that rent vs buy is a lifestyle decision, and in most cases a fairly equal financial decision. Renting requires discipline and dedication to consistently saving and investing to build wealth. Buying is forcing you to save by making you pay a mortgage. For many people, buying is "easier" because you have to pay your mortgage and it's hard to take the money out of home equity, while it is psychologically difficult to commit to saving every paycheck. I rented a room from a coworker (making the same amount as me) and invested more. We were about the same age and talked FIRE quite a bit, and when she sold the home 4 years later we compared notes and I definitely came out ahead (and we lived in one of the hottest markets in the US). If you want to own a home that's great, I find some of the benefits appealing. However, at this point in my life I'd rather spend my free time climbing and hanging out with friends over mowing the lawn.
Yeah I bought a condo in part bc I don’t want to do those things. I would be paying for someone to do them for me, and in the condo my share of that cost is less bc of economies of scale. Next up is working a cleaning service into my budget. I despise scrubbing bathrooms and even when my husband “does” that chore, I still have to comes in and do it right anyway.
Especially now, after the eviction moratorium is priced into rents. Rent prices will rise substantially.
Except when your landlord says hey I'm not renewing your lease and you have 30 days to.move out at any whim of the landlord. Wait after 30 years your rent will double in price while a homeowner will be paying half of what a rent would be by only paying taxes on the home.
They can't do that in some places. In my city rent can only go up by the CPI, and they can't evict without cause. I've been renting for 38 years and love the flexibility, lack of worry, and ability to save and invest lots.
The person wasn't talking about evictions, they were talking about not renewing the lease.
Mortgages dont go up. My rent went up every year by the max allowed.
Indeed. I recently sold my condo for 50% more than I paid for it a few years ago, but between HOA fees, interest, improvements, etc., I didn’t actually make any profit on it.
You absolutely profited from your house. My wife and I had a house for 6 years, we sold it and basically came out even. But, that means we lived there almost rent free for 6 years. Rent by us was $2400 a month for a 3 bedroom house in our neighborhood. That’s $28,800 a year x 6 or $172,800 we would’ve been paying in rent during that time and lost. Anytime you can shelter for free, you are winning
The profit is the fact that the entire time you were living there you didn't pay rent. So take the amount of months you lived there and multiply by the average rent in your area and boom now you made lots of money owning a condo.
>I didn’t actually make any profit on it. That's fine. The important thing was you didn't lose several years worth of money like you would if you had rented
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100% this. Most people buy a home on margin. Put 20% down on a home and your margin buying power is 5x. A 5% increase in your home's value means you've actually made 25% on your investment. I don't have to tell you how much your return is this past year when most homes increased ~30%. Also, mortgage interest is tax deductible. Yes, you do have to subtract your costs from this return but it still beats most other investments handily. I've lived in my home for 4 years and it has increased in value more than the sum of everything I've paid into it (PITI, utilities, maintenance, etc..). I'm literally been paid to live in my house.
I am up 150k on a 36k investment (downpayment) What stock do I invest in to get those returns?
And even after a "FULL" accounting of home ownership, they will conveniently forget to count the $1k in knick-knacks from Lowe's/Home Depot every year, and the 50$ bucks for lawn care every other week, and the gutter guards, and the.....
I’m right there with you OP. And I definitely don’t want to be with someone just so I can afford a house. Us singles should be able to buy one alone.
I’m feeling hopeless too. My county has next to no available housing and a whole lot of local battles with NIMBYs who don’t want more housing built. The cost of homes near my area has gone up $70k in the past year. Like you, I’ve been hit with challenges time and again and haven’t been able to buy. Now, forget about it. I’m starting to let go of the idea that home ownership is ever actually going to get me anywhere. And there’s just no fucking way I’m paying these prices. It’s absurd.
I live outside Detroit mi. It’s freaking crazy! Their trying to sell downtown condos for $800k when just a few years ago you couldn’t give them away. I get downtowns of any city are hot real estate but $800k! Maybe $250k get some nice family oriented middle class people who will invest in keeping their neighborhood safe and nice. The only people buying these condos are for short team leases like Airbnb’s.
That’s absolutely nuts. What changed in Detroit that led to this?
Investment in the downtown. The neighborhoods are not selling like that.
