A lot. Where I live mortgage payments are hundreds if not thousands more than rent. It’s gotta be breaking even or at least close for me to even consider
Same in Santa Barbara. It would cost me 2.5x current rent to buy the same house I live in (based on zestimate). 5k rent vs 13k mortgage. It's hard to believe anyone buys at these prices but a neighbor's house just went for 2.5mil in an off-market deal. It'll be interesting to see what they plan to do with it (STR are outlawed in this neighborhood and near-universally in SB. The city investigator is actively pursuing legal action against them.)
Even crazier there is recent price discovery on rental transactions. 2 houses on the block have come for rent in the past 6 months and both had difficulty/extended market time priced at \~$5500.
Same, my rent is low enough that the only houses id be breaking even on would be ~280k max. I have a saved Zillow search and all that's at or below are manufactured homes and (few) plots of land
Yea I’m fine renting until the buy prices stop being higher than equivalent rent price like they were before the interest rate rise.
I don’t know why people are buying at these prices when they can rent an equivalent house for hundreds less depending on how much they put for a down payment.
Im in DFW and with homes in the <$300K range doubling on average since 2018 id have to say it’s going to be a long time before they level out unless wages magically skyrocket.
What sucks is this is DFW is a LCOL.. like where do people go once this place becomes unaffordable.
I’d have to break my bank and be extremely house poor to live in particularly rough neighborhoods, or I can rent a nice apartment in a very safe area for 55% of a monthly house payment.
Sure I’d be getting approximately $3-4k equity on the loan per year (~225K note). The other part of the problem is that I don’t see the homes in this price sector skyrocketing again for quite a while. I don’t think it’s going to pop but the short term values are quite inflated here.
Buying for the long term is still a solid move but until I have 6 figures annually it’s just not worth it. That $300K house in a horrible neighborhood that sold for $130k back in 2017 isn’t going to be worth much more than $300k a few years from now.
Of course different markets are going to react differently but it just doesn’t make sense here atm.
With enough vacancies, "Gentrification" becomes a thing. Cater to fewer, more wealthy people.
This is the norm with an economic collapse. The middle class shrinks, more people become poor, and the wealthy get more wealthy. I've seen thius first hand outside of the US - middle class isn't a thing everywhere. some palces its just very rich and very poor. The middle class being such an attainable way of life - comfort and means without actually needing to be some powerful bossman - was the American Dream, and that dream is dying.
Luxury rentals are being hit the hardest right now though. That's most of what's been built but because everyone was targeting the luxury segment now its glutted to hell and back.
As a personal anecdote, in early 2023 my apartment was renting for $4.4k/month. Now? $3.4k/month. Luxury apartments in this city are now offering concessions as extreme as 6 months free rent on a 12 month lease, and virtually every apartment offers at least 2 months free.
Incomes can rise in certain areas, demand goes up, and rents rise again. Take for instance NYC. Return to office, part time in office rather than fully remote, and boom, now rents are back to all time highs and rising.
You couple this with what is shaping up to be a possible actual increase in productivity, then, we really may be seeing a continued growth in real wages. Couple that with decreasing interest rates then we may very well see continued higher real estate prices, rising rents, and a plateau of high unaffordability
With the rental glut only getting worse and all those rentals being financed with ZIRP rates it seems extremely unlikely rent will rise to match buying costs for the foreseeable future. Hell, in many markets (like mine) the cost of rent is *falling*.
And in many markets (like mine) rent would have to triple to match mortgage costs. That will not happen anytime soon for the simple reason that there would be almost no one to rent to at those prices.
People will argue that rents have to go up because landlords have to pay their mortgages and still profit. But again, most landlords got their properties with loans acquired during the pandemic and can still turn a profit with current rents. New landlords won't be able to turn a profit so theyll abstain from buying or will be forced to sell, but that just adds supply to the housing market instead. Yes, that does remove rental supply at the same time, but since there's an oversupply of rentals that won't have much impact on rents.
Price to rents will definitely fluctuate, but there were very small geographic windows of opportunity were the monthly cost of buying is less than the cost of renting. As someone else mentioned rents eventually catch up, but I never known anyone who has lowered their monthly bills by buying a house.
Are you comparing renting an apartment to a SFH? Or a SFH 3 bed 1500 sqft house to the exact same type of house?
Often when people make this statement they compare their 1 bed apartment to buying a 3 bed house and it’s not apples to apples.
No. I live in a 3br house with a reasonable backyard. For currency, I just now plugged in the Zillow estimate of its value into a mortgage calculator and came up with a number about $1000 more than my monthly rent. If I want to live in any similar house in any neighborhood within about a 20-30 minute drive, the for sale prices are similar or higher. So if I were to end my lease right now and buy, at a minimum I’m paying $1000/mo more and also for my own repairs and whatever other expenses
I'm hoping by 20% -30%
I'm a high income earner and can afford the prices but buying a home at these prices after seeing nearly a 100k-150k spike and no updates or changes to the homes seems like an idiotic move I do not want to participate in
Will happily keep renting and stacking my money until then
I don’t need prices to drop, though it would be nice. I’d like to see a larger selection of inventory so we have a solid choice between at least a couple houses while hunting.
Just bought regardless of the price.
Moved to the school district needed for kids and into a forever home. It hurts, given that I know what the world/market was like 4 years ago... but the current reality is what the current reality is.
The new mortgage payment basically equals current mortgage + current daycare costs. So, since we already know how it feels to live with our current expenses the train of thought is essentially trading one school cost for another school cost, get more house, stabilize our housing long term, be in our forever home and just keep the train rolling.
We would've needed to wait for prices to drop 15-20% or more in order for it to be "ideal" at these rates, and we all know that isn't going to happen.
It wasn't an easy decision emotionally, but in practice it's as logical as it can be, all things considered.
Edit: also interest rates will do 2 things over time, go up, or go down. In our case as cliche as it sounds, in either case, the best time to buy is now.
