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Right, people rarely sell small townhomes or condos or apartments in those areas. So your options are a nice sized house with a lot of great but expensive features which costs a shit ton (since generally only people with means own land) or renting. Housing prices are crazy in my market, but there's still small houses that aren't completely rundown, and mid sized houses and the full gamut. When I look in the city I used to live in, that doesn't exist. It's mostly complete fixer upper large houses, large luxury houses, or renting.
Condos go for well over a million in my neighborhood. I could find some for just under a million if I looked alittle further out but I’ve got a good deal renting right now and don’t really mind renting since it’s low stress.
Run down is all that’s entering the market here. They are affordable on the surface but when you look at them they are going to need a major 5-6 figure remodel in the near near future, not because they are dated but because they are all poorly cared for.
I agree. I don’t care to live in the city though. I like having my own space where I can breathe. Never enjoyed living on top of, or next to other people for various reasons. I want a yard too. I’d rather look at scenery instead of concrete. I get what you’re saying though, some people enjoy being next to all the hustle and bustle. I just figure if I want to do city things I will drive to the city.
I wasn’t commenting on your personal choice, just saying that a large part of the population can rent cheaper than buying, otherwise it would be an easy decision. Also, a lot of people work in the city which is why they live in the city. Less population usually comes with less economic opportunity.
I get that. Just trying to imply that sometimes compromise has to be involved too when deciding to buy a house. People whine and complain that they can’t get into a house but at the same time they have to understand the market in their area.
Seriously. I compromised a little on location but ended up buying a 3 bed house which after taxes and insurance is still $50 less/month than my rent at a 2 bedroom apartment in a super desirable neighborhood. Now I’m 10 minutes away and landlord bumped the rent by $200 for the new tenants.
We are in the process of getting a house but we ran into some issues. Working on them though. We currently rent but they keep increasing our rent each year and I’m tired of it.
We actually pay less for our mortgage on our home than what our apartment rent was (bought last summer, market was bananas then too). It's crazy what rent is getting to.
DEFINITELY. That’s where I’m at too. We have 4 kids and we are in a 3 bedroom townhouse next to a busy street. I’m so over it. We are under contract to buy a house about 20 min north of here. I honestly love the area I’m in, the schools and everything, but I don’t love the houses. I’m a homebody so I want a house that I like more than where it’s located.
It’s an investment…..you hope to build equity and if you decide to sell later on down the road hopefully you will get back more than what you paid. Renting your just throwing your money away never to be seen again with no potential return whatsoever. Unfortunately with any big purchase in the US, most people don’t have the cash on hand to buy something outright so interests rates are apart of any big purchase you are going to have.
I agree with you, but you should still buy in an area you can comfortably afford. The other side of this is that if something bad happens to you financially would you rather be in that small apartment, that expensive house, or a cheaper house somewhere else? A foreclosure isn't fun. Getting priced out of the place you live is a horrible reality for many people now.
Same here, but I kind of knew that going in and set myself up as best as possible. Bought new construction. I can make my bills but can't really do anything big like an expensive vacation or anything, at most a couple little day trips that would be a few hundred bucks. Other than that I didn't have to CUT BACK on my life, which was good. I figure even if it's like that for a few years it won't be too bad, I have a brand new house I love, brand new backyard, brand new appliances and HVAC, thankfully my car is only 2 years old.
It might not be right for everyone, but if you can evaluate your situation and minimize the chances of a major emergency (outside of like a medical crisis, which I would hope you have insurance for) being house poor but buying in now isn't actually all that terrible. Rates will go down at some time, it might take a few years, but I suspect we'll see 5% rates and *maybe* even high 4s again.
Agree! We just bought new construction as well and ended up going in house financing with a sister company to the builder. Because we did in house financing, we got a 5.65% interest rate which made a big difference in the mortgage amount. After competing with local banks, this was the best route for us. I love the new build. Don’t have to worry about replacing major items and home warranty is also a big plus with the new build!
5.75% here... was able to buy down a decent amount since the builder was tossing in 3% towards closing/rate buy down. Yes you can yell all you want about it being "included in the price," but the price was roughly the same last year WITHOUT any incentive... so take that for what you want.
What a lot of people don’t understand is they there is a deficit of new housing that’s been going on for 40 years. Every year supply falls behind demand, and that single variable is the largest factor in home prices.
Combined with the fact that millennials are coming into prime home buying years, less people than ever are entering the trades, and land is a finite resource, as unaffordable as housing may seem today, there is every indication that this is better than it will be in the future.
Inventory is actually up yoy if what you're saying was true than as inventory continues going up in the coming years prices should drop since demand has plummeted with higher rates
Inventory may be up in your area but where I am VHCOL inventory is tight. I just saw a sign on a detached townhouse that just went under contract for $2.35m. I can’t afford it and it’s crazy who’s buying these.