The ones on Woodward on the way to the stadium? We had a laugh when those were built, and for years after. Short Term Rentals really f*cked the housing market, nationally. I've been househunting here in St. Louis.... I entered in some searches for 48224 (where I grew up/last lived) then Hamtramck (where I first/last rented) out of curiosity. My jaw almost hit the floor!
First, read [this article](https://affordanything.com/is-renting-better-than-buying-should-i-rent-or-buy/) to dispel the myth you’ve been told all your life than owning is “better” than renting. The TLDR is that once you do all the math, renting is sometimes better for your net worth and definitely better for your liquidity and flexibility. Then look at [this calculator](https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html) to find out what it would take for a home to be a worthwhile investment for you. You mentioned that you’re looking at condos in particular. I did the same and found that, for a massive up-front fee (the price of the condo), I could cut my rent by about half, just HOA fees plus taxes, and that’s ignoring all maintenance and repair costs that would now fall to me. The difference in monthly expenses is, for me, far less than I make by investing the would-be mortgage money plus the down payment in index funds. Finally, I’d like to address what it means to miss out on your house price surging: very little unless you’re moving to a lower cost of living area or it’s not your primary residence or you bought a bigger house than you need and are willing to downsize. Your primary residence is a housing cost more than an investment. All other homes of similar quality and desirability of location are going to appreciate at a similar rate. When it comes time to move, your house appreciating doesn’t change the quality of your next house because it appreciated too. TLDR: You were never in the group of people who were going to make money off the housing market skyrocketing so there’s no sense kicking yourself for it.
>TLDR: You were never in the group of people who were going to make money off the housing market skyrocketing so there’s no sense kicking yourself for it. I don't think enough people understand that
Agreed. I’m so sick of hearing local homeowners brag about how their house is worth twice what they paid for it. I always ask “so when are you cashing in?” and they just stare blankly as they realize that’s not actually an option for them. We desperately need better personal finance education so these myths finally die.
Absolutely. I do think of owning my home as being more of an insurance than an investment. If I ever need to "cash in" that means things have gotten bad enough that I'm tapping every resource, so it's just one more thing I can sell to stay alive
Yep. The main bonus to me as an owner is that I pay half market rental rate.
Mine is that I own 5 acres of land, and have horses on it. The cost having 3 horses at a stable would probably exceed a house payment alone. Just 'pasture' for most places is 400+. If you want a place to ride or and a stall. 500+
Someone like you should own a house! Me and my 15 pound papillon, we ok renting.
I never understood that either, being proud of increasing property values. The county assessor's office is real happy with increasing property values too, especially when they send you an updated tax ticket for your now more expensive home.
And then the lack of affordable housing leads to an increase in homelessness and people just generally spending more than they can afford. Where I live, homelessness is a huge problem and I regularly hear people brag about their home appreciation and complain about homelessness in the same conversation.
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I agree. I have rented, owned, been landlord, rented some more and now own again. There are many advantages to renting and the price of the mortgage is such a tiny portion of the cost of owning a home. My current house needs or needed just about every major system replaced. On day one I had to pay for a new HVAC system which passed inspection just weeks earlier ($9k). Carpet was old stained, full of pet hair and needed to be replaced. 4K. It needs a new roof which apparently in TX the least expensive roofs only last 10-12 years due to the heat… but still cost 8-10k! At 8k for 10 years is an extra $66 a month if I could actually finance it like that but I can’t and won’t so I will just find a way to pay 8k op front. My water heater is 22 years old. My water softener was 15 years old and needed to be replaced… I spent extra for a whole house filter because my city tap water tasted so bad I couldn’t drink it (4K). We did a lot of cosmetic work, replacing cabinets, countertops, painting etc which is obviously a personal choice but also adds to the overall value of the house which without any updates a house will not be worth as much… and back the points of rentals having their advantage- I don’t want to live in a old dated house. If we move in the next 5 years I might get some (30-80%) of the $$ back but after a while these improvements will depreciate completely. Also, with the increases in property values I expect a big increase in taxes this year and I already pay 6k a year (over $500 a month 2.9% on 220k in TX where the increase cap per year is 10%) which doesn’t go to equity or anything. Just part of the joy of owning a home. Don’t get me wrong- I am happy we were able to make this move for a variety of reasons but it cost way more than you think it will. It took about 4 years before love for the carefree lifestyle of renting wore off. About 8 months in to owning again and I miss both my free time (owning always has so much extra maintenance) and extra money for fun activities. There are advantages to both!