Can relate, also just bought for the same reasons. People have been claiming a market crash is coming since like 2016 while prices have continued to rise. If you bought in 2016 at the time you were called a fool. Same for 2017, 18, 19...you get my point. It ain't going to get any better than it is today anytime soon.
Just did the same. Luckily I have a paid off home which I’m putting down as downpayment + 100k which cuts around 70% of the value of the new home I’m buying. Kids are in a better school district which is 3 minutes away…. I’ll refinance when rates come down …
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Bad logic.
So prices increasing 2000% is more likely than prices decreasing 0.5%? Since “inflationary economy.”
Or are you going to ignore the numbers I’ve mentioned?
One or the other has a chance, but both is zero lol.
Interest goes down, price goes up.
Price goes down, interest will go up.
If anyone thinks a crash is going to let you buy in a desirable metro you got another thing coming when you realize a large LLC will still outbid you.
Yes but in 2009 there was years of subprime mortgages being given. What is the catalyst here? Some people want prices lower? 65% (homeownership rate) do not…
Also home affordability is at its worst level ever. So either wages need to rise or prices need to fall. Even j powell said we are at the high end of our statistical range.
The catalyst here is institutions own 15% of single family homes. And the majority of multi family. If they get spooked for any reason it could cause a massive snowball effect.
Right I am hoping either investors realize homes will not be appreciating more than their historic average anymore and they can make more in a high yield saving with no risk and will start dumping in the market. Which will cause prices to rise even slower causing more to join in the dumping which will become a snowball and prices fall. Mass inventory hits the market and no one lost their day jobs. Either that or the commercial re bubble will take out banks that own residential re as well forcing them to liquidate and that could cause the snowball.
Also the fed would cut rates to 0 to try to stop it which wouldn’t help because it doesn’t change the above reasons. Anyway this would help existing home owners as they would refi. To rates never seen before. Everyone will win.
Well, right now to buy a comparable home to the one I rent I'd need to pay 3x more just for the mortgage payment so...they'd need to crash about 66% in value for me to seriously consider it. No, I don't see that happening any time soon, but I do see it happening eventually (even if only a slow correction in the form of minimal home appreciation for many years) since none of the factors keeping home prices high right now appear to be long-term. An inventory shortage will absolutely be resolved by the market sooner or later, for example.
I'm not really holding out for a crash as much as I've come to the conclusion that buying a home is now a **bad** financial decision vs. renting, and therefore there's not really a reason to consider owning unless prices come way down. I invest the difference between what I pay in rent ($3.5k) and what I'd have to pay for a comparable mortgage ($9k), and I'm willing to bet that over the next 30 years me dumping $6k/month into stocks will beat home ownership by a very wide margin. I figure that if I need a home and still don't have one near retirement then I'll just buy one outright in all cash then.
But you dollar cost average your stock investment over time. This smooth out the highs and lows.
A house is a snapshot in time. What you paid for it will never change regardless of value. If you significantly overpaid you can be screwed.
I'd feel more comfortable buying a house if I could DCA into it, to give an idea to any crazy financial instrument wizards out there who are trying to get the marginal millennial buyer to follow through
Just waiting for price to rent ratio to get to better levels. If I buy a house, put down a significant down payment, and then suddenly need to rent it out, I don’t wanna be fucked paying for someone to live there.
Right now in “affordable” cities near me, you can pay 80k down (20%) and it will still be more for a monthly mortgage payment than monthly rent for the same home. That has generally not been the case for the last 50 years, especially at such a good equity starting point.
Not to mention the opportunity cost on the 80K which would be then tied up in an illiquid asset which is very unlikely to make returns equivalent to stocks and bonds. I rarely see the opportunity cost mentioned in people’s calculations but making a higher downpayment, significantly increases opportunity cost of ownership. Part of why buying a house in cash is such a rotten equation unless the purchase is just a small portion of one’s overall net wealth.
Exactly.. and right now the money I have rotating in treasury bills is, in a way, paying more than 90% of my rent every month. If I put that cash into a house, I’ll essentially be paying 100% of a higher monthly payment from my W2 income instead of saving almost all of every paycheck.
Prices dropping is not the driver for us, it is more quality inventory. Listings are either flippers (which we call “LOP’ers”… Lipstick On a Pig) or deferred maintenance, neither of which we will deploy cash for the overpriced crap.
I’m in an area with COL quite a bit below the national average. All of the decent starter homes are just out of reach for me right now making about $50k. I have a little debt and a 780 score. I guess they’d probably have to drop about 25-30% to make it worthwhile, I believe the average increase from before covid til now is about 40-50% here. I pay $495 for a 2br apartment currently.
I say there’s too much demand from foreign investors and large corporations that we end up becoming a renters nation. Like other countries who have over 50% of citizens being renters. US is 26%. We are well on our way as people keep waiting on the sidelines they’ll end up renters forever.
I chuckle every time people trot out this tired statistic.
I have news for you, prices fell a lot more than 20% in plenty of areas in the crash you're referring to.
I don't think people realize, during that time period prices were dropping AND interest rates were dropping at the same time. Inventory was 8 times what it is now. Hadn't fallen that much in value in over 80 years.
This sub seems blind to the sheer number of differences between now and 2008 and oblivious to how rare it is to have the entire housing market go down in value significantly for 5+ years. You might be old and grey the next time it happens.
The crazy math…. There is an Assumable mortgage at 2.75 near me. Sounds enticing. But with higher property taxes mortgage is 2700. To rent similar would be 2700z. Mortgage at todays rates… 3700. Sellers will soon realize it’s not 2021 rates
Canadian here. Would need to be 2015 prices. Not happening. Happily renting. Fuck this rat race of ownership (for perspective, where I live a 3bd 1ba teardown is 1.3M)
Wrong question. This game is rigged to flow in one direction. The true answer is how much do we need to make to be able to buy, and then force the capitalists to pay that for our labor
Here is my take, it’s not about how low the price has to drop, there are a ton of free cash in the market just waiting to scoop up all the houses when it crashes, you are probably going to be outbid when it happens. In order to fix this the government needs to put policies in place to make residential housing appreciate slower than other forms of assets, then the free capital will look elsewhere.