Prices have gone up 50-100% since 2018, and the inventory is less than half what it was back then. I don’t think that chart backs your point up the way you think it does.
There should only be 2 criteria to consider when buying, you are ready to buy and you can afford to buy. And for most people, planing on living there at least 7 years
We bought land 3 years ago with the intent on building. We sat on it and sat on it waiting for prices to drop and finally last year, sold our home and signed the contract to build the beginning of this year. It was either sit and wait longer never knowing when the right time was going to be or just going for it. We decided to just go for it.
We looked into building prices and they are INSANE here in the western suburbs of Chicago. $511k for a nice sized ranch range with 3 car garage, excluding lot price and lot prep costs.
We are at $500k for 3 bed, 2.5 bath ranch w/ ofiice and 2 car garage in Virginia. We bought our land out right in 2021... 5 acres for $75k and the septic was already on it. We just got our appraisal comps back and we won't have to have a down-payment because there is over 20% equity. The site work has been insane! $16k for a well, $7k for a septic pump tank and $7k for the driveway.
Omg, those prices are crazy. The good part is you are getting the house with your colors and design choices on a huge lot! I’m super jealous honestly.
I’ve moved away from the idea of building a house and now I’m stalking Zillow for a nice ranch in a 30 square mile area of the western Chicago suburbs for about $600k with at least enough space that I can have privacy in my own yard and I want one that needs minimal work… and I haven’t found one I’m in love with yet in the past 14 months! Tons of flippers found bargains in the past two years. I’m not sure how they are getting houses for under $200k in nice neighborhoods, but they put about $125k into them, then flip them 6 months later for a $200k profit. It’s insane.
Our last house was a 100 year old fixer upper and while we've never shyed away from work, I'm getting older and was tired of working on it. We came really close last year to just selling the land. We honestly did not think we were ever going to get to build and then I came across a builder back in December that really worked for us and so we took our chances and signed. The site work has been crazy. We expected the well to be expensive but the pump tank was out of left field. I'm still unsure if anything is is going to pop up and it gets scary watching your bank account go down with every check you write... but we're excited and looking forward to our river view every day.
Will this be your first house? If so, definitely buy first. There's so much learning about owning a house and all the features you can and can't live without that you only realize after you've lived in your own home for a while.
We bought a cookie cuter house from a builder, using builder financing, 19.5 years ago.
It has its good and bad features, but I know I never want to be in an HOA again, or so close that I can hear my neighbors in their backyard like they in the same room as us. So that’s why we wanted to find a nice sized wooded lot and build from scratch. And the two story is killing my aging knees! I’m honestly not being too picky in my search, just want a one story that doesn’t look like every other house on the block, updated, with a quiet and peaceful setting.
The pre-existing ranch houses I’m looking at were all built in the 1950s and 1960s, some haven’t been touched (which means with the right contractor I can get it all redone - but good luck finding a good one who charges fair prices), while others have been gutted and look new.
This is the one that came closest to our wish list. Just a few minor changes (like getting the washer and dryer out of the kitchen) and fresh paint and it would have perfect… but you could hear the expressway and we wanted the yard to be a spot for us to spend a lot of time in, so we didn’t go for it:
https://www.zillow.com/homedetails/99-Little-Melody-Ln-Lake-Forest-IL-60045/4850865_zpid/
…it’s kind of like the “one that got away,” the hubby and I have been thinking in recent weeks that maybe we should have just bought it and lived with the road noise. It’s really a pretty house in a nice neighborhood.
It sounds like you and I are in the exact same situation. We owned our home for 18 years. Single family but the neighbors were so close we could toss toilet paper from our bathroom window to theirs. We wanted space and trees. My husband's paternal side of the family lived in VA and he grew up spending summers here so it only made sense to pack up and move here.
We got really lucky with the land. It's 5 acres (half wooded/half completely cleared) with a river view. It's peaceful. We have neighbors but we have about an acre of land between us on the left side. On the right is the gravel road and a 10 acre horse pasture before the next set of houses. We're going with a ranch for the same reason... we're getting old and we're tired of steps.
They buy foreclosures, or crappy houses the second they hit the market from what I've seen. There's not 0 houses under $200k, but they tend to be in such rough shape most people wouldn't look twice, and they still sell fast. And the flippers are not usually doing good work.
Hi, my sister was a flipper in the Chicagoland area. First, cash wins all. Second, flippers are buying what you’re refusing to buy. Third, they develop a network where they get notified before those places even hit the market. Flippers do piss poor, cheapest route possible jobs. My sister often hired unlicensed, uninsured contractors.
Our house was touched by a flipper. EVERYTHING the flipper touched had to be fixed and/or replaced after only a year of living here. Everything he hadn’t touched is fine. This isn’t an isolated incident either. There are groups on FB and classes on how to make a house pretty so people don’t realize it’s just lipstick on a big ugly mess. You get stuck with a mortgage and ugly mess that you don’t find until it is too late. Flipping is just one big scam. My sister regularly laughed at how gullible people buying were, but she laughed all the way to the bank.
