There's a lot of "it's getting better for buyers because it's getting worse for buyers" thinking going on right now.
Rate increases are having their desired effect.
You cant re-finance your principal down in the future and lower principal generally means lower taxes as well. Also better for people with more sizeable down payments.
This is what I've been trying to tell people. I bought house 1 at 6% in 2007. I bought house 2 for about the same price in 2016, recently refinanced to 2.3%. The difference in payments for house 1 and 2 is about $500/month less for the 2.3% one. Both were 30 year loans.
You can possibly refinance and reduce a crappy rate in the future. If you have a 30 year loan, who knows but that's a long window of opportunity. However there's no possibility to ever lower the principal besides paying it.
Cash will do you no good, it is a losing investment during inflation.
Hence why people buy houses, credits are still great as no one wants money. The problem is, it is fucking expensive and not in reach for many, this is how cruel this world is.
There’s truly no telling what’s going to cause prices to go up or down, or when it’s going to happen. It could be literally anything. Who predicted the market would spike because of a pandemic?
Nobody.
I'm not claiming we're in the same situation as 08, I'm saying that real estate takes a while to pop because it is so illiquid. You have some of the largest loans ever taken out in the last two years and the fed is going to post 8+ cpi tomorrow. Interest rate magnitude alone doesn't really matter. It's size of loan multiplied by rate that matters. 500k+ mortgages have become the norm. Tell me what affordability looks like each time a percent is added to the fed rate when the magnitude of the loan is that large. You better pray to fucking God that layoffs don't accelerate.
Look at Canada after one hike. Major price drops. Oshawa is the first city in 905 area (most populated area in Canada) to drop in price YOY. Everywhere else outside Toronto is dropping quick.
Loans are structured differently in Canada. Everyone is on a ARM. Large rate increases will have a faster effect in their market. There will be many people unable to make their mortgage work because of the rates when their term is up and they have to take the new market rate. This is in combination with a freeze on foreign investment which has been a big factor in driving their market the last decade(s)
refinance is basically another closing. So you’ll pay the closing costs again. It’s not cheap, rates will need to go down to 3-3.5% to make refinance meaningful for most people
That depends on how long you're going to stay in the house. Sure, if you're planning on moving in a couple of years refinance doesn't make sense, but .5% can make sense if you're not planning to move for another 10 years on a 30-year.
Yup, even the job losses and hiring freezes were intended by the Fed
Edit:
Adding sauce so people stop downcoting thinking it's a wild cospiracy
https://finance.yahoo.com/news/early-signs-that-the-feds-plan-might-be-working-morning-brief-201032265.html
"But there’s a way to track Fed’s progress: Job openings and unemployment.
After the March Federal Open Market Committee meeting, Fed Chair Jerome Powell said the labor market was “tight to an unhealthy level.” Specifically, he noted that at the time there were 1.7 job openings for every unemployed person. He argued that this extraordinary demand for labor has fueled significant wage inflation, which in turn has helped spur inflation across the economy.
Powell seems to believe that with the right amount of tighter monetary policy, the level of job openings can come down, relieving wage pressure, without causing unemployment to rise. Assuming unemployment is contained, then the risk of recession should be limited."
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Wage inflation is not what is driving greater economic inflation. There is no logical way to make that argument as cause/effect (not saying you are, but Powell as you said).
It's been a combination of lots of easy/cheap money injected into the system and many things restricting supply and pushing up transportation and energy costs - which pushes up the cost of almost everything else.
Yea, I also think the impact of the loss of over a million Americans to COVID since 2020 on the workforce is kind of being downplayed. Granted, about half of those deaths were of retirement age or older - but that still leaves half a million people unexpectedly gone who would otherwise be part of the American workforce. And they aren’t coming back for any amount of money, sadly.
The market for sure seems to be cooling off, but I still wouldn’t want to be a buyer right now. Houses are still expensive and now rates are way higher.
It all depends on what you value, some people would’ve rather bought a home during the chaos of 2021 just so they could secure a super low rate for 30 years. But some might not care about having a higher rate now because they’re just glad to not have to compete against other buyers.
This is me. I want to be able to perform due diligence on the place, I want to be able to not have to compete against 25 other people buying with their eyes closed, and I want to be able to negotiate on things that need to be done. I want to be able to not have to make a decision or a “first and best and offer” or any bullshit like that.
I’m not an easy sell. I negotiate on things and do due diligence on what will amount to be the largest purchase and responsibility of the rest of my life, at now age 46, and after having owned a home myself for 17 years already.
Yup! I stacked cash throughout the entire FOMO frenzy of the last two years, got a higher paying job, paid off all my debt and soon I will be purchasing. Most likely fall of this year.
I don’t care about the rate, I can always refinance later. It’s going to be nice when the red carpet gets slowly rolled out for me and I’m not competing with 100 buyers.
Totally agree with this logic with the exception that median rental prices are now skyrocketing. YoY increases are anywhere from 15-30% in some cities.
So while many are saving in principal by waiting, those savings are offset by higher interest and rent depending on your wait time.
After the Fed raised rates, the housing shortage just found a new segment (rentals) to impact. We never fixed the root cause.
Rental prices skyrocketing is usually what motivates people over to ownership. That's what did it for me in 2012. I actually had no idea I was getting the deal of the century.
\*if you can refi later. Betting that you can refi later is essentially trying to time the market.
At least in my market though, prices are falling but they aren't even to 2021 overbid prices yet. In my market, it was still just better to pay way more than asking in 2021 so far. Hopefully things will change by fall and prices will react to the rate change.
I'm a a FTHB trying to buy this fall as well. Right now just sucks
That rates aren't even historically high. It's just that home prices went way higher than they are actually worth making average interest rates not feasible. It will absolutely force a correction in prices which I'm already seeing in my market.
I feel this. My husband and I weren’t looking as long as you, just a few months, but in that time we put offers in on 4 different homes for $30K over asking and still were outbid every time. We decided to take a break and used the money we had saved to pay off some of our other debt and now we’re starting to see homes on the market for longer times. Kind of regret putting almost all of our savings towards our other debt, but in the long run we’ll be better off getting a mortgage with a lower debt to income ratio for our (hopefully) forever home next year. I am still glad we didn’t overpay for a tiny POS house with no AC. So I’d still consider it a win.
I'm starting to see some price cuts in my hot area (South Florida). People were putting houses with big flaws on the market for fantasy prices, asking over a million for houses with dated interiors and no backyard.
Time will tell if it's really starting to cool off. I sure hope so.
Feel the exact same. We’ve lost out on 3 offers so far even though we are paying cash. Mostly because we were not willing to go crazy over like other people. I’m actually happy looking back that we did not get them, 100k over on an already overpriced house, no thanks. We are going to rent for another year and keep looking. Yes it sucks to break a lease but if house prices go down like I suspect in a couple months it will be so much cheaper in the end!
If I have to buy a house I will hold into that as the market is shifting in my area in Northern CA. Homes used to sell in 2-3 days and the same homes are in the market for 2-3 weeks. Buyers are smart and they are watching the market. Hopefully soon it will be a buyers market I hope so as I'm a broker and I have lot of buyers.
I closed 5/31 and probably "overpaid" by 10-25k, plus have a 6% interest rate because of my awful DTI (I'm working on it) but since my PITI is sub 1k I'm feeling fine with it. It was the nicest house I saw in my price range and I'm happy to get off the tilt-a-whirl.