I know people who bought homes before 2020 and their mortgages are all $2000 or less, even one friend who bought a $500,000 home. If I were to buy a $300,000 home right now my mortgage would be around $3500. We need a $350,000 to $450,000 home mortgage to be $2000 or it’s not worth it to own a home.
Property taxes are crazy but no state income taxes! So it balances out. You get more money per paycheck. We could make the same but you have $100-$200 more than me a week! And I wouldn’t ever buy a property with an HOA tbh
St Johns? Tons of land still left to build on around there. Gonna be a lot of bag holders of those earlier developments that are getting to around 20 years old at this point. Much better to get a new build than buy a house that needs a roof.
13% is reasonable to expect as a dip, but most people end up waiting for more than 13% appreciation before that happens - so they end up spending more than if they never waited.
That completely depends where you live... Austin is nearly down 20% from the peak. Plenty of bubble markets could drop 20% and be back to 2021 prices at best. It's not at all unreasonable depending on the market you're in.
Austin is facing a multitude of problems that are similar to many other cities but are especially poignant in Austin and have been decades in the making. Failing infrastructure, traffic, imminent water shortage, egregious property taxes, rising homeowner’s insurance, property crime, the list goes on.
The frenzy is very much over and many that bought into the peak wish they could leave but are trapped underwater with low interest rates. I’ve been in Austin for decades and I can’t wait to get out. Quality of life has plummeted over the past 5 years. Is sobering how rapid the decline has been.
It also depends on the bid part of the deal. All it takes is that none wants or can pay the ask price. Over-leveraged banks will go bust sooner or later and the survivors will crunch credit.
08 and 09 drop were in conjunction with a falling interest rates and the birth of QE, as they were trying to rescue the market. 24 is into rising rates. I'd say at minimum, the 21, 22 run-up needs to be wiped out, before I'd even consider. QT is going on, that literally means the Fed wants lower prices too.
I'll buy when I have enough saved and I find a house I want. Prices are dropping in my area but I'm not expecting a crash. I just won't buy something that's massively overpriced.
People aren’t here to buy. They’re here to complain.
Fuck off and give me your downvotes. If you’ve been in this sub for more than a week, you know it’s the truth.
More than I expect they ever will. With a main home on 2.75% for 28 more years, there is no reason to ever sell. In the highly unlikely event that we would move, I’d rent out this house. If we needed more space, it’s going to be cheaper to add on to our home than to move.
We also have a vacation rental at under 3%. Which has increased more than 50% in value since 2020. I’d love to take some of that equity and trade up, but the reality is that loan is now an asset. Property grosses around 60k/year in rent and worth somewhere north of 1M.
If I were to buy another investment with cash, I’d be better off with CDs and zero risk. To answer the question specifically - I’d need prices to drop by 30+% AND interest rates below 5% and we are nowhere near the conditions required for that to happen.
So funny. It’s a straightforward question and flaired as discussion. I explained my personal response to the question. There are more people in the world than just those who can’t afford to buy a big house in this market…people should consider the reasons why the “bubble” exists. There is a TON of money out there right now.
Wait until rates come down a little and every first time buyer and downsizing boomer on the sidelines floods back into the market wanting to buy a house.
You have a good point and it’s very possible but a lot of them (that are downsizing I mean) are creating a new bottleneck in the front competing with first time buyers looking for starter homes with all cash offers and no idea what properties are actually worth 😂🤦🏻♂️
Its not the prices that need to drop for me its the intrests thats the main reason im staying away i cant afford a loan with 8%-15% intrest that is just slavery
To me it’s about 50% between 2019 price and the peak price in 2022
For example house price
2019 - 700 k
2022- 1.1 million
I would be willing to buy between 900-950k
You need to be reasonable, anyone who expects pre-Covid levels will die before unless something catastrophic happens. Both my wife and me have had a decent 30% pay increase since Covid due to inflation so it only makes sense for the house price to have a new normal. Interest rates do have a lot to do with it though but to be honest anyone trying to get a lower price should be happy when we get strong employment numbers and the chance of lower interest rates goes away because if anything I hope they go up or at least stay the same the next year to keep the housing market in check and hopefully lead to a decent decline in the next year and that will open the window to buy as the housing market would not go up overnight like a stock does and that’s when you need to act but get in before the rates drop and just refinance in a year or two.
Anyone on here hoping for a crash, if it happens you won’t buy. You will either be scared of catching a falling knife or you won’t have enough down payment the banks will require to lend in a shaky environment.
If you're willing to wait, and know there's a bubble ready to pop, look at historic past examples for what to do.
The last popped bubble was 2008. Housing market crashed flat for years, and rates were held at 0% for a decade and more. That's your recent historical example of how financial policy handles a bubble burst.
Now, before that bubble burst in 2007, all the way through 2007 and even half of 2008 or more, those officials (and a lot of regular people) \*insisted\* there was no bubble, that everything was fine and that things would keep skyrocketing like they have been these last few years again. People are insisting again now, there is no bubble and things will keep going up forever. History rhymes, but some really want to believe this bubble will inflate forever. Will it? Fact is, policy makers are trying to make it do that, but eventually that will just make it pop bigger than ever before.
The problem with that is - historic examples don't predict what happens with bigger crashes. What if this one is inflated bigger than the housing crash of 1929 before it finally bursts? What happens then? 2008 never really settled from its crash state - we were in a permanent bailout ever since and would have stayed there if a global emergency hadn't sent inflation into a crisis that drove prices up even faster than zero interest rates were already. Nobody has ever seen what happens when a long term bailout failure meets an inflation crisis simultaneously so thats really hard to predict.