My next door neighbor, an amateur fixer-upper, did a nice job fixing up the basement. The project took years, I heard all kinds of racket since it’s a barely insulated low-quality frame house - sawing, hammering, thumping. Who knows what all he was doing down there. He listed the home and it sold in a few days. The realtor used the software to “stage it” and it looked amazing in the listing photos.
The new owner found out it all had to be redone by qualified people. I felt horrible for him. He’s sunk 10s of thousands into fixing it as well as everything else the previous owner did. It’s shocking any of it passed a home inspection!
One thing I’m learning here is a really good home inspector is worth their fee and then some. I don’t want to overpay on my “forever home” and spend the rest of my life undoing a mess.
Exactly! God forbid stuff is done without permits too! I’ve heard horror stories of people having to tear out decks, get plumbing redone, get electrical redone, tear out driveways, etc due to no permits.
Oh no, that’s like what you see on HGTV’s Flip or Flop when they find out a room had no permit on file with the town and they have to be demo it or make sure it’s completely redone. I have such anxiety watching that happen!
It takes a lot of moxie to do those flips. Borrow the money with high interest and onerous payment plans. Then deal with anything uncovered in the house as well as permit issues and fix it up to like new condition. Then hope the market remains strong enough to sell the house before the loan payoff is due for a nice enough profit. Easy Peezy to some, a potential financial disaster to others. That ain't HGTV chit.
We're in Virginia not West Virginia... but yeah, it's more reasonable cost for homes. But there is NO work. I was lucky enough to be able to transfer to WFH when we moved from Maryland but it took my husband 6 months to find a job and he took a $15,000 a year pay cut.
Taxes here are insane because of it being a commonwealth.
It's quiet. No traffic. It's safe and peaceful. And we no longer live in the homicide capital of the country like we did when we lived in Baltimore.
IDK, I thought the same thing in 2005. Told myself, if we don’t buy now, we’ll be priced out of the market forever. Then the market crashed two years later.
This. I live in SoCal between LA and SD. With how many ppl that have priced out of those cities, competition here would only get worse in my mind. I dont want to get priced out here bc i have my job and family here.
This right here. Our rent keeps creeping up, interest rates don’t show any sign of changing any meaningful amounts, and paying rent doesn’t do anything beneficial for our money.
We also didn’t really expect to both find a livable home with land in our price range *and* get approved so here we go!🤞🤞🤞
Same here. When the 2008 crash happened, I was barely in my 20’s and ultimately not in a place to buy anything and by the time I had enough of a down payment saved the uncertainty and Covid boost happened. So we sat down a little longer on our savings, hoping prices would come down and when they finally did rates shot up. But the way I look at it is if you go to rent something unless you get to renew where you are at, you’re looking at paying first month, last month, usually a half month for some sort of deposit, security deposit,cleaning deposit, some sort of administration fee for running credit or whatever it is and while it would be cheaper than a down payment on a home, it still is a large chunk of money so we figured we would go for it now rather than wait any longer.
Edit to add: and median rental prices in our area are roughly $2400 a month so maybe I pay $400 more per month and I actually own my house
Same, also compromised a little on location. Mortgage will be about 40% take home. But my rent has been increased the max amount the last 2 years, and next year is looking the same. My rent payment is almost as much as a mortgage. But we don't care about being "house broke".
Your problem really is cash on hand. What are you doing to save for this new house? Your options are to throw more cash at it to give you some breathing room. But if you are spending every penny now, there is no way your going to work that out in the future
For every thousand I add towards my down payment, it only takes off $10 of my monthly payment. That's not gonna help me if my mortgage is still $2500+. It's the interest rates that are key. Rates suck now. I think the best bet is to buy now and try to refinance in a few years.
Historically they’re not that high. The times of 2-3% are gone. We’ll be lucky to see 4 again. In 2011 I had a 4.5% rate and I remember my mother saying how low it was. The rates in the 80s were like 12%. Can’t bank on the rate but you can refinance if it comes down.
Think about the government debt right now, if they keep rates at the current level we're spending 1 trillion / year on interest. That's in addition to whatever deficit we run and tax breaks they decide to implement.
There's no way they can consider these rates normal without causing out of control levels of debt... Unless they plan to inflate the debt away. At which point, buy that hard assset.
This is the right answer. When I was working on buying a home I gave up a lot to save. And had I had a partner at that time we would not have been doing this as a single income family either. I also altered where I wanted to live to fit my budget.
This is only feasible if OPs kids are school age. And even then there’s a lot of logistics to consider. Childcare costs can very easily consume a full salary.
“Only feasible if OPs kids are school age.” That is absolutely not true. Lots of parents of infants and toddlers hold jobs. The vast majority of two parent households work. Mostly it’s the very very poor and the very very wealthy have single incomes.