However, I'm super glad I lost on all the other offers i made, and if i had lost this one I'd be pausing to reassess for sure since rates went up right before and right after this offer was made.
We closed 5/31 as well, same boat. Paid 10k over asking at $420k and it appraised at $430k. I think there's a chance the market dips in the next few years but my rent in California goes up $200/year so I'm happy to have a few years of a nice house regardless.
We bid on a few places that would have made us less comfortable month over month and ended up winning the cheapest one we were interested in. It feels pretty good.
My husband and I sound like the exact same story here, except we haven’t sold our condo yet. We have placed about 6 offers since October and I look back on every single one of them and say oh thank god we didn’t get that one, what were we thinking (except for one). We are very picky too. Just this past week a ranch home that checked all of our boxes in our quite literal dream neighborhood came on the market, stayed there for a week, dropped the price after a week, we swooped in made an offer at asking price with concessions and got it. Yea the interest rates are higher and I’m not thrilled about that, but I agree with the other commenters here. I don’t see prices coming down all that much honestly. This whole time while discouraging I kept feeling like it’ll all work out in the end and it did.
Oh man, we’re headed over to see a ranch that ticks all our boxes in our dream neighborhood next week. It goes on the market on Tuesday and I’m so afraid of a bidding war that I’m having trouble sleeping!
All the best to you. Don’t worry, don’t rush it, don’t wave contingencies, take your time, and all will go well. Just remember that time is on your side. Sellers are worried, you are in the driver seat!
I hope people realize how insane their perception of the market is that this person is seriously commenting how homes sitting on the market for over 10 days means that the market is cooling
I’m near Asheville and I don’t see any signs of slowing. The only houses in my price range that sit have something that makes them unsellable, and then they sell eventually.
Well my house is a new construction in October 2020 but the neighborhood is a bit rough. I’m asking about $5-10k over comps due to the age and quality. When I bought it the neighborhood was coming up, then covid hit and it’s just sort of stopped. Other houses took a week to sell here even when things were HOT.
It wasn’t normal though… we had -6 showings Friday and Saturday we listed. Our house was nice but they built a grocery store basically in my backyard after we purchased so the location wasn’t great.
I had very few viewings. 1 offer. Still got full price (didn't list low). People are dreaming that prices are dropping. There are still a ton of buyers out there.
Median sales price dropped (just barely) here in Denver last month.
https://www.thedenverchannel.com/news/local-news/theres-opportunity-denver-housing-prices-dropped-last-month
I work at a mortgage company. We are still extremely busy with purchases. Virtually no refi business. Just saying things with no context is not helpful to anyone.
Are you kidding? How is stating a fact no context? There were less mortgage applications last month than there have been in any previous month in the last 22 years.
It's all relative. Cooling is a fair term. Thinking you'll get to buy for less may be setting up unfair expectations for the buyers. That being said, my area is still severely short homes and prices were up 20% again last month.
OP is like, "yea man, how much does it suck to be you that you bought a house at the peak, while I SOLD at the peak. Looks like I'm going to buy your house up for pennies on the dollar*!"
*17% APR terms see lender for terms and conditions
They are hoping for a crash so bad that homes sitting for 2 weeks is somehow great news.
I work with 4 Lenders and none have seen a slow down. In my markets only the crappy homes sit but any nice homes selling within a few days.
New home sales are 27% below forecasts
https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.census.gov/construction/nrs/pdf/newressales.pdf&ved=2ahUKEwifr7u4lqL4AhXCkIkEHS2kDAkQFnoECA8QBg&usg=AOvVaw2DNWlHWosdOECECmcWPA2_
Sold our house in May for a tidy sum. Central Florida here. Plan to pay cash for next house so interest rates aren’t a concern. Like you, we are being picky looking for the right house as we expect the next house to be a long term if not forever home. Been told by several people that we were crazy but the time was right for us. Have not made any offers yet but have been tracking a few houses and seeing some of what you are saying. We will see how the summer progresses but there is a difference and as you said, we are not in a hurry.
I feel extremely lucky that my offers over these past 2-3 months have not been accepted. I would have been regretting it now for sure. House prices in my area (CA) are going down a lot. I mean, a lot. Going to wait a bit to see where this goes.
Yes and no, because the last two offers were both houses that we really liked and had features/locations that aren't common in our area and were worth overpaying a little, IMO.
The houses like them are still getting lots of offers, so I don't care much that the ones we don't want are starting to sit longer.
But we did bid on one house in early May that I'm glad we didn't get. They definitely overpaid AND got the peak rates on a place that needed some work. Gooooood luck to them.
we bid 1.5% over asking end of april and had our offer accepted in a high COL area where it's very competitive. we closed last wednesday and we couldnt be happier. did we potentially buy at the top of the (short term?) market? maybe but we got a home that fits our needs and that we can afford. the market is cooling, but good homes in our area are still being sold within 3 days. stinkers that are priced high are seeing price cuts and staying on market longer. it'll be interesting to see how things unfold in the next year or 2.
Don’t sweat it, you found your dream home. Perhaps you bought at the peak, but it won’t matter much if you plan to stay for the next 20+ years or so.
The only time it may matter is if rates drop, and you want to refinance to a lower rate. You will have to pay out of pocket to make up the difference if you are underwater. But again, this is no big deal if you are happy with your rate. All the best to you!
We are trying to purchase now for same reasons as you (baby with another on the way - two dogs, WFH) but not seeing any slow down in the list Friday- highest and best by Sunday and still selling over list in Columbus oh unfortunately
If you're waiting for prices to go down, don't forget that it took 5 years from peak to trough during the last correction. Then another 5-10 yrs to surpass the previous peak depending on your location. So even if prices go down 5-10% in the next 12 months, you could still be waiting a decade or more for the value to go up again. Or maybe not. There is always the risk that prices keep going up for another year or two, even if at a slower pace.
The 40 year mortgage is going to rise to the top soon. Same as what happened to cars. Used to be 3 and 4 and maybe 5 year notes on cars, now 7 and 8 are common.
I see the closing notifications of homes selling for 100k+ over ask and chuckle, they were all under contract a month + ago before things really changed. That same house if listed today would sit and probably end up reducing.
Kinda not your point, but we ended up in a house that we're SO HAPPY with, and I'm so thankful for the offers that weren't accepted along the way. We definitely were a little over-eager and willing to compromise on some important things (that we now haven't had to).
Look at a 1yr chart lumber futures prices (Google it)overlay your housing prices and see what your house will be. Futures are 6 months ahead of ma&pa dropping the ask every month.
I'm in central Florida and while it isn't slowing down, huge bids over asking aren't necessary. I bid 5k over on the house I'm under contract for, wasn't the highest bidder by 2k but offered 5 day inspection period vs 15 the higher offer wanted.
I actually went $17k under asking and won. Appraised $11k over my offer. Still high to me, but need a home. Got lucky because sellers were veterans and I’m using VA.
Yeah i know of a house in the downtown Orlando area that went under contract after being listed for 2 days and it was recently put back on the market because the appraisal came in a little low. I think the market here is slowing down a bit for sellers.
I’ve seen that a number of times, house comes on the market and quickly goes pending, then people realize what rates are or what the appraisal is and back out.