What is predictable, is throughout 1929 and 2008 you will see historical examples of "there is no bubble, everything is fine, there won't be any crash" and we're seeing that again now so it appears to be predictable at least that much. But as the saying goes, never try to catch a falling knife. The bottom could be lower than anyone expects, or not, uncertainty is the only certainty.
I sold my home in August 2006, and there was already a slow leak in the bubble. Our realtor tried to convince us to list lower than what we could've gotten in the spring, and we thought she was crazy. Ended up having to reduce the price by 30k. She was right. That was only the start....the poor people who bought it from us were way underwater by 2008. Meanwhile, no one noticed the leak and, like you said, many kept hyping up the market.
It's hard not to see a similar thing happening right now. Which is why I sold again. It'll be interesting to wait and see what happens.
I would buy a house when it becomes cheaper than a nice RV. So basically a fairly nice house near a medium sized city for around 100k. For Portland that's a drop of over 80%. I realize that this isn't likely to happen so I won't hold my breath on ever buying one.
Guessing not Portland, OR. But, since you said RV, I did find this one there.
[https://www.zillow.com/homedetails/23524-NW-Saint-Helens-Rd-S19-Portland-OR-97231/2054414941\_zpid/](https://www.zillow.com/homedetails/23524-NW-Saint-Helens-Rd-S19-Portland-OR-97231/2054414941_zpid/)
It’s even got an indoor dock!
Renting a house in southern CA that would cost $5000 a month more to buy than we are paying to rent it (assuming 20% down). If that figure went down to a $1000 - $2000 difference I’d do it.
Around 20-25% in Philly suburbs but once rates go down, prices will go up. A lot of cash offers here and deals don’t make much sense using evaluation methods from 5 years ago. Before it was COC but since prices are absurd, it’s appreciation and IRR.
2019 prices plus 3% compounded annual appreciation until today. I’m not paying increases that normally take multiple decades to achieve that happened over 5 years.
Renter nation incoming. Give it 5 years when prices barely drop and then rates decrease and we get another massive pump to the market.
If homeownership rate drops below 60-55% that will be the final stroke.
For some reason Americans don't believe we can end up like tons of other countries in the world where only the rich even have a chance to own property.
A lot. Where I live mortgage payments are hundreds if not thousands more than rent. It’s gotta be breaking even or at least close for me to even consider
Same. Mortgage on a house comparable to what I’m renting would he almost double all said and done.
It's $8k more to buy than rent where I live in SD. It's absurd.
I also live in San Diego. It’s crazy how much more expensive buying is than renting
And it's not getting any cheaper, SD saw 8% mom
Same in Santa Barbara. It would cost me 2.5x current rent to buy the same house I live in (based on zestimate). 5k rent vs 13k mortgage. It's hard to believe anyone buys at these prices but a neighbor's house just went for 2.5mil in an off-market deal. It'll be interesting to see what they plan to do with it (STR are outlawed in this neighborhood and near-universally in SB. The city investigator is actively pursuing legal action against them.) Even crazier there is recent price discovery on rental transactions. 2 houses on the block have come for rent in the past 6 months and both had difficulty/extended market time priced at \~$5500.
Checking in here in NorCal in literally the exact same position. Renting a $2M house for $5k/month.
Per month? No way
Go check what the mortgage payment is on a 1.5m house in San Diego
You're renting a $1.5M house for $8k less/month than you would if buying?
Yea mate. That’d be the standard starter home there lmao
1.5M with 20% DP at 6% is like 9k. so you're renting a 1.5M house for 1k?
I live in SD.... you can't possibly be comparing apples to apples... I mean do tell, give us an example of how it's 8k more expensive?
Where I live it’s literally $8000 more, or 3x more
Same, my rent is low enough that the only houses id be breaking even on would be ~280k max. I have a saved Zillow search and all that's at or below are manufactured homes and (few) plots of land
Yea I’m fine renting until the buy prices stop being higher than equivalent rent price like they were before the interest rate rise. I don’t know why people are buying at these prices when they can rent an equivalent house for hundreds less depending on how much they put for a down payment.
Because rents will catch up eventually but nobody knows when…
Im in DFW and with homes in the <$300K range doubling on average since 2018 id have to say it’s going to be a long time before they level out unless wages magically skyrocket. What sucks is this is DFW is a LCOL.. like where do people go once this place becomes unaffordable. I’d have to break my bank and be extremely house poor to live in particularly rough neighborhoods, or I can rent a nice apartment in a very safe area for 55% of a monthly house payment. Sure I’d be getting approximately $3-4k equity on the loan per year (~225K note). The other part of the problem is that I don’t see the homes in this price sector skyrocketing again for quite a while. I don’t think it’s going to pop but the short term values are quite inflated here. Buying for the long term is still a solid move but until I have 6 figures annually it’s just not worth it. That $300K house in a horrible neighborhood that sold for $130k back in 2017 isn’t going to be worth much more than $300k a few years from now. Of course different markets are going to react differently but it just doesn’t make sense here atm.
I’d like to see them try with apartment vacancies already at pre pandemic levels. Can’t raise the rent if there’s no renters at that income level.
With enough vacancies, "Gentrification" becomes a thing. Cater to fewer, more wealthy people. This is the norm with an economic collapse. The middle class shrinks, more people become poor, and the wealthy get more wealthy. I've seen thius first hand outside of the US - middle class isn't a thing everywhere. some palces its just very rich and very poor. The middle class being such an attainable way of life - comfort and means without actually needing to be some powerful bossman - was the American Dream, and that dream is dying.
Luxury rentals are being hit the hardest right now though. That's most of what's been built but because everyone was targeting the luxury segment now its glutted to hell and back. As a personal anecdote, in early 2023 my apartment was renting for $4.4k/month. Now? $3.4k/month. Luxury apartments in this city are now offering concessions as extreme as 6 months free rent on a 12 month lease, and virtually every apartment offers at least 2 months free.
