I know this topic has been beaten to death, but can't resist with all this talk about prices falling. I have been on the lookout for a house in South Bay, but have been hesitant on pulling the trigger, as my rent is low and money was earning decent elsewhere. Lately I have heard from many colleagues (homeowners and otherwise) that prices are going to fall through 2019/2020, and researching price estimates seem to show the same. So is it really a bad time to buy now? I know it's hard to predict any market declines, but how about the time of the year? Is it a bad time to buy now with schools and all and better to buy later in the year?
On the same boat. Where do you park your money?
right now haven't parked in a safe instrument it as such. It's all mostly in s&p500 etf. That said, I'm still trying to assess if there's life in the SPX bull run or should I get out as well...
People claim prices will fall, but there is a flood of new IPO money coming in. If anyone can predict for sure they would quickly become one of the richest people in the world. You should buy based on your personal needs/risk profile and not as an expectation of investment - if you plan to live in the house for 10-15+ years, short term fluctuation isn’t as big of a deal.
I’m in the same situation. I’ve been in the search since Feb, prices have gone down a bit. But all this talk about a looming recession next year, afraid to catch a falling knife. Jobs report was lower than expected. Only incentive I see is that interest rates are near 2010 levels at 3.75% for a 30yr fixed jumbo.
There’s an argument for buying when prices are lower and interest rates higher because you can always refinance when rates go down. Can’t get a lower price on purchased home when rates go up.
When prices are lower because of higher interest rates, doesn't that also cause your house to go down in price making the refinance option less attractive?
Buy
If you’re gonna live in your house for 10 year plus it doesn’t matter if it’s gonna drop 20% one year and go up 50% one year... it’s like timing the market. You don’t do it for stocks why do it for houses..
Because they are different.
with stocks we have dollar cost averaging on our side, which naturally limits the risk of buying at inopportune times...but with house you're putting down 1-2 mil at a single instant, and bad timing can be disastrous
Don't try to time the market. If you're in a good place where you are unlikely to need to want to move for 5+ (ideally 10+) years, and can afford a house you'll be happy with in the long term, it's almost always a good time to buy. If you don't have the stability to buy for the 5+ year term even with an appreciating market you lose a lot in transaction costs, probably to much to be worth it unless you're actively flipping.
we're not very sure if we'd stay in there bay area for that long, or would move somewhere else (e.g. Seattle) in 5-10 years. I understand trying to time the market is futile, but feel hesitant to catch a falling knife and then get stuck somewhere for a long time. That said, the returns some friends have made (property appreciation + leverage offered by mortgage) are better than anything I can hope in the stock market, thus the FOMO in case there's still life left in the bull run
So you are only buying because you are hoping for a better return on your home than stock market? Then definitely don’t buy. All the advices assumed you are buying for your needs, not for short term investment hoping to beat stock market.
Assess your needs. If things go really bad with the economy you could see all sorts of magic tricks that could eat away at your money if it’s held in other assets classes or as cash: currency debasement, NIRP, or unchecked inflation. No one knows; just make sure you don’t over leverage yourself.
are you saying it's safer to ride it on SPX, than trying to get a house (on mortgage) and see the leverage destroy your money in a downturn?
If rental < property tax + insurance + mortgage interest - house value increment, then keep renting
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