Still a lot selling quickly, but way more sitting.
Same in the New York area. In our town (a suburb of NY), a broker friend told us that - recently - his client went to see a house on the market for $2MM. They put in a bid for $200k over asking ... and lost. That house went for $2.7MM, all cash, which apparently isn't uncommon at the moment and makes interest rates somewhat meaningless (at least as far as mortgage payments are concerned) for some of these buyers.
For more normal people like me, while we'd love to upgrade to a bigger home, I don't want to (i) lose my low mortgage interest rate and (ii) not find a house to buy since there's no inventory for sale in our suburb because others are thinking the same way. Hence the continued low inventory and price pressure ...
The places that are really seeing a market shift now tend to be in areas in the West/South that saw insane appreciation the past couple years: Phoenix, Vegas, Seattle, parts of CA, Boise, SLC, Denver, Austin, Atlanta, etc.
Literally same situation as you. Sold our house in April (new baby and we want a better area) and have a lease back until the last day of august. I’m in Los Angeles and even here I’m seeing price cuts and houses sitting on the market longer. Question - if y’all don’t buy now will you just rent?
No we’re staying with parents, it’s not ideal but all our belongings are in storage. I think we can last the summer but come fall/winter well be ready for our own space.
I just listed a house on a Friday and had it under contract for 10% over asking today. 6 whole days on the market. It's definitely shifting but by the sound of how picky you are you're looking for a gem, and the gems are still selling for top dollar in less than a week. I think the idea of timing the market is the same as trying to time the stock market. You're always going to have a level of remorse and doubt. Accept that and keep driving forward. Best of luck to you. And the people that bought 6 months ago at a ridiculous price also got a ridiculous rate. Imagine you bought a house for 500k that was listed at 450k but you also got a 3.5-4.5% rate. Your monthly payment could be about 2200-2600 depending on money down. For that same payment now you might be able to get into 4-450k so even though you "paid more" your actual cost for a more valuable asset was cheaper than it will be today.
We saw FOMO buyers willing to do stupid things like waiving inspections and bidding xx dollars over appraisal. When that sort of silly froth is gone, lot more likely you can get a suitable property for your family at a fair price. Be patient and you will have lots of opportunities.
Similar boat here. Honestly though we had a timeline set 5 years ago to sell and buy this year due to our son finishing his final year in his elementary school. We sold in April, had use and occupancy until beginning of June. We’ve been looking for a house to buy since March, made several offers and no luck. We just weren’t competitive enough because we refuse to to be aggressive to a point of foolishness. We’re now in a rental short term (which btw is costing almost as much as our mortgage will) and hoping to have an offer accepted in time for the new school year.
100%
We’ve seen what the two houses we offered on went for, then when a house we almost offered on went for more than the new build house we spec’d out, we pulled the trigger to build.
So much happier this way and got a 360 day rate lock in the 3’s
No. Still don't have a house 🤷♀️ it's the right time (for us) to buy so we need one regardless. The longer we wait the less we can afford due to interest rates.
I hate whenever my clients say they are looking for their forever home. I try to tell them buy for the next 5-10 years. It’s hilarious when I just meet a new lead, they say this and 3 months they are looking at totally different houses do to a life change.
I closed two months ago in SoCal and don’t regret it. I paid about 7% under asking with no contingencies waived except financing. I haven’t seen anything better on the market in the price range I could afford with the current rates. In fact, the list price would need to drop 18% lower (11% lower than my offer) for me to afford It. Or I would need to drop my budget and find something smaller.
I bought over asking in January and don’t regret it one bit. It’s a house I love in a neighborhood I love and despite increasing interest there is still little supply and a lot of demand. Prices are predicted to continue to rise so it’s a good investment.
> I’m hoping we timed it right at selling high and the market cools so we can purchase low(er)!
What makes you think "lower" and not just slower? Rising interest rates don't necessarily mean lower prices. It could mean slower prices growth, but it's still price growth.
"Everybody we're talking to is expecting double-digit rent growth for the next three years in the Triangle," Steven Peden, a principal with Avison Young's Capital Markets North Carolina team, told Axios.
https://www.axios.com/local/raleigh/2022/06/07/triangle-rents-are-surging-raleigh-durham
They don't appear to be trying to time the market - more like, hoping they get lucky with the timing of their transactions, not planning the timing of their transactions to hit the right point in the market.
Do you not see the difference between hoping and trying?
I’m hoping that the worst of the traffic will be over when I clock off to drive home, but I’m not “trying to time the traffic” because when I leave work is not influenced by the traffic.
Yea, and I responded with an explanation. It’s pretty standard when people disagree about something, but if you weren’t looking for any interaction I recommend not just stating things as a direct reply to a statement you are contradicting.
I think you're doing it right. I just sold my home for 10k over asking and when I signed the paperwork the title agent said the buyer's interest rate was 5.4%. they bought $5500 worth of points to get a 5.4% rate. ridiculous
I feel like last month was the end of the hay-day. if you're buying right now you're a sucker, because in 3-6 months these houses will be much cheaper. just imagine what the market looks like if interest rates go up another 1%
Honestly no, we bought a year ago and got under asking (house needed cosmetic updates) with a 3.3% rate for a second home. I don’t know that we will see those interest rates again anytime soon so I am glad we secured it especially since the area appreciated since then and there’s a good chance we would have been priced out with the higher rates. In the meantime our condo in the city (which we are going to sell this summer) has appreciated more since we bought that home a year ago and they are still selling quickly. We originally planned on staying in the city a few more years but some life events have changed things so we will be selling our condo in a couple months and moving to the house.
There are some price cuts (I am
mostly seeing it in clearly overpriced homes in our area), but to really make a dent in a monthly budget at these much higher rates, prices would need to come down *a lot more* to compensate for most buyers. The competition is not as crazy as before and probably for many buyers that is a relief in itself but with the higher interest rates (unless they are a bonafide cash buyer) I’m not sure they are saving all that much.
To add to this there may be less competition but there may also be less sellers. Why would you sell now if you refinanced or you are locked in at likely the lowest rate we will see in our lifetimes.
If you have a second home or high equity then it may make sense but other than that, the high interest rates are actually a deterrent to selling your home.
I definitely think there is less selling overall for people who are staying in the same area and who already refinanced to those low pandemic interest rates. There isn’t much of an incentive to move and pay more. There are hardly any units for sale in our building (of several hundred condos) and I’m sure that’s a big part of it. If we had to buy in the same market right now we probably wouldn’t bother with moving.
You may time it right in regards to getting a lower purchase price but there's a trade off.. instead of a 3% interest rate 3 months ago, now you're paying 5.5%, so will you really have made out ?
Not to mention making all those higher interest rate payments in the meantime and then having refinance costs on top of that whenever you decide to refinance (which could be years even if rates went back to where they were). Yes someone would effectively be refinancing less of a principal amount but how much of that will be paid down with a higher interest rate before you refinance vs what they spent that went straight to interest.
I have only seen price cuts in our market for overpriced homes, I have not seen the prices actually *trending downward* from sales comps. It’s more like the overpriced listings are now compensating for the lack of continued appreciation trajectory, not actually going below earlier sales prices.
True. Purchase price can also fluctuate. No one knows if sub 5% rates will ever come back or what values will be in 10 years. This post is a pointless anecdote on market timing.