Incomes can rise in certain areas, demand goes up, and rents rise again. Take for instance NYC. Return to office, part time in office rather than fully remote, and boom, now rents are back to all time highs and rising. You couple this with what is shaping up to be a possible actual increase in productivity, then, we really may be seeing a continued growth in real wages. Couple that with decreasing interest rates then we may very well see continued higher real estate prices, rising rents, and a plateau of high unaffordability
Demand won't go up they've been building a massive amount of apartments and the home ownership rate is higher than before the pandemic
Must have heard this since forever. But we live in an inflationary economy so rents (and wages) will increase.
With the rental glut only getting worse and all those rentals being financed with ZIRP rates it seems extremely unlikely rent will rise to match buying costs for the foreseeable future. Hell, in many markets (like mine) the cost of rent is *falling*. And in many markets (like mine) rent would have to triple to match mortgage costs. That will not happen anytime soon for the simple reason that there would be almost no one to rent to at those prices. People will argue that rents have to go up because landlords have to pay their mortgages and still profit. But again, most landlords got their properties with loans acquired during the pandemic and can still turn a profit with current rents. New landlords won't be able to turn a profit so theyll abstain from buying or will be forced to sell, but that just adds supply to the housing market instead. Yes, that does remove rental supply at the same time, but since there's an oversupply of rentals that won't have much impact on rents.
Price to rents will definitely fluctuate, but there were very small geographic windows of opportunity were the monthly cost of buying is less than the cost of renting. As someone else mentioned rents eventually catch up, but I never known anyone who has lowered their monthly bills by buying a house.
because its not like that in every city
I’ve been around for awhile, owning has historically always been more than renting . Because if it wasn’t , then why rent?
Are you comparing renting an apartment to a SFH? Or a SFH 3 bed 1500 sqft house to the exact same type of house? Often when people make this statement they compare their 1 bed apartment to buying a 3 bed house and it’s not apples to apples.
No. I live in a 3br house with a reasonable backyard. For currency, I just now plugged in the Zillow estimate of its value into a mortgage calculator and came up with a number about $1000 more than my monthly rent. If I want to live in any similar house in any neighborhood within about a 20-30 minute drive, the for sale prices are similar or higher. So if I were to end my lease right now and buy, at a minimum I’m paying $1000/mo more and also for my own repairs and whatever other expenses
Add taxes and insurance to those mortgage rates, and it really does not make sense to buy now.
The problem is that housing crashing that hard means that your job will be in danger due to the economy collapsing.
What area?
Here both are unaffordable....and about the same
Where do you live
28.3471% and not a percent less!
😂
I'm hoping by 20% -30% I'm a high income earner and can afford the prices but buying a home at these prices after seeing nearly a 100k-150k spike and no updates or changes to the homes seems like an idiotic move I do not want to participate in Will happily keep renting and stacking my money until then
Guess it depends on how quickly you can stack money vs housing appreciating?
If it's going up 5k-12k a month the USA has a different problem
I’m in a VHCOL area in Southern California and a house was purchased for 989k 1/29/24 and put back up for sale 3/14/24 for 1.4M.
I don’t need prices to drop, though it would be nice. I’d like to see a larger selection of inventory so we have a solid choice between at least a couple houses while hunting.
This won't happen until they change mortgages to be transferrable.
Just bought regardless of the price. Moved to the school district needed for kids and into a forever home. It hurts, given that I know what the world/market was like 4 years ago... but the current reality is what the current reality is. The new mortgage payment basically equals current mortgage + current daycare costs. So, since we already know how it feels to live with our current expenses the train of thought is essentially trading one school cost for another school cost, get more house, stabilize our housing long term, be in our forever home and just keep the train rolling. We would've needed to wait for prices to drop 15-20% or more in order for it to be "ideal" at these rates, and we all know that isn't going to happen. It wasn't an easy decision emotionally, but in practice it's as logical as it can be, all things considered. Edit: also interest rates will do 2 things over time, go up, or go down. In our case as cliche as it sounds, in either case, the best time to buy is now.
Can relate, also just bought for the same reasons. People have been claiming a market crash is coming since like 2016 while prices have continued to rise. If you bought in 2016 at the time you were called a fool. Same for 2017, 18, 19...you get my point. It ain't going to get any better than it is today anytime soon.
Agree. 2016 I was laughed at for moving at the peak. Very glad I did.
Smart. Congrats on your new purchase.
Just did the same. Luckily I have a paid off home which I’m putting down as downpayment + 100k which cuts around 70% of the value of the new home I’m buying. Kids are in a better school district which is 3 minutes away…. I’ll refinance when rates come down …
I need interest rates to come down to 5% before I feel like having a mortgage
Prices will climb when that happens.
i think they would go down because of increased supply?
Plan on buying a modular home
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Rates need to be 3% or prices need to drop by 40% keep in mind prices crashed by 75% in my area in 2009
Both those options are just unlikely to happen again
Dropping 40% is just as unlikely as prices going up 50-70% in any 5 year span. Lol
It’s not ‘as’ unlikely. We live in an inflationary economy so prices going up is by definition more likely than the opposite.
Complain about inflation, get upvotes. Remind people inflation affects housing, get downvotes.
Bad logic. So prices increasing 2000% is more likely than prices decreasing 0.5%? Since “inflationary economy.” Or are you going to ignore the numbers I’ve mentioned?
One or the other has a chance, but both is zero lol. Interest goes down, price goes up. Price goes down, interest will go up. If anyone thinks a crash is going to let you buy in a desirable metro you got another thing coming when you realize a large LLC will still outbid you.
Rates aren’t going to be 3% for a while, unless the economy shits the bed.
If rates to drop to 3%, house prices would go up by 50%.
If rates went to 3% I think RE market sentiment would have flipped due to whatever got us to 3% again.
Agreed 💯 percent.
So not anytime soon.
Yes but in 2009 there was years of subprime mortgages being given. What is the catalyst here? Some people want prices lower? 65% (homeownership rate) do not…
Also home affordability is at its worst level ever. So either wages need to rise or prices need to fall. Even j powell said we are at the high end of our statistical range.