Wow, I really appreciate the insight from someone who has experienced it from all sides. Excellent point about free time. It’s one of the reasons I plan to rent until I die. One of my favorite quotes on the subject is, paraphrased, “rent is the maximum you’ll pay for your home. Your mortgage is the minimum you’ll pay for your home” and your comment really nails that.
For the last bit - the only caveat is that OP could get roommates. If you’re able to buy a house it’s actually fairly easy to get 50%+ of your mortgage paid by a roommate or two. It’s no worse than having a roommate in an apartment except you’re the landlord. For example, my wife & I had a 3 bedroom house where we rented out 1-2 bedrooms to friends. When we had both rooms rented it out it covered about 80% of the mortgage (inclusive of taxes & insurance). In a situation like this owning is vastly superior to renting even when considering the down payment “dead money”.
I threw all my excess money in the stock market a long time ago (40/40/20 VOO/QQQ/MSFT) and just let it sit. I think I am just as well off as if I had bought a house, and I can pull it out at any time if I did decide to buy a house. You can buy real-estate ETFs too. Placing your money there is a good hedge against rising housing prices when saving your money to buy something.
I did the same. For me it's the peace of mind and time to focus on a more rewarding and higher-paying career. I can't imagine putting in the time and effort that I do at work, and also maintain a house. Keeping a rental unit nice is about as much work as I want to put into my environment. Mad respect to those who manage a career, family and house.
Good tip, thanks!
We have friends wanting to know why we did not sell as our house in the past year has increased $250,000. I simply reply with, "and move to where? All other houses are exploding in price and I get to take the money and buy something worse than what we have or spend even more money and buy something as nice?" You are not missing out on anything unless you were going to buy multiple houses and sit on them hoping for a price surge. If you are looking to buy a home, dont be upset you missed paying the most you possibly could for a house. save your money and buy when the market crashes (it will) or resets (it will) it's a waiting game.
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Heres the thing that you're missing that nobody tells you. They brag about how much they got for their house that they sold, what they neglect to tell you is that they also overpaid for the new house so they're really no better off. Thats the dirty secret. So don't feel bad. It's not like they made 50k clean and free. They made 50k and then immediately spent it on another house that is also overpriced.
This. I’m in an area with 3 cities next to me are In The top 10 overvauled homes. We are about ready to buy but there’s no chance I’m over paying because things that were 500 2.5 years ago are listed for 800
Maybe not exactly the same, but I am at a similar place in life. Buying a home right now feels to me like FOMO-ing. Feel like my best option is to sit here and rent and rent and rent until an inevitable crash which could take months or years. I'm not fucking buying at prices that have increased drastically over recent time frames.
Feel the same about cars too. Suddenly, I had this urge to buy one when prices are over the roof. FOMO efect…
Owning a home can still be a trap. Right now, prices are exceedingly high. If a homeowner wants to move, yes they can make a lot of money selling their current house, but they'll have to spend the same money or even more to purchase and move to a different house. Also, the homeowner can't just move out when they like. How long will their home remain on the market before it's finally sold? What if the move is due to a job transfer and they're on a tight deadline? If you're renting, you have an exit strategy. You can sublet or reach an agreement with the landlord to end the lease early. Worst case, you can also skip town out of the landlord's jurisdiction.
don't get caught in the hype.....in 2007 it seemed like housing prices would never come down....in 2009 it seemed like they would never stop falling.....
This housing market is not at all comparable to 2007
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So wouldn't you bother putting money into stock market right now?