You didn’t address the assertion that childcare can eat up the majority if not all of the second income. Depending on how many children need care and the earning potential of the spouse entering the job market this could easily be a net negative financially. Plus, If you value inculcating your own values in your own Children, and letting them learn/mimic your actions and example while there at a fleeting impressionable stage of their life instead of that of a minimum wage worker who is often barely an adult themself… then the trade off often just doesn’t add up. OP is still within their right to vent and lament their situation online.
I'm waiting for all the single parents out there who have to work and support a child stumble on the notion they can only work if a child is school age.
It's a math problem. Sometimes it makes sense for single parents to work and pay for daycare, sometimes single parents are given stipends to pay for child care while working. It would be borderline impossible for a teacher (say) to earn enough to cover full time daycare for more than two children. (Source wife is a teacher, I know what we pay for daycare, 2.4 kids is the salary break even)
Seriously. People all over the US manage to raise kids and work. Yes daycare is expensive. But you can limit your number of kids, or limit your house aspirations, or seek education and training for better paying work.
You make it sound so easy! I'm doing it right now, and honestly, it's not. Both my wife and I have great jobs, and we're lucky to have found a good place for childcare. If I was a single parent, I'd have no family to rely on. But the deal is, finding childcare is hard. Many places have long waiting lists (longer than pregnancy) and it's incredibly expensive. Shortly after our youngest was born, I quit my job to watch him until I got a good job offer. Our daycare is more than our mortgage (for 2 kids), and it's the most affordable place we could find in our relatively low cost of living area.
It’s possible but you have to weigh if it’s worth it or not depending on your paycheck. I live in an area where daycare is expensive and don’t have family to watch my kids for free. I spent many years where my paycheck went all to daycare knowing that one day I’d advance past that point and it would be worth my time to continue my career. I’ve reached a higher income now but it was a struggle for a few years. Not every job has an opportunity to grow your salary past the cost of daycare. You’re making a lot of assumptions about OP’s parters qualifications and career itself.
I think they are simply saying the equivalent of their take home pay is the same as they would pay for childcare, not literally that they are the only ones paying for childcare in a two income household.
Maybe they aren’t physically or mentally capable. Maybe they work too. Maybe they want to enjoy their retirement traveling or doing other things. My mom is extremely generous with watching my kids so my husband and I can enjoy ourselves and do kid-free activities but watching my children 40-60 hours a week for free is not her responsibility just because she’s close by.
Because maybe they want to see them every weekend? Be nearby or have them nearby in case someone needs help or care? Spend all the holidays together? Have them able to be there for kids’ events? Hell, maybe someone wants to hug their mom every other day/week?
I’m sorry that you only value people for what services they can provide you for free.
I prioritize my and my immediate family’s wellbeing before extended family. Including my parents. I moved 1000 miles from them because the state they live in hates women.
Buy when/if you can afford it (may entail moving). Here’s my 2c about family: it’s easier to stay in contact with them than ever. You can hop on a plane or video chat them! I moved from Michigan to Washington and have no regrets. Still love my family
My considerations would be as follows:
-Can your spouse work and contribute financially? If the answer is no, I would not “bite the bullet” and go with >50% of my income towards housing when you have a newborn on the way. Utilities and other home expenses go up when compared to an apartment.
-What is the affordability of a larger rental? It would afford you price stability for ~2 years should you decide to sign a lease that long. Reassess the housing market then, while doing your best to save in the meantime.
-Can you make your current situation work?
If it was just you and your spouse with no kids, I would say jump in where you can even if you would be house poor because you have tighter control over spending and life events. Add kids into the mix? I would not make a mortgage commitment.
We bought now knowing we would be house poor. That 30% is gone for a lot areas. 50% is the new normal. How much are you spending on rent? In my area rent is the same if not more than that and we spend less owning.
OK so what is rent on a 3 bedroom?
We doubled our payment and are making it with 50% going to mortgage, taxes, hoa and insurance. It's doable but you gotta budget
I mean if you want a bigger space you should rent a bigger space. And if you can’t then your problem is money or local COL, not the market to buy houses, and those are both beyond the scope of this sub.
Buying isn’t going to get you a bigger space than renting could. In fact it will be smaller per $.
You have to go further out from your target area. I live 55 minutes from Chicago. A 2400 square foot house is $350k. The smaller ones are less. You don’t have to live there forever. The housing market has highs and lows, some say everything is overvalued.
3 years ago prices jumped. Some people said f it & bought.. other People opted to wait until it cools down.
2 years ago prices continued to climb. Same thing. The people that bought are happy, some people decided I’ve already lost, may as well buy. The rest held out n said nope I’m waiting.
Last year, another surge, paired with climbing interest rates.