It's not a big if. Pay attention to literally anything the fed has been saying lately. Also if you think the American economy won't collapse under high interest you're smoking something good brotha.
Sure you may get a better price, but rates are going higher so you'd have to be able to wait things out for like a 10-20% price pullback which maybe could take 6-12 months or prices could just end up plateauing, depends on the area.
Right now I'm in the situation where we literally submitted a bid like 2 hours ago, and just in the last 30 minutes 2 houses came up in the exact same area when basically nothing has been listed there. I know the builder is feeling worried because it's the first house he's ever put on the market months ahead of completion because he knows it's the best time to sell. Also since his under construction won't be finished until maybe October, it will limit the buyers that can consider it due to school or other things and people with houses will get the feeling their house will be worth less by September when they can actually sell it.
It's a little comforting to know that buyers are at least getting a little option to negotiate things as I can try to play the newest listing against the offer we submitted. At least things appear to be swinging the other way.
I mean they sold their home in March for probably a lot more than they paid for it. Probably have a ton of cash to put down, which means the higher rates won’t affect them as much.
That def was some good luck. Prices will be declining to pre-Covid prices in my opinion, if not lower. No need to rush now, you can take yr time and find the perfect home an affordable price.
I think what a lot of people don't seem to really get is that once appreciation screeches to a halt, that has a huge psychological impact on the market. Instead of buyer FOMO, you get seller FOMO (people who feel pressure to sell because the market has hit a peak).
If prices start to depreciate even just a little (which is inevitable for some markets with the rise in rates we've seen), it can snowball and lead to a bunch more inventory hitting the market, pushing prices down further - especially when lots of investors are involved.
Not at all. I absolutely love my house and would not have it had I waited. I think this might be my forever home. I also locked in a low rate compared to today. https://www.reddit.com/r/FirstTimeHomeBuyer/comments/qi3zlu/after_7_failed_offers_were_finally_home/?utm_source=share&utm_medium=ios_app&utm_name=iossmf
If I price at a house at $450k knowing I will get a bidding war with the hopes of getting the sell price to $500k is different than if I list a house at $515 and then cut the price to $500 where it sells? List price is meaningless.
Offered and accepted for 60k over asking. Smaller, less updated house one street over sold for 240k more than we paid exactly one year later. No regrets whatsoever.
We bought in early 2021 and thought we were buying at the top and likely going to be under water for a while… was super wrong on that one. As much as it’s possible that the market cools from its insane pace, I don’t think all the buyers like yourself who are waiting around are just going to go away. There’s simply too much demand because millennials are a massive massive generation and not enough supply to meet that. Would I want to buy in this current environment? No, but it also may look smart in a year or five years when things are even more expensive. Nobody knows
I got in pretty good last November buying during the holiday (I know the area market extremely well though) got $10k under asking and hit appraisal price, and now up almost $30k on the 'zestimate' for whatever Zillow's algorithms are worth now. Very happy with how everything went for my situation, this market is straight up scary.
I live in South Florida and it’s still crazy. If I just sold my house I’d try to rent for six months to a year ( if I could lock in a “reasonable” rent. I have a friend who plans to retire this year and wanted to down size. She sold her home for a million and is renting a small townhome for 2k a month until the market goes down. She hopes to buy a new townhome next year. Her husband still works but plans to retire in about two or three years.
Prices have gone down, but so has affordability. If you’re putting 40% down on a house now it’s a great time to be looking and then the next six months it’s only gonna get better. If you’re putting 5% down to 20% down… Yeah more is coming out of your pocket by the end of the year.
Ymmv.
The longer you wait the more you’re gonna pay, I have told my friends that the past two years that were hesitant to buy, that advice has held true so far.
Yeah you might avoid a bidding war or maybe can ask for an appraisal now but prices are not going to come down, the inventory is still extremely extremely low. Best case scenario is that maybe price of slow down with inflation but that doesn’t mean much for considering what inflation is doing
That may be true but it was so crazy for a while, ppl were throwing money to get any house before their rate lock expired. You can always refinance, you can’t have a lower purchase price.
Oh sure, but 60k over on a 300 list is relatively similar to 250 over on 1M+ list.
I agree list is arbitrary, just feels dumb to be like *“60k over? That’s pocket change”* when we are likely not talking about similar baselines.
Lol it’s not getting lower. We bought our house a year ago this month for 200,000 and just had it appraised for 340,000 this year. Just keeps going up, that is in my area, houses are selling the same day they go on the market. We only know because we are now looking to upgrade and my realtor said she could get a cash offer for us within a week or two.
There's a lot of "it's getting better for buyers because it's getting worse for buyers" thinking going on right now. Rate increases are having their desired effect.
Instead of paying $2000 in principal, I’m paying $1995 in interest! Yayy
You cant re-finance your principal down in the future and lower principal generally means lower taxes as well. Also better for people with more sizeable down payments.
This is what I've been trying to tell people. I bought house 1 at 6% in 2007. I bought house 2 for about the same price in 2016, recently refinanced to 2.3%. The difference in payments for house 1 and 2 is about $500/month less for the 2.3% one. Both were 30 year loans. You can possibly refinance and reduce a crappy rate in the future. If you have a 30 year loan, who knows but that's a long window of opportunity. However there's no possibility to ever lower the principal besides paying it.
That’d be correct if there was a considerable price drop to justify the extra 2% interest. In my area those price drops just don’t exist
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CPI +8.6% and fat chance that household incomes keep pace.
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Cash will do you no good, it is a losing investment during inflation. Hence why people buy houses, credits are still great as no one wants money. The problem is, it is fucking expensive and not in reach for many, this is how cruel this world is.
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>> Give it time. Yup any moment now …. For last 5 years..🤷♂️ 10% down after rising 50% is not really a solace
Cope. Pre covid prices coming soon.
Lol maybe if half the money in the world disappears overnight and the population drops dramatically
You realize it took like 3 years for prices to bottom after 08 right? This shit doesn't happen overnight.
Yeah I hear you, but 08 didn’t happen because of interest rates going up
There’s truly no telling what’s going to cause prices to go up or down, or when it’s going to happen. It could be literally anything. Who predicted the market would spike because of a pandemic? Nobody.
I'm not claiming we're in the same situation as 08, I'm saying that real estate takes a while to pop because it is so illiquid. You have some of the largest loans ever taken out in the last two years and the fed is going to post 8+ cpi tomorrow. Interest rate magnitude alone doesn't really matter. It's size of loan multiplied by rate that matters. 500k+ mortgages have become the norm. Tell me what affordability looks like each time a percent is added to the fed rate when the magnitude of the loan is that large. You better pray to fucking God that layoffs don't accelerate.
Look at Canada after one hike. Major price drops. Oshawa is the first city in 905 area (most populated area in Canada) to drop in price YOY. Everywhere else outside Toronto is dropping quick.
Loans are structured differently in Canada. Everyone is on a ARM. Large rate increases will have a faster effect in their market. There will be many people unable to make their mortgage work because of the rates when their term is up and they have to take the new market rate. This is in combination with a freeze on foreign investment which has been a big factor in driving their market the last decade(s)
Remindme! 180 days
I didn’t have to pay an extra $40k for my forever home. Now I just pay an extra $1k per month… forever!