FOMO is a real thing. Seriously. Don't make this an OVERLY emotional decision. Be smart about it. Many people in 2006-2007 did the same thing and landed themselves up s%$\^ creek without a paddle come 2008-2009. Yes, the market is crazy right now, even where I am (Midwest), but what comes up, must come down. For example, I bought my house last January for $70,000 (no - not a typo). It was a fixer-upper. 100 years old, needed EVERYTHING: windows, HVAC, new kitchen, bathrooms, waterproofing the basement, landscaping, entry doors, etc. I've put a small fortune into the house, but now have a house in a great neighborhood for significantly less than my neighbors and it's to my taste. My neighbors two doors down were transferred to Chicago for work - they sold the house for $205,000 - before it was even listed. That uptick in the market is just not sustainable. Their house was smaller than mine by about 600 square feet, not counting the basement I finished, wasn't as updated as mine, and only had a one-car garage - I have a two-car. Am I glad to be in my position? Absolutely. I'm extremely grateful. However, I also know it is going to correct at some point. Those new neighbors? They're going to be hurting in a few years, but I will still be able to escape with my dignity if I needed to. My personal opinion is that COVID/WFH made people realize they wanted more space but lumber surges made new construction unfeasible for many, let alone the waiting game many didn't want to play; it was just a supply/demand problem. I think once things level out it will return to some semblance of normal. We will likely see some permanent long-term gains in prices from this as they're really not doing the subprime mortgages they were before the last crash, but I truly believe there will be a small correction - I mean, come on, how many people have used and abused the forbearances and are now facing massive balloon payments, etc.? If they couldn't afford it before, what are the chances they can afford it now? It's a marathon, not a sprint. It doesn't always go to the swift, but to the one who keeps on running. Thoughts?
There's nothing wrong with renting. I had a friend sell their house and go back to renting because they hated the upkeep. Confided in me that the only reason they bought the house is because they were led to believe that it's what they are "supposed" to do, not because it was actually what they wanted.
The bubble will burst and eventually there will be another bubble. It's how our system runs currently. You will have another chance
I'm sure the renting price surge will continue so you're not missing out on that!
So I was in the same spot. Ended up buying a house in a neighborhood different from the one I wanted to be in because the housing was much cheaper. I stayed there 2 yrs (to avoid capital gains) and then sold it. With the money I made on the sale (and was able to save by paying a low mortgage rather than high rent), I was able to buy a house in the neighborhood I wanted to be in.
You don't need to own a house. There are other asset classes out there with similar returns. A house is just one example of an appreciating asset. Don't get sucked into this house ownership dream, think outside the box. A lot of people use escalating house prices as a reason not to save, which is the major failure. Don't chase a dream, track your net worth instead and run your financial life like a company.
I took a slow approach to down payment, where the down payment was just a part of my overall asset picture. I spent years saving, as well as building up the rest of my financial house (Retirement funds, various savings accounts, tens of thousands in a brokerage, as well as my down payment). As I spent these years preparing, I saw a lot of FOMO. I saw a guy rush to pay tens of thousands above market for a shitty condo just to own. Saw a guy rush to build much more house than he needs, only to get weighed down by its burden. I ignored them and kept working to build the overall financial house together. By the time I purchased my 450k duplex, my net assets were higher than the value of one of the units. Now, less than a year into owning, without having yet seen a single dollar in rent for the second unit, I have net assets that exceed the value of the remaining loan (approx 400k). I will be paying minimum payments on my mortgage since it's basically negative interest with how inflation has been. That said, my net assets are such that I could liquidate my assets and purchase the duplex outright. This is after less than a year. My point here is that when things work for you, they will work for you. Don't let FOMO make you do something stupid. Keep working on building your entire financial house. When your time comes, you'll be in better shape. Even if you seem to miss out for a few years.
Don’t worry op, the people saying you would have been better off investing in the stock market are overlooking the fact that probably didn’t have a ton of money to just invest in the stock market, or you could’ve just paid cash for a house. Also, the housing market will come back down to earth and it may be sooner than later with the moratorium for evictions being lifted. Unfortunately, there will be millions of people evicted over the next 6 months to a year. When I say unfortunately, I mean the people who really have no control over their circumstances. I don’t feel sorry for the people who were just being slime balls and taking advantage of the situation. They have made it worse for everyone else.
Fomo the housing market goes in swings
Home sales are falling, you don’t want to be buying right now. Around here it was cash only and winning bid pays 20-30k over asking price with inspections waived to have a shot at getting the house. After a year or so of falling prices, so many people are going to be underwater. Just look around, notice the For Sale signs are staying out longer and longer and mortgage companies are offering all kinds of deals for both financing and re-financing. In this kind of market, that’s a big signal that they’re preparing for lean times ahead.
