Housing expert advice - buy a property in bay area or Seattle before March next year before interest rates go up

Google
LEMu62

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LEMu62
Dec 17, 2021 109 Comments

(note : got lots of DMs for helping with property evaluation. I am not a realtor. Please work with your realtor for bidding on a property. I am only sharing knowledge I gained through property management experience)

I am a housing expert managing several investment properties for the last decade+.

This is an advice for those looking to buy a house especially in the bay or Seattle.

If your down payment is ready to go, you need to go very aggressive till March.

Fed will increase interest rates by March 2022. If that happens you are looking at significant rise in mortgage payments.

For e.g. For $2M loan, monthly mortgage will increase by $1700/month if interest rate goes up by 1%. That's $20.5k increase per year.

First interest rate hike will be significantly high followed easy ones in 2nd half of 2022.

And there is absolutely no way fed is going to decrease interest rate for a significant period.

Inventory crunch is not going away.

My TC :$500k+
Total properties in the US : 11
In bay area : 3 (including my primary house)

#mortgage #housing

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TOP 109 Comments
  • It is better to pay 2-3% interest rate extra than to pay 500k extra for avg houses.
    Dec 17, 2021 10
    • Google
      LEMu62

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      LEMu62
      OP
      Exactly my point on what Amazon said. Prices and competition is not going down by any means. Housing will be crazy next year too.
      Dec 18, 2021
    • Meta
      hiremepliz

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      hiremepliz
      @google i agree i think inflation and short supply will keep this party going next but just in case if i am wrong as well i choose my investment property carefully by prioritizing cashflow that can cover my monthly mortgage + insurance + tax. So even if the price drops i only lose networth without risking losses financially…my plan is to get another home equity loan on my purchase on march when the property is still going up in price and if real estate market crash i can swoop in for discounted price
      Dec 31, 2021
  • Amazon
    jsonld

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    jsonld
    will prices not go down/stabilize if interest rates increase?
    Dec 17, 2021 5
    • Amazon
      cmmg

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      cmmg
      I'm less sure, with more and more companies allowing remote work I think the patterns are going to change.

      Seattle has already seen condos in the city go in the opposite direction from houses, probably because everyone moved out of them into houses in the suburbs during the pandemic.

      I can easily see that go to the next step, with people moving even further afield, and the condos in the city soaking up demand from suburb housing as some do return to work.

      I expect housing that is 3-6hr drive from the city to be see the most growth as people orient around coming to the office a couple times a month or only for events.
      Dec 17, 2021
    • raising rate is just expectation, it is not so sure. also for hot markets, like bay area or seattle, it does not matter at all. looked at bay area history of home prices, it only dips when economic criss. so buy just when you can buy, timing market is risky and too ambitious. just two cents
      Dec 17, 2021
  • Cisco
    gazni

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    gazni
    sorry, i disagree. I have been into such traps before and panic'd bought a property few years ago. Guess what, prices went down thereafter. Ground rule is, when interest rates go up, prices go down. I have experienced it so many times. 2018 was peak and 2019 they started raising interest rates. I bought in 2019 and got a very good deal. Imagine people not going in open houses , houses staying on market for 30+ days. My contingent offer was accepted and i got repairs done etc. And this was in Redmond area which is very hot and avg house goes more than 1.2M. What really changed in 2 years to shrink inventory so badly ? nothing ? inventory as always been limited. But liquidity injected by fed is driving prices high. News articles/realtors/ such articles are building more FOMO. Investors are piling up more than regular people who want primary residence. People are flipping houses more often. I am saying all this with data not just reading some article somewhere. I am 100% positive that housing will come down (not crash ofcourse) but back to levels in 2019 with some 100-200k extra for 700-800k house. Now premium is 500k+. I know people will laugh at me and i don't really care. I am not timing market and don't know whether it will be this year or next year but sometime. Ground rule : always buy when others are selling and sell when others are buying. When tapering starts, crazy ipo count will go down. Less millionaries will be produced and there will be no bidding wars. When intrest rates goes up, people will obviously price out and don't bid. Then news will give articles - 'long awaited housing crash coming' etc. people will start panic selling.
    Dec 19, 2021 6
    • Cisco
      gazni

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      gazni
      @ kBiA36
      wait and watch, my dear!
      Imo, people are in euphoria and fomo. As mentioned lots of things are driving costs up. Let it dry out..
      In 5-6 years, i have bought 2 houses and every year i bid trying to always find better deal. I was successful once and i will be successful next time too. I am confident about my strategy.
      Yes, challenge is still there. 2 years talk to me again. Let's see who's winner. There are 100 will bet against me and few are with me. I never follow trend.
      Dec 20, 2021
    • @gazni, i hope you can win because i also want to buy another property for rent. investing in home is much more stable than stock. anyway!
      Dec 20, 2021
  • Apple
    ShibaKaBap

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    ShibaKaBap
    Not saying it’s a bad advice but if you were to choose between potentially lower house price and lower interest rates, always always choose lower house price as you will definitely get multiple chances to refinance in next 30 years and lower payments. RE lags Stock market by a few months, given that 2021 was a correction in majority of high flying tech companies (hood, snap, pins, zoom, pton just to name a few), days of overbidding by half a mill are numbered. AAPL GOOG alone can’t mint enough millionaires to keep bidding wars flaming forever.
    Dec 17, 2021 7
    • Overnight IPO people are not the only people throwing money on houses. There are lot of other people who made money from tech stocks, there are many chinese investors too who made money in stocks. Well guess what, both chinese and US tech stock are headed down gradually given the data we have today. I have been living in Seattle for 7 years and have been closely following real estate market, this is the first time in 7 years people are actually saying the market is just too expensive so there's obviously something different this time than previous years. Another data point, I know at least 10 friends who bot houses in Seattle area since covid, I talked to every single of them and the main reason they were able to spend that much was because of their stocks.
      Dec 18, 2021
    • Google
      pSHT68

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      pSHT68
      House prices in Seattle go up like crazy because of WFH policy. Many people from the Bay actually moved up there. It's possible that what happened since last year won't happen again for the Seattle area. But for the Bay, I highly doubt it.
      Dec 18, 2021
  • eBay
    lrJV61

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    lrJV61
    The right advice looking at all US history is just buying as soon as you can and don’t overthink it
    Dec 17, 2021 4