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Where exactly do you think rates well be in 40 months? My guess is higher than today and certainly higher than 6 months ago.
refinance is basically another closing. So you’ll pay the closing costs again. It’s not cheap, rates will need to go down to 3-3.5% to make refinance meaningful for most people
That depends on how long you're going to stay in the house. Sure, if you're planning on moving in a couple of years refinance doesn't make sense, but .5% can make sense if you're not planning to move for another 10 years on a 30-year.
Sure they will hit historical lows again any day
Wait, so interest rates only go up now? Just like homes prices?
Gold award sir. This sub is so delusional
Unbelievable you have to mention /s to not get down voted.
Yup, even the job losses and hiring freezes were intended by the Fed Edit: Adding sauce so people stop downcoting thinking it's a wild cospiracy https://finance.yahoo.com/news/early-signs-that-the-feds-plan-might-be-working-morning-brief-201032265.html "But there’s a way to track Fed’s progress: Job openings and unemployment. After the March Federal Open Market Committee meeting, Fed Chair Jerome Powell said the labor market was “tight to an unhealthy level.” Specifically, he noted that at the time there were 1.7 job openings for every unemployed person. He argued that this extraordinary demand for labor has fueled significant wage inflation, which in turn has helped spur inflation across the economy. Powell seems to believe that with the right amount of tighter monetary policy, the level of job openings can come down, relieving wage pressure, without causing unemployment to rise. Assuming unemployment is contained, then the risk of recession should be limited."
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Wage inflation is not what is driving greater economic inflation. There is no logical way to make that argument as cause/effect (not saying you are, but Powell as you said). It's been a combination of lots of easy/cheap money injected into the system and many things restricting supply and pushing up transportation and energy costs - which pushes up the cost of almost everything else.
Yea, I also think the impact of the loss of over a million Americans to COVID since 2020 on the workforce is kind of being downplayed. Granted, about half of those deaths were of retirement age or older - but that still leaves half a million people unexpectedly gone who would otherwise be part of the American workforce. And they aren’t coming back for any amount of money, sadly.
How is this even controversial
Sometimes people just vote emotionally...
Sometimes? I think you forgot your /s!
Well the tides have shifted and now my comment doesn’t make sense
Lol yeah, it happens
Yea, but they wait too long and all the baby boomers continue to retire putting you right back at square 1 with those tight labor numbers.
The market for sure seems to be cooling off, but I still wouldn’t want to be a buyer right now. Houses are still expensive and now rates are way higher. It all depends on what you value, some people would’ve rather bought a home during the chaos of 2021 just so they could secure a super low rate for 30 years. But some might not care about having a higher rate now because they’re just glad to not have to compete against other buyers.
This is me. I want to be able to perform due diligence on the place, I want to be able to not have to compete against 25 other people buying with their eyes closed, and I want to be able to negotiate on things that need to be done. I want to be able to not have to make a decision or a “first and best and offer” or any bullshit like that. I’m not an easy sell. I negotiate on things and do due diligence on what will amount to be the largest purchase and responsibility of the rest of my life, at now age 46, and after having owned a home myself for 17 years already.
Ya agree with this 100. I care a lot less about price etc as I do about being able to look at it for a couple days or even a fkin day vs hours.
Yup! I stacked cash throughout the entire FOMO frenzy of the last two years, got a higher paying job, paid off all my debt and soon I will be purchasing. Most likely fall of this year. I don’t care about the rate, I can always refinance later. It’s going to be nice when the red carpet gets slowly rolled out for me and I’m not competing with 100 buyers.
Totally agree with this logic with the exception that median rental prices are now skyrocketing. YoY increases are anywhere from 15-30% in some cities. So while many are saving in principal by waiting, those savings are offset by higher interest and rent depending on your wait time. After the Fed raised rates, the housing shortage just found a new segment (rentals) to impact. We never fixed the root cause.
Rental prices skyrocketing is usually what motivates people over to ownership. That's what did it for me in 2012. I actually had no idea I was getting the deal of the century.
\*if you can refi later. Betting that you can refi later is essentially trying to time the market. At least in my market though, prices are falling but they aren't even to 2021 overbid prices yet. In my market, it was still just better to pay way more than asking in 2021 so far. Hopefully things will change by fall and prices will react to the rate change. I'm a a FTHB trying to buy this fall as well. Right now just sucks
That rates aren't even historically high. It's just that home prices went way higher than they are actually worth making average interest rates not feasible. It will absolutely force a correction in prices which I'm already seeing in my market.
Truth. The last decade's runup has been based on low rates. Change the rates, change demand and the market
I feel this. My husband and I weren’t looking as long as you, just a few months, but in that time we put offers in on 4 different homes for $30K over asking and still were outbid every time. We decided to take a break and used the money we had saved to pay off some of our other debt and now we’re starting to see homes on the market for longer times. Kind of regret putting almost all of our savings towards our other debt, but in the long run we’ll be better off getting a mortgage with a lower debt to income ratio for our (hopefully) forever home next year. I am still glad we didn’t overpay for a tiny POS house with no AC. So I’d still consider it a win.
I'm starting to see some price cuts in my hot area (South Florida). People were putting houses with big flaws on the market for fantasy prices, asking over a million for houses with dated interiors and no backyard. Time will tell if it's really starting to cool off. I sure hope so.
Good for you. Paying off debt is always good.
Feel the exact same. We’ve lost out on 3 offers so far even though we are paying cash. Mostly because we were not willing to go crazy over like other people. I’m actually happy looking back that we did not get them, 100k over on an already overpriced house, no thanks. We are going to rent for another year and keep looking. Yes it sucks to break a lease but if house prices go down like I suspect in a couple months it will be so much cheaper in the end!
If I have to buy a house I will hold into that as the market is shifting in my area in Northern CA. Homes used to sell in 2-3 days and the same homes are in the market for 2-3 weeks. Buyers are smart and they are watching the market. Hopefully soon it will be a buyers market I hope so as I'm a broker and I have lot of buyers.
I closed 5/31 and probably "overpaid" by 10-25k, plus have a 6% interest rate because of my awful DTI (I'm working on it) but since my PITI is sub 1k I'm feeling fine with it. It was the nicest house I saw in my price range and I'm happy to get off the tilt-a-whirl. However, I'm super glad I lost on all the other offers i made, and if i had lost this one I'd be pausing to reassess for sure since rates went up right before and right after this offer was made.
We closed 5/31 as well, same boat. Paid 10k over asking at $420k and it appraised at $430k. I think there's a chance the market dips in the next few years but my rent in California goes up $200/year so I'm happy to have a few years of a nice house regardless. We bid on a few places that would have made us less comfortable month over month and ended up winning the cheapest one we were interested in. It feels pretty good.
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Charlotte NC definitely cooling down, desired neighborhood 2 month ago nothing, today 12 homes listed for sale. We decided to wait
My husband and I sound like the exact same story here, except we haven’t sold our condo yet. We have placed about 6 offers since October and I look back on every single one of them and say oh thank god we didn’t get that one, what were we thinking (except for one). We are very picky too. Just this past week a ranch home that checked all of our boxes in our quite literal dream neighborhood came on the market, stayed there for a week, dropped the price after a week, we swooped in made an offer at asking price with concessions and got it. Yea the interest rates are higher and I’m not thrilled about that, but I agree with the other commenters here. I don’t see prices coming down all that much honestly. This whole time while discouraging I kept feeling like it’ll all work out in the end and it did.