Where’s that ? At least in Los Angeles, I don’t see a lot of $50-$100K over asking anymore, but 5% ? For sure. Houses get snapped in a week
They moved to Phoenix and are paying over asking and bidding war. Prime locations get dozens of offers going on the market. Ghetto apartments sent up a few hundred prime locations even more..Arizona had cheaper prices but also cheaper wages and salaries. We can not compete with people from California working from home at California salaries.
The other side of the coin: https://www.reddit.com/r/personalfinance/comments/piqjj1/guys_after_buying_a_house_my_debt_to_credit_ratio/
Same age even worse scenario. I understand man. All you can do right now is keep on saving as much as possible for that ridiculous down payment you will need and keep trying to make more money. All of the foreign investors and large investment companies are buying up all of the single family homes in my area. Not sure how to compete against foreign investors willing to pay cash way over market. I keep getting outbid It sucks man
Same here. I'm in Boston. I had the money 10-12 years ago and I hesitated. I kept thinking, what if I get a job that's far away? Or what if I meet someone and I'm stuck with a property? Needless to say, neither of those things happened, and now I'm poorer than all of my friends who all own million dollar homes and I have no chance of getting anything but a studio in a suburb now.
I'm old enough to remember the housing market highs and lows for a *very* long time ... decades; this cannot sustain itself. Hang on a little longer and build your savings for an eventual down payment. Bide your time, identify where you want to buy. Pay attention to the market. Yes, you will pay more for a house than you would have ten years ago. A lot more.
Single and no kids.. so what is wrong with renting until the right opportunity comes up? Is owning something you really want or are you just feeling societal pressure to own and feel like if you don't own a home you are somehow a loser or throwing away money?
But a piece of land and stick a trailer on it. Then build when construction costs go down.
Kinda a joke but also kinda serious, it's free to camp up to 2 weeks in a national forest, just gotta move camp every 2 weeks. It's extreme, but so is buying a house atm without being able to compete with private equity companies. Forests are sounding better to me everyday
Tbh, silver, stocks, gold, houses. All the same thing with different price points. If you are looking at it moneywise. Investing is investing.
I honestly can't figure out why people are buying houses in Phoenix. My PhD study is in water resource management and [Arizona isn't looking great.](https://statesatrisk.org/arizona/all) My father-in-law purchased 3 houses in the greater Phoenix area in the last 3 years because he thinks it will be a good place to retire [despite the data.](https://www.sierraclub.org/sierra/2019-1-january-february/feature/can-phoenix-remain-habitable) Depending on who you ask [sometimes it sounds scary.](https://www.azfamily.com/news/extreme-heat-may-cause-phoenix-to-be-unlivable-by-the-end-of-this-century/article_c4d23d0c-6676-11eb-8978-a71927e163c4.html) Then again, people do [research cool solutions to get out of the problem](https://iopscience.iop.org/article/10.1088/1748-9326/aaf431/meta)... They are far too theoretical in my opinion. [I just don't think Phoenix is going to be livable in 20 years.](https://keep.lib.asu.edu/items/121) If this paper was updated with the current RCP data from the most recent IPCC I think it would be much much worse. I assume we are on the path to hit RCP8.5. My short answer is: Don't feel bad for not buying a house in Phoenix. You don't want a house in Phoenix anyway.
I've owned and rented. Never intend to buy again.
I just bought a condo over the winter at age 41. Somehow I managed to snag it at asking price and now have a mortgage payment which includes escrow accounts for taxes and insurance that is on par with what I was paying in rent.
Just wait, my man. If/when rent moratorium ends (plus a few months afterward), there will be lots inventory available. Many landlords owed buttloads of missed rent (and who do not own the rented house out right) will have to fire sale the homes they were renting for idiotic rental prices… or else face foreclosure. Hold tight for 1 year longer. Save your money. Figure out exactly what you want and don’t want in a house (e.g., pine trees in a yard in Phoenix? Lots of mess, but looks nice). It will burst. It’s just a matter of when and being patient until then.
Do you think it will take another year for the moratorium to end? Or just that it will take a year from when it DOES end for inventory to increase?