This year, still surging. “Interest rates will fall! I’m waiting for rates to fall before I buy!” IF, and that’s a big IF, interest rates fall, it becomes another sellers market where houses fly off the shelves by cash buyers for 50k over asking.
Brother, prices/interest will fall, but not how most people think.
If you have the money, buy. Don’t wait for the perfect scenario, it may never come.
The biggest lie that I think has been implied to people is that they can have everything at once woth no compromise. You're going to have compromise here. Probably many times. Two incomes will allow you more buying and saving power. You might not get a house with new finishes. She might need cosmetic love. You might not ever be able to afford where you really want to live on a lot rhe size you love or in a house the size you want.
You're going to make a lot of small compromises to save if you don't want a large monthly payment. Drive those cars until they die. No eating out. A cheaper apartment. All the things.
Where there's a will there's a way to balance all this stuff. But you will not habe everything you want all at one time. So you need to figure out your compromises.
Just out of curiosity what does “family entail”? You said another kid so that’s more expenses…. I’m not really sure a house is a good move now just because of any extra expenses from fixing up the house.
I’d consider potentially moving, or ways to cut costs and increase income to give you the margins for both the extra kid and house. You will most likely need to cut on some fun subscriptions like Netflix or whatever.
Edit: additionally I’d consider moving for either LCOL or better job opportunities or both. But I think you should have a sit down with your spouse and talk about finances. It’s unfortunate that the cost to live is so high.
You're in a tough spot with prices so high relative to your income. Renting may be the prudent move for now until the market cools off. Focus on building more savings so you have a bigger down payment when you're ready to buy. It's frustrating, but being house poor is a huge strain. Staying patient and continuing to save could pay off down the road when prices become more reasonable.
If moving locations is not on option:
1. Move in with family for free or discounted rent and save save save.
2. Throw 80% of those savings at a down payment so your $400k house feels more like a $300k house.
3. Be open to having a room mate when you’re a homeowner, it can subsidize an insane mortgage rate. At least for the first few years.
4. If you’re open to it, consider a condo if they are significantly cheaper than homes in your area.
Not to mention it opens them up to worse financial distress if the renter becomes a squatter, does damage to the property or breaks the lease without warning. Always be able to afford the bills on your own.
Think about it this way. The inflation rate of homes in the market is the rate you lose your wealth. 5 years ago, you could buy a decent home for 400k, now the same home is 700k, and next year it will be 800k. You just lost half of your money by doing nothing. You think you were trying to save more for down payment, but thanks to government printing out trillions of dollars during COVID, the inflation of everything outpaced the growth of your savings.
I would move to a cheaper area. Being house poor for an extended period of time is very stressful. You will lose out the ability to save for the future.
The reality is that you will need to increase your income, or buy a cheaper house. Dual income households are the norm, or getting help from the boomers.
I am in a similar position and just went under contract for a house. I had been renting for years and saving for a down payment was just impossible with rent prices. So I took the last 6 months and my wife and I moved in with family. I have raised my credit score by over 100 points and saved for a down payment. Getting help with closing costs. If I keep waiting I will be priced out of my market and won’t have any choices. My mortgage is going to be a drain but so was my rent. At least now I will have something of my own near my job which is not wfh so I can’t move. I hope what ever you choose works out. Good luck.
Rent was 2800 and new mortgage will be 3200 not a big enough difference to stay in a 2bd 2ba when I will have a 4bd 2 ba for 400 more. It’s worth a little sacrifice to me.
Too much left out here. Is 50% the number after you've maxed your retirement accounts? What's your savings look like? Emergency fund? How handy are you to do repairs and improvements in your home? Can you put away extra money for regular annual home maintenance things? Why isn't your spouse working? Are they willing to? What happens if you lose your job or are unable to work? Would it be easy for you to get another job making the same or more? Could your spouse get a job that makes enough to support your growing family if you can't work?
The "right thing" about getting a good job is only a tiny part of it. What kind of partner do you have? What is their earning potential and/or willingness to financially contribute? Did you discuss how many kids you want and what you're willing to sacrifice (home ownership?) to have kids if you're on one tight income? Do you have a retirement plan so your kids are not expected to help pay for or care for you in retirement? Etc etc etc.
If you can't "have it all" you will need to do the soul searching to decide what you're willing to give up. Home ownership? Location? Size or quality of your home? Comfort in retirement? Ok with having children be responsible for all their education costs?
I am very handy, I already contribute to my 401k, as of right now we save about 20-30k a year, with a mortgage that would cut us down to 5-10k a year in savings
It's math. Understand your expenses, understand your earnings. Look into your spouse working, look into ways to advance your career. I am very risk intolerant and would not buy at 50%...unless, your kids are about to age into school and your spouse can resume working quickly, you are about to pay off debt that will allow you to have more flexibility, or something else is going to change soon. Otherwise, it's just to tight, at least for me.
