Both house prices and interest rates are inflated. If I buy a $650k home at close to 7% interest with 5% down, I will be paying over $40k in interest yearly which doesn't make financial sense. Considering interest payment are higher in the beginning, it will be a big cost of building a small equity. Almost $200k in interest in 1st 5 years. And housing boom of 2x-3x price increase in small time during pandemic years cannot be guaranteed again. Comments? EDIT: For those voting yes, what's your rationale? Are you voting yes due to FOMO?
No assurances that rates will ever go down, or that housing prices will rise or fall. It’s a risk, not a question of worth. History shows that over time you yield 1-2% return on a house.
>>> History shows that over time you yield 1-2% return on a house.<<< This is not true.
@walmart - At current high prices and interest rates, a $600k loan will put you back by $40k per year just in interest. You will end up paying $200k in interest alone in 1st 5 years without much equity. That's a high cost of building equity. And pandemic housing boom cannot be repeated as interest rates was kept artificially low during and after pandemic leading to killing inflation.
Hoomers are coping by saying yes to the poll. House prices are ridiculous right now, especially given the rates. We will either see a correction, or a decade of stagnation in house prices while inflation eats away the dumb valuations
Keep in dreaming. Bay Area Seattle prices already up 5% in last two months. RE is very local you cannot generalize it. Lot of places saw close to double digit growth last year, while places like Seattle fell.
Coope
How long do you plan on living at that house
I’m in the No camp but some reasons for Yes are: 1. FOMO as you say. “It will continue to go up forever so you may as well do it now” 2. For many people there’s a non-quantitative reason. More security, something they can call theirs. 3. Because “people just do it” or American dream, etc. 4. “Rent is throwing away money”, but apparently interest, maintenance, closing costs, property taxes aren’t for some reason. These combined are a powerful force. Many people also don’t view it in an analytical sense if they are treating it as an investment including considering opportunity costs. I’m very willing to accept those doing it for emotional/non-numerical reasons, but they should just call a spade a spade.
Don’t buy a house now. Housing market will crash anytime this year. You can buy the same house for 50% off after the crash
Home prices are sustaining these high interest rate. If they start crashing interest rates will be cut which will again provide support to the pricing.
Na. It will crash
5% down only. How are wrong to begin with.
I remain unconvinced that buying a house is a significant advantage over renting and investing. It depends on the exact numbers in your area of course but both are probably similar options from a financial perspective. If you can afford a shorter mortgage term you will pay less interest. If you want the security you get with owning then that's also a factor. Ultimately it's up to you if the numbers makes sense and seem worth it to you.
You will own the house fully after 30 years of payment. That's a false sense of security!
You do not buy a house to make money from it, you buy to live and make memories, so plan for that.
Yes, but at what cost.
I don't understand that memory part. Americans keep selling and moving so how come you build lasting memories? In other countries people rarely sell their house. Even i can go-to my childhood home now and recall my childhood memories. Here in the USA people downsize when a child goes to college and again sell and moves when they retire . So how come memory plays such a significant role in house purchase?
Yes buy if it is yr first house
If the rates go up, you'll be glad you got in now. If they go down, you can always refinance. Maybe see about a cheaper house if you're really concerned.
bad advice. you cannot always refi. if equity is lost and beats out your loan, no dice.
Not to mention refinancing isn’t free… can cost thousands of dollars