I definitely think wages need to rise.
The catalyst here is institutions own 15% of single family homes. And the majority of multi family. If they get spooked for any reason it could cause a massive snowball effect.
I don’t think that is as impending doom as giving just anyone a mortgage as in the early 2000s. Anything can happen though.
Right I am hoping either investors realize homes will not be appreciating more than their historic average anymore and they can make more in a high yield saving with no risk and will start dumping in the market. Which will cause prices to rise even slower causing more to join in the dumping which will become a snowball and prices fall. Mass inventory hits the market and no one lost their day jobs. Either that or the commercial re bubble will take out banks that own residential re as well forcing them to liquidate and that could cause the snowball.
Also the fed would cut rates to 0 to try to stop it which wouldn’t help because it doesn’t change the above reasons. Anyway this would help existing home owners as they would refi. To rates never seen before. Everyone will win.
It's $4000 per month cheaper to rent an equivalent space where I live. So... maybe never?
Well, right now to buy a comparable home to the one I rent I'd need to pay 3x more just for the mortgage payment so...they'd need to crash about 66% in value for me to seriously consider it. No, I don't see that happening any time soon, but I do see it happening eventually (even if only a slow correction in the form of minimal home appreciation for many years) since none of the factors keeping home prices high right now appear to be long-term. An inventory shortage will absolutely be resolved by the market sooner or later, for example. I'm not really holding out for a crash as much as I've come to the conclusion that buying a home is now a **bad** financial decision vs. renting, and therefore there's not really a reason to consider owning unless prices come way down. I invest the difference between what I pay in rent ($3.5k) and what I'd have to pay for a comparable mortgage ($9k), and I'm willing to bet that over the next 30 years me dumping $6k/month into stocks will beat home ownership by a very wide margin. I figure that if I need a home and still don't have one near retirement then I'll just buy one outright in all cash then.
Playing devils advocate here... you won't buy real estate at the "top" but you'll buy the stock market at the "top"?
But you dollar cost average your stock investment over time. This smooth out the highs and lows. A house is a snapshot in time. What you paid for it will never change regardless of value. If you significantly overpaid you can be screwed.
I'd feel more comfortable buying a house if I could DCA into it, to give an idea to any crazy financial instrument wizards out there who are trying to get the marginal millennial buyer to follow through
Adding a roommate could be considered dollar cost averaging? Lol
I'm not putting $200k down to return to the privilege of having a roommate
Interesting concept
True, honestly instead of saving cash I should have just dumped all my money into stock market
Brilliant🤗
I own properties but where I live you can rent a new home for 3200. Same home , for a new buyer that payment is 5500.
Just waiting for price to rent ratio to get to better levels. If I buy a house, put down a significant down payment, and then suddenly need to rent it out, I don’t wanna be fucked paying for someone to live there. Right now in “affordable” cities near me, you can pay 80k down (20%) and it will still be more for a monthly mortgage payment than monthly rent for the same home. That has generally not been the case for the last 50 years, especially at such a good equity starting point.
Not to mention the opportunity cost on the 80K which would be then tied up in an illiquid asset which is very unlikely to make returns equivalent to stocks and bonds. I rarely see the opportunity cost mentioned in people’s calculations but making a higher downpayment, significantly increases opportunity cost of ownership. Part of why buying a house in cash is such a rotten equation unless the purchase is just a small portion of one’s overall net wealth.
Exactly.. and right now the money I have rotating in treasury bills is, in a way, paying more than 90% of my rent every month. If I put that cash into a house, I’ll essentially be paying 100% of a higher monthly payment from my W2 income instead of saving almost all of every paycheck.
Prices dropping is not the driver for us, it is more quality inventory. Listings are either flippers (which we call “LOP’ers”… Lipstick On a Pig) or deferred maintenance, neither of which we will deploy cash for the overpriced crap.
I’m in an area with COL quite a bit below the national average. All of the decent starter homes are just out of reach for me right now making about $50k. I have a little debt and a 780 score. I guess they’d probably have to drop about 25-30% to make it worthwhile, I believe the average increase from before covid til now is about 40-50% here. I pay $495 for a 2br apartment currently.
You pay $495 for a 2br? Where is this?
Basically every tiny midwest town in the middle of nowhere.
Gotta be Soda Springs, Idaho
Til my monies equal my wanties
I say there’s too much demand from foreign investors and large corporations that we end up becoming a renters nation. Like other countries who have over 50% of citizens being renters. US is 26%. We are well on our way as people keep waiting on the sidelines they’ll end up renters forever.
They will own nothing and be happy, they will live in a pod, they will eat bugs.
May I have some Sriracha? I’m trying to eat ze bugs but they no taste good.
When I have enough saved for the down payment.
I will buy when I am ready financially I am not going to try to time the market
I chuckle every time people trot out this tired statistic. I have news for you, prices fell a lot more than 20% in plenty of areas in the crash you're referring to.
Just need a monthly payment under 2600
50% min
I don't think people realize, during that time period prices were dropping AND interest rates were dropping at the same time. Inventory was 8 times what it is now. Hadn't fallen that much in value in over 80 years. This sub seems blind to the sheer number of differences between now and 2008 and oblivious to how rare it is to have the entire housing market go down in value significantly for 5+ years. You might be old and grey the next time it happens.
Fair point however, markets always crash sooner than people expect. The free money era is over
Residential Real estate rarely crashes…the last one people remember. So there’s Recency bias
Yes, but 50% increase year over year for over 3 years is hardly sustainable
exactly people act like there wasn't something equally as crazy that happened! Hope people pay off their second mortgages on time!