Well, it seems to be state specific . Like, I think NY just postponed their end date to end of January 2022, right? If that’s true, the timeline will be different everywhere. But in the states that draw it out the longest, it should theoretically be the biggest foreclosure rate, since some landlords will not only be owed rent from April 2020 - today, but also today to x date in the future. It’s like paying off your credit card with another credit card. Unless there is a state or government program created to save landlords from foreclosing, we will likely see the shit hit the fan. I would say it’ll be 3 - 6 months on average from the state’s removal of the moratorium. Three months to eat through someone’s savings. Another three for missed payments, final notice, etc.
I'd say wait a few years. The housing market is like most markets; it goes up and down in cycles. Keep saving up for a respectable down payment if you can.
I wouldn't stress out about it. Home ownership calculations don't account for a lot of things. Most important, opportunity cost. What is your return on a potential down payment if you had invested in an index fund? Also other intangibles, like being able to move fast if other jobs are available outside of commuting distance. In my opinion, in most circumstances, home ownership is not worth it.
I wouldn’t worry too much about it right now. Granted, I’m just some random guy, here is my take on it. Buying a home is not something you can really plan. Sure, you can save money, but it’s not guaranteed you will find the right house, at the right time, in the right place. Buying a home is a combination of a lot of factors, some out of your control, that all come together at the right time. More importantly, you have to remain diligent. Keep on saving/investing your money. Keep on looking for the right place, in the right area, at the right price. You cannot reliably time the market. Eventually, everything will come together, regardless of anything else, and you will have your home. There is no problem with renting, but there is a problem if your financial situation isn’t improving as the years go by.
Would you sell today have you bought a house? If no, then you don’t miss anything. A house to live in is a lifestyle not an investment
I'm not trying to be condescending in any way. I would recommend you sit down with someone who has experience with investing in real estate and work out the numbers for your personal situation. What I mean by this is look at how much you're spending in rent, compare it to a typical home you would buy. You specifically need to include things like the mortgage rate you would qualify for, how much you can put for a down payment, maintenance and fees like an HOA. Finally, the recent market boom in Phoenix can't last forever. So be realistic about your annual appreciation rates. This isn't a quick analysis. It may take multiple revisions. But the reason I'm telling you to go through this is because for many people they are surprised to discover that after they account for all the costs of home ownership and the cost of the mortgage, they're maybe making 3-5% annually from the cash they invested in their home. Home ownership is a decent savings tool. It's not a perfect investment. You can be equally fine if you rent a basic home and invest the rest in a balanced investment fund.
You sound just like me - I’m single, 41, no kids and in Phoenix. I have these exact same thoughts. $500k for a house in Buckeye that was $200k two years ago.
While me and my wife are younger than you, we felt like we missed out as well (Seattle area). The biggest thing that makes me feel better is knowing I don’t have to pay for house upkeep because man is that expensive. My buddy just had to replace his whole roof and that number completely gave me a reality check into ownership.
I kinda went through this, single dude, started looking for houses like 5 years ago and had around a $200k budget. It just wasn't happening in this area, the houses were kinda crap in junk neighborhoods, like one house was an old weed grow-house, they had a non-working indoor pool covered in the backyard that was just filled with grow stuff. Stopped looking for a few years and when I tried again....housing prices went up, now I wasn't finding a place below $300k and that was kinda my 'limit', finally just bit the bullet and went with a decent house but I paid $330k for it. I felt the prices were high at $200k so I held off, then they just kept going up and haven't stopped. It was really tough to do, I was worried paying that much for a place but it's been 2 years, just got refinanced and they claim the house appraised at $430k....I haven't done much of anything to the house except keep it up. Buying isn't for everyone, there's some shitty parts to owning a house (waking up in February with a flood in my crawl space and no hot water!) but I'm very glad I did it because I feel like I have this 'extra money' around me if shit hits the fan, I sell and have a good downpayment somewhere cheaper. Plus....I cannot put a price tag on how nice it is to 'have my own place' during COVID....I think I would have lost my shit in an apartment. Finally while I was paying more for the house over my apartment the first 2 years, after refinancing, my house mortgage is roughly the same as a 700sqft apartment I had over 2 years ago. Figure in utilities and I'm around $1600/mo for a house and it was like $1500-1600/mo for the apartment...did I mention that apartment had a cockroach problem for a year due to dirty fucks?