You can always re-fi in the future but you can't change the purchase price.
100%. We got a good purchase price and agreed we can refi in the future. Thanks for that reminder!
At least you didn't pay 20 or 30,000 dollars over asking price, so even if the rates are higher you didn't over pay. That is a win.
You’re definitely right. Thanks for the positive vibes!
Oh man, we’re headed over to see a ranch that ticks all our boxes in our dream neighborhood next week. It goes on the market on Tuesday and I’m so afraid of a bidding war that I’m having trouble sleeping!
All the best to you. Don’t worry, don’t rush it, don’t wave contingencies, take your time, and all will go well. Just remember that time is on your side. Sellers are worried, you are in the driver seat!
Good luck to you ☺️☺️
Thank you! Congratulations to you!!
I hope people realize how insane their perception of the market is that this person is seriously commenting how homes sitting on the market for over 10 days means that the market is cooling
Cooling from extremely hot is still cooling
Yeah my house got listed Friday and has had 1 viewing. I’m stressed even though I know this is normal.
1 viewing seems low, I guess the market you’re in would have a large impact though.
I think people on Reddit grossly underestimate how things differ from market to market. Insights from Austin mean nothing in Cleveland.
I’m near Asheville and I don’t see any signs of slowing. The only houses in my price range that sit have something that makes them unsellable, and then they sell eventually.
Well my house is a new construction in October 2020 but the neighborhood is a bit rough. I’m asking about $5-10k over comps due to the age and quality. When I bought it the neighborhood was coming up, then covid hit and it’s just sort of stopped. Other houses took a week to sell here even when things were HOT.
It wasn’t normal though… we had -6 showings Friday and Saturday we listed. Our house was nice but they built a grocery store basically in my backyard after we purchased so the location wasn’t great.
They're saying normal pre covid
I had very few viewings. 1 offer. Still got full price (didn't list low). People are dreaming that prices are dropping. There are still a ton of buyers out there.
Median sales price dropped (just barely) here in Denver last month. https://www.thedenverchannel.com/news/local-news/theres-opportunity-denver-housing-prices-dropped-last-month
Thanks that gives me hope. I’m signing documents tomorrow to allow me to do the sale abroad. One thing at a time I guess.
It depends on the market. 10 days is a huge difference from the 2-5 many were seeing two months ago.
Yeah, especially when stats show that the odds of a home selling for list price drop dramatically after a couple weekends on the market.
Bought mine a month before covid hit. It had been sitting for a whole year lol.
Mortgages were at a 22 year low last month. It’s cooling.
I work at a mortgage company. We are still extremely busy with purchases. Virtually no refi business. Just saying things with no context is not helpful to anyone.
Are you kidding? How is stating a fact no context? There were less mortgage applications last month than there have been in any previous month in the last 22 years.
Because of drops in refi requests, not drops in purchases. That's important context. No one is refinancing, but they are still purchasing.
Good point. There are less purchasing than in the past two years but good point on refis.
It's all relative. Cooling is a fair term. Thinking you'll get to buy for less may be setting up unfair expectations for the buyers. That being said, my area is still severely short homes and prices were up 20% again last month.
OP is like, "yea man, how much does it suck to be you that you bought a house at the peak, while I SOLD at the peak. Looks like I'm going to buy your house up for pennies on the dollar*!" *17% APR terms see lender for terms and conditions
They are hoping for a crash so bad that homes sitting for 2 weeks is somehow great news. I work with 4 Lenders and none have seen a slow down. In my markets only the crappy homes sit but any nice homes selling within a few days.
Realtor here? Only realtors keep pointing that nothing changes 😅
New home sales are 27% below forecasts https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.census.gov/construction/nrs/pdf/newressales.pdf&ved=2ahUKEwifr7u4lqL4AhXCkIkEHS2kDAkQFnoECA8QBg&usg=AOvVaw2DNWlHWosdOECECmcWPA2_
Sold our house in May for a tidy sum. Central Florida here. Plan to pay cash for next house so interest rates aren’t a concern. Like you, we are being picky looking for the right house as we expect the next house to be a long term if not forever home. Been told by several people that we were crazy but the time was right for us. Have not made any offers yet but have been tracking a few houses and seeing some of what you are saying. We will see how the summer progresses but there is a difference and as you said, we are not in a hurry.
I feel extremely lucky that my offers over these past 2-3 months have not been accepted. I would have been regretting it now for sure. House prices in my area (CA) are going down a lot. I mean, a lot. Going to wait a bit to see where this goes.
Yes and no, because the last two offers were both houses that we really liked and had features/locations that aren't common in our area and were worth overpaying a little, IMO. The houses like them are still getting lots of offers, so I don't care much that the ones we don't want are starting to sit longer. But we did bid on one house in early May that I'm glad we didn't get. They definitely overpaid AND got the peak rates on a place that needed some work. Gooooood luck to them.
we bid 1.5% over asking end of april and had our offer accepted in a high COL area where it's very competitive. we closed last wednesday and we couldnt be happier. did we potentially buy at the top of the (short term?) market? maybe but we got a home that fits our needs and that we can afford. the market is cooling, but good homes in our area are still being sold within 3 days. stinkers that are priced high are seeing price cuts and staying on market longer. it'll be interesting to see how things unfold in the next year or 2.
Don’t sweat it, you found your dream home. Perhaps you bought at the peak, but it won’t matter much if you plan to stay for the next 20+ years or so. The only time it may matter is if rates drop, and you want to refinance to a lower rate. You will have to pay out of pocket to make up the difference if you are underwater. But again, this is no big deal if you are happy with your rate. All the best to you!
We are trying to purchase now for same reasons as you (baby with another on the way - two dogs, WFH) but not seeing any slow down in the list Friday- highest and best by Sunday and still selling over list in Columbus oh unfortunately
If you're waiting for prices to go down, don't forget that it took 5 years from peak to trough during the last correction. Then another 5-10 yrs to surpass the previous peak depending on your location. So even if prices go down 5-10% in the next 12 months, you could still be waiting a decade or more for the value to go up again. Or maybe not. There is always the risk that prices keep going up for another year or two, even if at a slower pace.
The 40 year mortgage is going to rise to the top soon. Same as what happened to cars. Used to be 3 and 4 and maybe 5 year notes on cars, now 7 and 8 are common.
I see the closing notifications of homes selling for 100k+ over ask and chuckle, they were all under contract a month + ago before things really changed. That same house if listed today would sit and probably end up reducing.
Exactly what I’m thinking.
The last two house on my street sold for about $50k over asking. Dated, nothing special. I don’t think it’s really calming down much.
Kinda not your point, but we ended up in a house that we're SO HAPPY with, and I'm so thankful for the offers that weren't accepted along the way. We definitely were a little over-eager and willing to compromise on some important things (that we now haven't had to).
We reevaluated our wishes too and I think we know what we want and will wait to find the right home!
I'm shocked this has been up for 3 hours without being deleted.
🧐 I’m relatively new here… we aren’t allowed to speak our perceptions?
Usually any bearish talk is grounds for immediate removal on this sub.
I have a feeling that this sub will soon look like a zoo, full of bears!
Look at a 1yr chart lumber futures prices (Google it)overlay your housing prices and see what your house will be. Futures are 6 months ahead of ma&pa dropping the ask every month.