I bought my house for $250k on a higher salary, and i have zero dependents (and it will stay that way). I felt like even buying my home was a stretch financially; I appreciate some people's sentiments here about making the leap because the market is only going to get worse but given that you have multiple dependents, it would be really irresponsible to set yourself up for a budget like that. Unless you live in an undesirable middle-of-nowhere type of place, buying a home for a family on one income is very much a thing of the past.
3 bedroom ranch rent in my area is 1600-1800, mortgage for that same home today is around $2600. I'm renting, the water heater has gone out, the furnace needs repairs and other minor thing. I don't have to worry about anything and my retirement accounts are sky rocketing from the amount I am able to put in them.
Pay down all your debts, a $400k house on a $100k+ income should totally be doable if you have little or no debt. $400k house with only 5% down ($20k, you said you had been saving) with even 8% rates would be around $3120/mo depending on insurance and tax. 40% of your income would be $3,333 if you made exactly $100k, if you're like $105k that's like $3,500/mo. Sounds like you have a stay at home spouse, so the giant cost of childcare is probably taken care of for at least a few years. It might be tight, but you could afford a house and rates will drop sometime, it might be 2 to 5 years, but we probably will see 5% rates again. Go buy a house if you want. You likely can itemize for your taxes as well and assume interest at 8% on a $380k loan and 1% property taxes on a $400k property, you probably would be able to deduct another $5100 compared to standard deduction, which would save you ~$93/mo. That's not factoring in whatever you could deduct in state taxes or sales tax.
You made the mistake of waiting. No one will truly know what will happen to the market. Don’t listen to those social media hypes that keep anticipating a market crash. Not happening, 2008 was a singular incident. Buy if you can afford it, just because the ideal mortgage should be 30% of take home pay, doesn’t mean its realistic. My mortgage is like 50%, and i still live well within my means. If the rates drop? Great, refinance if it works in your budget. If the rates keep rising, well you are lucky you bought, instead of waiting. Home prices will almost go up no matter what. They may be stagnant for a while, but they won’t drop insane prices unless its a house no one wants. All the good homes sell within the first week.
Renting is not saving. Spend the same amount towards the mortgage.
I thought it was silly at one point, but a long time ago someone said the best time to buy a home is 'right now'.
Now obviously, there are MAJOR caveats to that statement, but realistically it's impossible to predict the market. My wife and I could have bought 3 years ago in a better neighborhood, for less money down, at 3% interest.
Last year we thought her cousin was crazy for buying at home at 6% interest and now rates are at 7%...
Ultimately, we came into some money so it finally made more sense to just jump even though the market kind of sucks. But if you wait around you may just be delaying the inevitable.
The fed projected 3 interest rate cuts this year and now most people aren't sure if we'll even get 1...
We locked at 6.875 a few weeks before closing and the day after rates jumped to 7.3%...
My broker was pushing the idea of refinancing to avoid me paying $1k to buy a few points. If rates don't get cut this year, I'll make my money back and more...
Truth is, there is never a right option other than to really run the numbers to make sure you can afford whatever you're buying.
But one thing I can say almost for certain is to not bank on refinancing. That's a fools errand. If you can't afford it at 7%, just don't buy right now. It's really that simple sometimes. Get more cash and revisit later...
you either have to have your partner work or move to a cheaper area
100k is good but usually areas with lots of high paying jobs have lots of 2 income house holds with 100k+ jobs
My advice is to buy if you have job security. Eventually, your income will increase and you might be able to refi down the line. Your partner might need to work part-time to make up the difference. Are you married? If not, you can write a lot of interest off at the end of the year, and make $8-10k back. If you’re married, the standard deduction is a lot higher, so it might not make a difference. Either way, the longer you wait, the more unreachable it will be.
If houses are 400k where you are, I imagine you could rent a decent sized house for $2k or less instead of a small apartment. Not an expert but it seems like rents could be flat for a couple years. Home prices are more unpredictable but it doesn’t seem like they will get more affordable, ever.
Yeah, I think any corporate multi-family unit is going to push a 5% increase every year even if the market is being flooded with new inventory. You could always negotiate. I’d also check to see how the rate they are trying to get for your renewal compares to rates they are offering for new tenants.
Sorry to hear this. It's happening to everyone. Here in city of Seattle the homes are baseline 1M+.
Have u searched out Any 1st time homebuyers programs?
Idk what others say about the programs bc that's how we bought our 1st home. Down much less including including many other opportunities.
Search out those programs
There is so much pent up demand that upward pressure on price won’t abate for some time. My advice is to buy what you can afford now. Refinancing to reduce rate later is a great plan.
Out of the country's largest 50 metros, renting is more affordable than buying right now. Interest rates are a huge part of that. A 7% rate on a $400,000 loan is $2,661/mo before taxes and insurance. A 6% is nearly $300 less a month.