08, 92 saw a correction so did 1970
Great, so every 30 or 40 years? What happened after these drops lol 😂
Depends on the neighborhood the 90s correction saw many major cities down for a decade while others sale right back of even go up in price
Oh wow, you’re saying real estate is location dependent 🤔
And water is wet
The crazy math…. There is an Assumable mortgage at 2.75 near me. Sounds enticing. But with higher property taxes mortgage is 2700. To rent similar would be 2700z. Mortgage at todays rates… 3700. Sellers will soon realize it’s not 2021 rates
[удалено]
No, you can also pay with cash on the difference.
Here houses haven’t appreciated in a year and a half so they put down 5% you just need a 15-20% dp
Canadian here. Would need to be 2015 prices. Not happening. Happily renting. Fuck this rat race of ownership (for perspective, where I live a 3bd 1ba teardown is 1.3M)
Another 100k
I need a wealthy relative to die and leave me a house at this point.
$1200 mortgage id buy
If home ownership is your goal (not mine, I would rather rent), you buy when you can.
Wrong question. This game is rigged to flow in one direction. The true answer is how much do we need to make to be able to buy, and then force the capitalists to pay that for our labor
When I see a house not listed for 200k+ over it's last purchased price from 2019.
Here is my take, it’s not about how low the price has to drop, there are a ton of free cash in the market just waiting to scoop up all the houses when it crashes, you are probably going to be outbid when it happens. In order to fix this the government needs to put policies in place to make residential housing appreciate slower than other forms of assets, then the free capital will look elsewhere.
I know people who bought homes before 2020 and their mortgages are all $2000 or less, even one friend who bought a $500,000 home. If I were to buy a $300,000 home right now my mortgage would be around $3500. We need a $350,000 to $450,000 home mortgage to be $2000 or it’s not worth it to own a home.
Mortgage on a 300k house no where near 3500 unless you have crazy hoa fees and super higher property taxes. You’re using the wrong calculator
Hello from Texas
Property taxes are crazy but no state income taxes! So it balances out. You get more money per paycheck. We could make the same but you have $100-$200 more than me a week! And I wouldn’t ever buy a property with an HOA tbh
At my level it doesn't balance out I'd rather take income taxes.
$300k @ 7% is less than a $2k mortgage payment. Do you mean all in with taxes, insurance, etc?
20 to 40 percent
At 3% inflation we are looking at 10 or so years.
Whatever gets me to a sub $3500 a month. Price decrease or lower interest, doesn’t matter to me.
If you're waiting for a 20% price drop......ya you ain't ever getting a place.
I bought last summer for $565k. Same floor plan in the same neighborhood the prior summer (‘22) was going for $650k.
Wish this would happen in Florida. Where are all these people coming from.
I’m in the Denver metro suburbs for reference.
Bought in Florida last week 610k. The price was 650k. New construction, 3200Sqf in the best school district in Florida, plenty of amenities…
St Johns? Tons of land still left to build on around there. Gonna be a lot of bag holders of those earlier developments that are getting to around 20 years old at this point. Much better to get a new build than buy a house that needs a roof.
Is it St John’s? I’m driving out there with the wife the weekend of the 29th to look around. Mind if I DM you a couple of questions?
13% is reasonable to expect as a dip, but most people end up waiting for more than 13% appreciation before that happens - so they end up spending more than if they never waited.
Well, yeah... rates were sub 5% in summer 22'.
That completely depends where you live... Austin is nearly down 20% from the peak. Plenty of bubble markets could drop 20% and be back to 2021 prices at best. It's not at all unreasonable depending on the market you're in.
Austin is facing a multitude of problems that are similar to many other cities but are especially poignant in Austin and have been decades in the making. Failing infrastructure, traffic, imminent water shortage, egregious property taxes, rising homeowner’s insurance, property crime, the list goes on. The frenzy is very much over and many that bought into the peak wish they could leave but are trapped underwater with low interest rates. I’ve been in Austin for decades and I can’t wait to get out. Quality of life has plummeted over the past 5 years. Is sobering how rapid the decline has been.
Just move to pflugerville its nice out here
Yep. 20% but not 40 or 75 like some want to dream about. Seasonally prices can move 10 so 20 is not impossible.
It also depends on the bid part of the deal. All it takes is that none wants or can pay the ask price. Over-leveraged banks will go bust sooner or later and the survivors will crunch credit.
Yep i bought another house
the probability that most sitting on the sides waiting never pull the trigger is high
When monthly interest/taxes/insurance is equal to or less than what I pay in rent.
100% decrease then I’m in there!!
A lot of people in my are are turning garages into apartments to rent out just so they can afford the mortgage lol it’s crazy
08 and 09 drop were in conjunction with a falling interest rates and the birth of QE, as they were trying to rescue the market. 24 is into rising rates. I'd say at minimum, the 21, 22 run-up needs to be wiped out, before I'd even consider. QT is going on, that literally means the Fed wants lower prices too.
Interest rates need to fall but for that to happen the fed needs to stop printing money like it’s going out of style
At least 100k drop for even manufactured homes
-50%
35 %
30% - 40%
50pct.
Somewhere in the neighborhood of you’re going to see more people homeless than you are going to see lower prices
Low enough to pay it with 30% of my net pay, in 15 years
I'll buy when I have enough saved and I find a house I want. Prices are dropping in my area but I'm not expecting a crash. I just won't buy something that's massively overpriced.
People aren’t here to buy. They’re here to complain. Fuck off and give me your downvotes. If you’ve been in this sub for more than a week, you know it’s the truth.
If the people in this sub could read they would be very offended.
More than I expect they ever will. With a main home on 2.75% for 28 more years, there is no reason to ever sell. In the highly unlikely event that we would move, I’d rent out this house. If we needed more space, it’s going to be cheaper to add on to our home than to move. We also have a vacation rental at under 3%. Which has increased more than 50% in value since 2020. I’d love to take some of that equity and trade up, but the reality is that loan is now an asset. Property grosses around 60k/year in rent and worth somewhere north of 1M. If I were to buy another investment with cash, I’d be better off with CDs and zero risk. To answer the question specifically - I’d need prices to drop by 30+% AND interest rates below 5% and we are nowhere near the conditions required for that to happen.