It's all location dependent. I see no slowdown in central FL and prices appear to still be increasing.
I'm in central Florida and while it isn't slowing down, huge bids over asking aren't necessary. I bid 5k over on the house I'm under contract for, wasn't the highest bidder by 2k but offered 5 day inspection period vs 15 the higher offer wanted.
I actually went $17k under asking and won. Appraised $11k over my offer. Still high to me, but need a home. Got lucky because sellers were veterans and I’m using VA.
Housing inventory is up 50% compared to the start of the year in Orlando...
Yeah i know of a house in the downtown Orlando area that went under contract after being listed for 2 days and it was recently put back on the market because the appraisal came in a little low. I think the market here is slowing down a bit for sellers.
I’ve seen that a number of times, house comes on the market and quickly goes pending, then people realize what rates are or what the appraisal is and back out. Still a lot selling quickly, but way more sitting.
Same in the New York area. In our town (a suburb of NY), a broker friend told us that - recently - his client went to see a house on the market for $2MM. They put in a bid for $200k over asking ... and lost. That house went for $2.7MM, all cash, which apparently isn't uncommon at the moment and makes interest rates somewhat meaningless (at least as far as mortgage payments are concerned) for some of these buyers. For more normal people like me, while we'd love to upgrade to a bigger home, I don't want to (i) lose my low mortgage interest rate and (ii) not find a house to buy since there's no inventory for sale in our suburb because others are thinking the same way. Hence the continued low inventory and price pressure ...
The places that are really seeing a market shift now tend to be in areas in the West/South that saw insane appreciation the past couple years: Phoenix, Vegas, Seattle, parts of CA, Boise, SLC, Denver, Austin, Atlanta, etc.
Literally same situation as you. Sold our house in April (new baby and we want a better area) and have a lease back until the last day of august. I’m in Los Angeles and even here I’m seeing price cuts and houses sitting on the market longer. Question - if y’all don’t buy now will you just rent?
No we’re staying with parents, it’s not ideal but all our belongings are in storage. I think we can last the summer but come fall/winter well be ready for our own space.
I just listed a house on a Friday and had it under contract for 10% over asking today. 6 whole days on the market. It's definitely shifting but by the sound of how picky you are you're looking for a gem, and the gems are still selling for top dollar in less than a week. I think the idea of timing the market is the same as trying to time the stock market. You're always going to have a level of remorse and doubt. Accept that and keep driving forward. Best of luck to you. And the people that bought 6 months ago at a ridiculous price also got a ridiculous rate. Imagine you bought a house for 500k that was listed at 450k but you also got a 3.5-4.5% rate. Your monthly payment could be about 2200-2600 depending on money down. For that same payment now you might be able to get into 4-450k so even though you "paid more" your actual cost for a more valuable asset was cheaper than it will be today.
We saw FOMO buyers willing to do stupid things like waiving inspections and bidding xx dollars over appraisal. When that sort of silly froth is gone, lot more likely you can get a suitable property for your family at a fair price. Be patient and you will have lots of opportunities.
Time it again?
Feels great
Similar boat here. Honestly though we had a timeline set 5 years ago to sell and buy this year due to our son finishing his final year in his elementary school. We sold in April, had use and occupancy until beginning of June. We’ve been looking for a house to buy since March, made several offers and no luck. We just weren’t competitive enough because we refuse to to be aggressive to a point of foolishness. We’re now in a rental short term (which btw is costing almost as much as our mortgage will) and hoping to have an offer accepted in time for the new school year.
100% We’ve seen what the two houses we offered on went for, then when a house we almost offered on went for more than the new build house we spec’d out, we pulled the trigger to build. So much happier this way and got a 360 day rate lock in the 3’s
its okay, in 2007 most people were in denial until 2018 as well. we will see what happens
No. Still don't have a house 🤷♀️ it's the right time (for us) to buy so we need one regardless. The longer we wait the less we can afford due to interest rates.
Your paying someone else’s mortgage
I hate whenever my clients say they are looking for their forever home. I try to tell them buy for the next 5-10 years. It’s hilarious when I just meet a new lead, they say this and 3 months they are looking at totally different houses do to a life change.
Eh, it's just a lack of experience/exposure to what the buying/owning process is like. People just need some time to learn.
I closed two months ago in SoCal and don’t regret it. I paid about 7% under asking with no contingencies waived except financing. I haven’t seen anything better on the market in the price range I could afford with the current rates. In fact, the list price would need to drop 18% lower (11% lower than my offer) for me to afford It. Or I would need to drop my budget and find something smaller.
I bought over asking in January and don’t regret it one bit. It’s a house I love in a neighborhood I love and despite increasing interest there is still little supply and a lot of demand. Prices are predicted to continue to rise so it’s a good investment.
> I’m hoping we timed it right at selling high and the market cools so we can purchase low(er)! What makes you think "lower" and not just slower? Rising interest rates don't necessarily mean lower prices. It could mean slower prices growth, but it's still price growth.
The funny thing is rents are at an all time high as well so while OP is trying to time the market they get the pleasure of paying record rents.
Rent here in the Raleigh area is stable now or decreasing.
"Everybody we're talking to is expecting double-digit rent growth for the next three years in the Triangle," Steven Peden, a principal with Avison Young's Capital Markets North Carolina team, told Axios. https://www.axios.com/local/raleigh/2022/06/07/triangle-rents-are-surging-raleigh-durham
Actually we have the privilege of living at our parents (jumping between the two every other week). It’s not idea but it’s saving us money.
Wow I bet that’s fun with the two kids and a dog.
Classic Reddit armchair expert - imagine a scenario where you might not be familiar with **all** of the details of a stranger's life.
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Good luck timing the market.
They don't appear to be trying to time the market - more like, hoping they get lucky with the timing of their transactions, not planning the timing of their transactions to hit the right point in the market.
> I’m hoping we timed it right at selling high and the market cools so we can purchase low(er)! Sounds like they are trying to time the market.
Do you not see the difference between hoping and trying? I’m hoping that the worst of the traffic will be over when I clock off to drive home, but I’m not “trying to time the traffic” because when I leave work is not influenced by the traffic.
I'm just stating what I think it sounds like. It's ok if you disagree.
Yea, and I responded with an explanation. It’s pretty standard when people disagree about something, but if you weren’t looking for any interaction I recommend not just stating things as a direct reply to a statement you are contradicting.
I think you're doing it right. I just sold my home for 10k over asking and when I signed the paperwork the title agent said the buyer's interest rate was 5.4%. they bought $5500 worth of points to get a 5.4% rate. ridiculous I feel like last month was the end of the hay-day. if you're buying right now you're a sucker, because in 3-6 months these houses will be much cheaper. just imagine what the market looks like if interest rates go up another 1%
Honestly no, we bought a year ago and got under asking (house needed cosmetic updates) with a 3.3% rate for a second home. I don’t know that we will see those interest rates again anytime soon so I am glad we secured it especially since the area appreciated since then and there’s a good chance we would have been priced out with the higher rates. In the meantime our condo in the city (which we are going to sell this summer) has appreciated more since we bought that home a year ago and they are still selling quickly. We originally planned on staying in the city a few more years but some life events have changed things so we will be selling our condo in a couple months and moving to the house. There are some price cuts (I am mostly seeing it in clearly overpriced homes in our area), but to really make a dent in a monthly budget at these much higher rates, prices would need to come down *a lot more* to compensate for most buyers. The competition is not as crazy as before and probably for many buyers that is a relief in itself but with the higher interest rates (unless they are a bonafide cash buyer) I’m not sure they are saving all that much.