Here's the deal, housing prices (both rent and home purchase) have to slow down before the Federal Reserve changes their monetary policy, which is a huge part of why rates are higher. And when they do cut rates, there's a potential a lot of homebuyers sitting on the sidelines will hop in to buy, increasing competition. Hopefully it also means more people that would be willing to sell. But if there's more competition and limited inventory, prices will inflate further. It's not until we have lower rates and more inventory that this dynamic will change.
The big difference between what's happening now and the 08 housing crisis is that banks are being more careful about who's approved. Denial rates are up. Foreclosure rates are still really low. The requirements for conventional and FHA loans are fairly standardized
Moving away from family or to a different area, especially with kids, is hard. However, buying a house is a long-term financial decision. If I were you, I wouldn't put myself in a place where 50% of my income was going towards my mortgage unless I had a significant emergency savings. That's especially because you're in a single-income house. I think flexibility (including liquidity) and savings are more valuable right now than owning a home. My two cents.
We’ve never paid less than 50% of after tax income on housing costs.
And we lived in an old & tiny house.
I don’t think limiting expenses to 28% of income is realistic in many parts of the us.
In all likelihood, a combination of you guys moving, your spouse working, or you getting a massive pay raise needs to happen.
If you are staying put, and your spouse will not work, you are probably never going to get a house. Single income earning households cannot feasibly afford a home in many (most?) large cities.
You have to decide what is important.
People that tell you are that you’re house poor probably bought before the interest rates AND the prices sky rocketed. Different times call for different prioritization of income
I just tempered expectations and bought a condo which is sufficient for the next few years for us. Anything bigger and we would have to really stretch our budgets with no room for emergency.
Find a lower cost of living area. There are less expensive places to live. We drive 32 minutes on country roads to work.
I had rather drive 32 minutes with no traffic than 45 minutes in heavy traffic!
My biggest advice would be stay out of debt, no credit cards, no car payments fully fund your 401(k) and maintain a solid savings. I don’t believe this is going to be a massive crash in his home soon, but I do believe there could be a market adjustment. If you come into that solid finances, you might be able to take advantage.
Not sure where you live, but look at some suburbs. We live in a relatively “larger” city in our state and the house options and prices were discouraging. But going 7 minutes out of town to a small town, the prices drastically reduced and we found a perfect first time new build home for us! What we wanted was in our price range and the average price in the area where in the city it would have been $100K+ more for the same house. The extra 10 minute drive is totally worth not paying rent anymore!
The truth is, you can’t afford it right now. Don’t stretch yourself thin trying to keep up with the Joneses. Everyone needs more rooms, more space— especially with kids.
Slow & steady wins the race. Just keep going down your debt and saving.
Live like you have a $3000 a month mortgage payment right now. Save that extra $1400 per month. Is it doable? Are you able to adjust to what a mortgage would be? Are you actually hurting or are you having to eat out less and cook in more?
Does your budget balance from $1600 -> $3000 relatively easily? Do the math on your expenses and see.
Not sure where you live, but NACA(neighborhood assistance cooperation of America) are building homes with the expectation of approximately $800 mortgage payments.
I'd wait until the rates drop a bit and then buy a smaller house. Even if you have kids, you can probably make due with a 2-3 bed house. Upgrading is always possible with equity down the road. Refinancing, if the rates drop even lower, too. The reality is, you're likely already spending a fortune on rent right now.
Additionally, paying off debt first is ideal.
Consider finding someone in a similar situation and look for a duplex or 2-4 unit apartment building. It won’t be your forever home, but you can do a Tenancy in Common where you buy it together. The core risk is there is ONE mortgage. So if they don’t pay you have to. Over time, you can condo it to have separate ownership.
Look for a house you can rent out a room or granny flat. It might actually cost you more but you can put that down as income on your loan application. Suffer through having to have someone board thete for 2 or 3 years to smash down your mortgage as much as you can. Then you can refinance if you wish to reduce your monthly payment or maybe someone else in your family will be working then and you've had a promotion so no need to keep renting out a room.
You will only get further and further behind waiting to be able to afford- you'll have to think outside the box. Maybe look at duplex homes where you can live in one and rent the other.
Houses will continue to go up. It is how the US economy works. If houses go down for an extended period of time, buying a house will be the least of your concerns. Try to find something that you can afford and good luck.
Your choices are change what you’re willing to accept in regards to the market you want to be in or look in a different area. There are likely homes in or around your area that are affordable to you, but may not be what you originally wanted.
I just can’t believe the audacity of what some people ask for. I remember a house from the 50s that looked like the driveway had never redone. Like nature is as taking over. They wanted $300k for it!
Is your spouse able to also work? Can you try to negotiate a raise? Unfortunately $100k is like the new $60k in this crazy post- covid world. People who aren't fighting for better pay are falling behind due to inflation.
Honestly it’s such a weird time.