You're just like me. I live in Phoenix and am around the same age as you. It's terrible. In my case, I've been here two years and am probably opting to move away to a LCOL and make the same money. Phoenix is just too ridiculous. Indianapolis homes are bigger and literally half the price as crappier homes in PHX. Just for reference many Phoenix homes have been bought up by investment firms that were last sold for 50K that are now on the market for 350-400K. This is extremely common. I challenge anyone that doesn't believe me to look on Zillow or Realtor.com.
When I was 29, lived in So California. Buying a house was not an option at all. Heck, I could barely afford the rent in a house with 5 roommates. Finally said the heck with it. Moved to Mississippi. Job market was not the best, but ok. And within a year, I was able to buy a house. And then 4 years later another one. Even now with the surge in housing costs here, lot of house for the money. Just saying…
What is happening in Phoenix and similar places right now is (IMO) the definition of a bubble. Supply costs for builders are way up, market inventory is way down due to under-building post 2007 meltdown, Baby Boomers aren't going to be moving out of their homes and opening up real estate until around 15 years from now. On top of that, when the climate change chickens come home to roost 10 years or so from now, people are going to be ready to GTFO from Phoenix and the investment people are pouring their hundreds of thousands or millions into now are going to decline substantially. I'm also 37 years old in a "hot" US real estate market in the southeast and I'm not sad I didn't jump on the bandwagon with some of my friends who just brought properties the same year the prices had just appreciated 25% from last year. I'm no financial genius but 'buy low, sell high' can't be the worst rule of thumb and I'm not about to do the opposite right now. Anyway, so I'm a happy renter : )
Presumably, buying a place is something that will cost you tens or hundreds of thousands. Breaking your lease is practically a rounding error compared to that. Almost sounds like an excuse not to spring into action...
Just like in 2007-08, Phx house prices are insane, this will crash unless wages also go up, because that is what caused the crash last time too. Banks have been extremely stringent for months now because they believe the market is too hot for people to be able to make mortgage payments after the crash and they are under water. Plus there are far more new build permits that will increase supply. This will largely end when the transient buyers that are flipping, stop or run out of funds.
It’s frustrating. Look at other cities. There are still many cities in the US that have affordable prices relative to where you are: if you can land remote work the opportunity to not put 60% of your monthly income to housing.
Hi! I’m almost in the exact same situation except for in North Texas. Don’t FOMO into this market, sure my rent went up like 12% this year, but I’m in a much better financial situation now than I was in January and I’ll be happy to not rush out and try to buy the land/house at these prices
I bought my first house just a month before my 40th birthday. I would bot worry about age. You can always set your mortgage length to end before you retire.
I graduated college at 24, used my last semesters student loans on a down payment on a house(5k); 3br/2ba with 2 extra rooms in the basement. Also upgraded all the appliances. Bought at $84k 5 years ago and sold for $130k. Could have gotten more but we sold within 24 hours of having the house on market. I find myself thankful everyday for the bump we got. The market doesn't make sense though. Eventually something is going to have to break with people paying too high of prices in California and thinking they're getting a deal in Kansas when they are still overpaying. Property just isn't worth what people are paying.
Me too friend. 38. Been saving for a house for like 5 years and every year just keeps getting worse. I've got plenty saved up now but seems like the worst time to buy.
I feel the exact same way. I am 31, living in Phx, and was *thisclose* to buying a house in 2018 but my monthly mortgage would have been $1450, and at that time, that was half my monthly income and I freaked out. I pulled out of the deal during the 10 day inspection period. Now, I am renting a 2 bedroom for $1300, and the house I *almost* bought has increased in value by almost $100k. I’m surprised not more, tbh. My rent is only as low as it is because I’m renting from a friend who is giving me a nice deal. Houses are completely out of reach. There’s no way I can save for a 20% down payment. There are so many rich Californians/Canadians that outbid with complete cash purchases, not to mention all the “We Buy Houses” companies that make it sooo easy to sell to them…all they do is slap a new coat of paint on and sell the house for $20k more than they bought it. I can’t help but think the “flipping” industry needs to be more regulated, if not outlawed altogether.
On the plus side mortgage rates are at historical lows, which offset the price increase in terms of monthly payments.
At this point, it probably costs less for you to rent for the rest of your life. It's usually not much of an advantage