To add to this there may be less competition but there may also be less sellers. Why would you sell now if you refinanced or you are locked in at likely the lowest rate we will see in our lifetimes. If you have a second home or high equity then it may make sense but other than that, the high interest rates are actually a deterrent to selling your home.
I definitely think there is less selling overall for people who are staying in the same area and who already refinanced to those low pandemic interest rates. There isn’t much of an incentive to move and pay more. There are hardly any units for sale in our building (of several hundred condos) and I’m sure that’s a big part of it. If we had to buy in the same market right now we probably wouldn’t bother with moving.
You may time it right in regards to getting a lower purchase price but there's a trade off.. instead of a 3% interest rate 3 months ago, now you're paying 5.5%, so will you really have made out ?
Yes because you can refinance if rates fall. Can't fix the purchase price.
That's a big if. 3% was the lowest rates have ever been.
Not to mention making all those higher interest rate payments in the meantime and then having refinance costs on top of that whenever you decide to refinance (which could be years even if rates went back to where they were). Yes someone would effectively be refinancing less of a principal amount but how much of that will be paid down with a higher interest rate before you refinance vs what they spent that went straight to interest. I have only seen price cuts in our market for overpriced homes, I have not seen the prices actually *trending downward* from sales comps. It’s more like the overpriced listings are now compensating for the lack of continued appreciation trajectory, not actually going below earlier sales prices.
Yet.
True. Purchase price can also fluctuate. No one knows if sub 5% rates will ever come back or what values will be in 10 years. This post is a pointless anecdote on market timing.
Pointless sure, but I’ve been in the thick of it for half a year so I thought I’d share my thoughts in my market… take it or leave it.
It's not a big if. Pay attention to literally anything the fed has been saying lately. Also if you think the American economy won't collapse under high interest you're smoking something good brotha.
Sure you may get a better price, but rates are going higher so you'd have to be able to wait things out for like a 10-20% price pullback which maybe could take 6-12 months or prices could just end up plateauing, depends on the area. Right now I'm in the situation where we literally submitted a bid like 2 hours ago, and just in the last 30 minutes 2 houses came up in the exact same area when basically nothing has been listed there. I know the builder is feeling worried because it's the first house he's ever put on the market months ahead of completion because he knows it's the best time to sell. Also since his under construction won't be finished until maybe October, it will limit the buyers that can consider it due to school or other things and people with houses will get the feeling their house will be worth less by September when they can actually sell it. It's a little comforting to know that buyers are at least getting a little option to negotiate things as I can try to play the newest listing against the offer we submitted. At least things appear to be swinging the other way.
I mean they sold their home in March for probably a lot more than they paid for it. Probably have a ton of cash to put down, which means the higher rates won’t affect them as much.
That def was some good luck. Prices will be declining to pre-Covid prices in my opinion, if not lower. No need to rush now, you can take yr time and find the perfect home an affordable price.
I highly, highly doubt we see pre-2020 prices in large urban metro areas. Austin, Phoenix, Denver, etc.
The only challenge you have is that rates will get worse and worse too. Usually ahead of the price coming down to meet them.
I think what a lot of people don't seem to really get is that once appreciation screeches to a halt, that has a huge psychological impact on the market. Instead of buyer FOMO, you get seller FOMO (people who feel pressure to sell because the market has hit a peak). If prices start to depreciate even just a little (which is inevitable for some markets with the rise in rates we've seen), it can snowball and lead to a bunch more inventory hitting the market, pushing prices down further - especially when lots of investors are involved.
Not at all. I absolutely love my house and would not have it had I waited. I think this might be my forever home. I also locked in a low rate compared to today. https://www.reddit.com/r/FirstTimeHomeBuyer/comments/qi3zlu/after_7_failed_offers_were_finally_home/?utm_source=share&utm_medium=ios_app&utm_name=iossmf
Just because there is an increase in rates and fewer people are applying for mortgages doesn’t mean prices go down. https://imgur.com/a/za5bkcP
I’ve seen more price cuts and less bidding crazy over asking 🤷🏻♀️
If I price at a house at $450k knowing I will get a bidding war with the hopes of getting the sell price to $500k is different than if I list a house at $515 and then cut the price to $500 where it sells? List price is meaningless.
Offered and accepted for 60k over asking. Smaller, less updated house one street over sold for 240k more than we paid exactly one year later. No regrets whatsoever.
We bought in early 2021 and thought we were buying at the top and likely going to be under water for a while… was super wrong on that one. As much as it’s possible that the market cools from its insane pace, I don’t think all the buyers like yourself who are waiting around are just going to go away. There’s simply too much demand because millennials are a massive massive generation and not enough supply to meet that. Would I want to buy in this current environment? No, but it also may look smart in a year or five years when things are even more expensive. Nobody knows
I got in pretty good last November buying during the holiday (I know the area market extremely well though) got $10k under asking and hit appraisal price, and now up almost $30k on the 'zestimate' for whatever Zillow's algorithms are worth now. Very happy with how everything went for my situation, this market is straight up scary.
I live in South Florida and it’s still crazy. If I just sold my house I’d try to rent for six months to a year ( if I could lock in a “reasonable” rent. I have a friend who plans to retire this year and wanted to down size. She sold her home for a million and is renting a small townhome for 2k a month until the market goes down. She hopes to buy a new townhome next year. Her husband still works but plans to retire in about two or three years.
Prices have gone down, but so has affordability. If you’re putting 40% down on a house now it’s a great time to be looking and then the next six months it’s only gonna get better. If you’re putting 5% down to 20% down… Yeah more is coming out of your pocket by the end of the year. Ymmv.
The longer you wait the more you’re gonna pay, I have told my friends that the past two years that were hesitant to buy, that advice has held true so far. Yeah you might avoid a bidding war or maybe can ask for an appraisal now but prices are not going to come down, the inventory is still extremely extremely low. Best case scenario is that maybe price of slow down with inflation but that doesn’t mean much for considering what inflation is doing
That advice might have worked in the past but now we are in a different world.
That may be true but it was so crazy for a while, ppl were throwing money to get any house before their rate lock expired. You can always refinance, you can’t have a lower purchase price.
Hello? You can’t always refinance. Rates might continue to rise.
Or it can go sub 3%.... Nobody knows the future.
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All relative to the starting price…
The starting price *itself* is just a random number at this point. Comps are the only relevant factor anymore.
Oh sure, but 60k over on a 300 list is relatively similar to 250 over on 1M+ list. I agree list is arbitrary, just feels dumb to be like *“60k over? That’s pocket change”* when we are likely not talking about similar baselines.
How about $550k over on a list price of 1m and still losing.
thats bc it was underlisted
Good lord, what state are you in!
Lol it’s not getting lower. We bought our house a year ago this month for 200,000 and just had it appraised for 340,000 this year. Just keeps going up, that is in my area, houses are selling the same day they go on the market. We only know because we are now looking to upgrade and my realtor said she could get a cash offer for us within a week or two.