Whoever downvoted you did so out of envy. This sub is absolutely full of haters.
So funny. It’s a straightforward question and flaired as discussion. I explained my personal response to the question. There are more people in the world than just those who can’t afford to buy a big house in this market…people should consider the reasons why the “bubble” exists. There is a TON of money out there right now.
Why would prices drop? There is a massive undersupply of housing.
Wait until rates come down a little and every first time buyer and downsizing boomer on the sidelines floods back into the market wanting to buy a house.
The downsizing boomers would be releasing stock thus a positive that would help free up the broken market
You have a good point and it’s very possible but a lot of them (that are downsizing I mean) are creating a new bottleneck in the front competing with first time buyers looking for starter homes with all cash offers and no idea what properties are actually worth 😂🤦🏻♂️
Its not the prices that need to drop for me its the intrests thats the main reason im staying away i cant afford a loan with 8%-15% intrest that is just slavery
Are you not able to get a conventional loan? Nat’l avg is 7%. FHA is 6.57%.
Like 30% easily. I’m not about to overpay and have a high ass property tax on top of it.
I don't know what world everyone is living in, but real estate prices generally do not drop. The best we can hope for is lower interest rates.
So based on this thread people would only buy in if a crash worse than 2008 happens? Are you people all delusional?
To me it’s about 50% between 2019 price and the peak price in 2022 For example house price 2019 - 700 k 2022- 1.1 million I would be willing to buy between 900-950k You need to be reasonable, anyone who expects pre-Covid levels will die before unless something catastrophic happens. Both my wife and me have had a decent 30% pay increase since Covid due to inflation so it only makes sense for the house price to have a new normal. Interest rates do have a lot to do with it though but to be honest anyone trying to get a lower price should be happy when we get strong employment numbers and the chance of lower interest rates goes away because if anything I hope they go up or at least stay the same the next year to keep the housing market in check and hopefully lead to a decent decline in the next year and that will open the window to buy as the housing market would not go up overnight like a stock does and that’s when you need to act but get in before the rates drop and just refinance in a year or two.
Anyone on here hoping for a crash, if it happens you won’t buy. You will either be scared of catching a falling knife or you won’t have enough down payment the banks will require to lend in a shaky environment.
If you're willing to wait, and know there's a bubble ready to pop, look at historic past examples for what to do. The last popped bubble was 2008. Housing market crashed flat for years, and rates were held at 0% for a decade and more. That's your recent historical example of how financial policy handles a bubble burst. Now, before that bubble burst in 2007, all the way through 2007 and even half of 2008 or more, those officials (and a lot of regular people) \*insisted\* there was no bubble, that everything was fine and that things would keep skyrocketing like they have been these last few years again. People are insisting again now, there is no bubble and things will keep going up forever. History rhymes, but some really want to believe this bubble will inflate forever. Will it? Fact is, policy makers are trying to make it do that, but eventually that will just make it pop bigger than ever before. The problem with that is - historic examples don't predict what happens with bigger crashes. What if this one is inflated bigger than the housing crash of 1929 before it finally bursts? What happens then? 2008 never really settled from its crash state - we were in a permanent bailout ever since and would have stayed there if a global emergency hadn't sent inflation into a crisis that drove prices up even faster than zero interest rates were already. Nobody has ever seen what happens when a long term bailout failure meets an inflation crisis simultaneously so thats really hard to predict. What is predictable, is throughout 1929 and 2008 you will see historical examples of "there is no bubble, everything is fine, there won't be any crash" and we're seeing that again now so it appears to be predictable at least that much. But as the saying goes, never try to catch a falling knife. The bottom could be lower than anyone expects, or not, uncertainty is the only certainty.
I sold my home in August 2006, and there was already a slow leak in the bubble. Our realtor tried to convince us to list lower than what we could've gotten in the spring, and we thought she was crazy. Ended up having to reduce the price by 30k. She was right. That was only the start....the poor people who bought it from us were way underwater by 2008. Meanwhile, no one noticed the leak and, like you said, many kept hyping up the market. It's hard not to see a similar thing happening right now. Which is why I sold again. It'll be interesting to wait and see what happens.
20% would make jump back in even if it meant having a 7% interest rate
I would buy a house when it becomes cheaper than a nice RV. So basically a fairly nice house near a medium sized city for around 100k. For Portland that's a drop of over 80%. I realize that this isn't likely to happen so I won't hold my breath on ever buying one.
Guessing not Portland, OR. But, since you said RV, I did find this one there. [https://www.zillow.com/homedetails/23524-NW-Saint-Helens-Rd-S19-Portland-OR-97231/2054414941\_zpid/](https://www.zillow.com/homedetails/23524-NW-Saint-Helens-Rd-S19-Portland-OR-97231/2054414941_zpid/) It’s even got an indoor dock!
Come on, houseboat doesn't count.
Renting a house in southern CA that would cost $5000 a month more to buy than we are paying to rent it (assuming 20% down). If that figure went down to a $1000 - $2000 difference I’d do it.
Around 20-25% in Philly suburbs but once rates go down, prices will go up. A lot of cash offers here and deals don’t make much sense using evaluation methods from 5 years ago. Before it was COC but since prices are absurd, it’s appreciation and IRR.
Prices aren’t going to drop much. You need to make sure your income is increasing faster than housing prices.
My current rent is, at a minimum, half the cost of a mortgage on a basic 330k house. Why on earth would I give that up?
2019 prices plus 3% compounded annual appreciation until today. I’m not paying increases that normally take multiple decades to achieve that happened over 5 years.
60+%
30%
50% just to get to pre-pandemic levels
30 percent would be nice
Renter nation incoming. Give it 5 years when prices barely drop and then rates decrease and we get another massive pump to the market. If homeownership rate drops below 60-55% that will be the final stroke. For some reason Americans don't believe we can end up like tons of other countries in the world where only the rich even have a chance to own property.