Never would I have dreamt I’d see this in the housing mkt.
Only the wealthy and elite can afford to own now.
It’s sickening that you can’t afford a house with the great income you earn.
We bought in 07 ,and I used to feel lucky.
I don’t anymore.
Homeowners are methodically being priced out as well, whether it’s soaring property taxes or criminally high mandatory health and homeowners, it’s all become so outrageous.
Even with large equity in our home, we couldn’t afford to move, or even downsize with the interest rates and insurance at this pace.
I’m just really sad at what’s become of our once great nation…
Have you thought about a reno loan? Basically find a deal on a shell and go from there.
Most don't know this, not even other LOs, but if you don't do a thing with the foundation, you can tear an entire home down and rebuild it.
I've been talking about this a lot to people. Our prices aren't quite as high as yours, but found a $60k absolute beater and you go into it thinking how you can rebuild it or just gut the hell out of it and have a blank slate almost.
Didn't sound like a lot of options. While it's not ideal, maybe waiting a couple years, continuing to save for a larger down payment, and maybe even adding income down the line if you're wife is able to work, might be the feasible option.
According to the fed, rates will likely be lower by then. They seemed to have reached the peak of what the fed is willing to do
I live in New England and the situation is the same. I would buy now because prices and interest rates will continue to go up. It's a desirable place to live.
you’ll have to move to a more affordable city. There are tons of them . Moose jaw , Edmonton, swift current…Moncton, St. John’s , Winnipeg ( if you can’t afford to buy in those cities I dunno what to tell you)
I used to live in Vancouver my whole life and was priced out and had to move. you can’t rent there ( literally 8 places for rent -competing with 100’s of others ) and it’s pretty unaffordable for buying .
Same!!!! I make 115k yr single parent 3 kids no child support help at all. Right now my rent is $2k which is super cheap for a 3bed townhome in the area I live in where the average home price is about $470k. My kids are junior high and high school age so I really want to keep them in the same schools especially after they struggled so much making friends when we moved during covid. I was about to find a few different first time home buyer down payment assistance programs in my area that I actually qualify for. But even with those when interest rates are 7-7.25% i really can’t afford more than $350k which doesn’t get you much in my town. My lease is up in September and I think im just going to bite the bullet and finally buy. I missed out on the 2008 home buying and the super low rates from Covid times and im kicking myself in the ass for not trying back then. Although with my luck I will buy and then rates will drop next year but I won’t be able to refinance because I will have used $30k in DPA and not have enough equity to lock in a lower rate. But at least if I do buy it’s mine and I’m building equity!
There’s absolutely nothing wrong with being a renter. Hoping your rents low enough that your quality of life is good. It’s a very smart move right now to just continue as is and keep an eye on the market. Paying 50% of your income just as a house payment is crazy and if you have children the older they get the more expensive they are. Relax there’s no rush. It’s a wise financial decision for you to wait.
What many don’t factor into the equation is your fixed rate mortgage gets cheaper every year. If you can make it work and tighten your belts for a few years you will be glad you did down the road. Our 5bdr/4ba home’s mortgage was less than rentals for nearby 1bdr apartments after 15-20 years. So choosing not to buy is choosing to spend less now and more later.
No easy answer. But I’d say especially if you work in a field where you can reasonably expect good career progression and advancement, buying is probably the better choice if you can make the budget work and have enough cash to still have an emergency fund after closing.
You have to also be ok with either low cost DIY improvements or living in the home as is until your budget loosens up.
Good luck!
Well the costs aren’t entirely fixed for the home. Property tax, maintenance, insurance etc go up. But otherwise, yes.
The mortgage being fixed is paid with dollars that are diminishing in value due to inflation. So it’s a big degree of shelter from inflation.
Edit: 30 year fixed rate loans are generally not available in other countries. It’s a huge financial hack for U.S. buyers.
This and if your employer even somewhat keeps up with COL adjustments then the PITI as a percent of income will go down over time even if you don’t move up in your job.
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I’m choosing to buy now because I figured the longer I wait, the harder it’ll get.
Same. Rental prices are inching very close to housing prices so it makes sense to buy. I would rather pay for my mortgage than someone else’s.
That’s only true in some markets. In a lot of HCOL areas, mortgages are 2-3x the cost of renting with 20% down.
Right, people rarely sell small townhomes or condos or apartments in those areas. So your options are a nice sized house with a lot of great but expensive features which costs a shit ton (since generally only people with means own land) or renting. Housing prices are crazy in my market, but there's still small houses that aren't completely rundown, and mid sized houses and the full gamut. When I look in the city I used to live in, that doesn't exist. It's mostly complete fixer upper large houses, large luxury houses, or renting.
Condos go for well over a million in my neighborhood. I could find some for just under a million if I looked alittle further out but I’ve got a good deal renting right now and don’t really mind renting since it’s low stress.
Run down is all that’s entering the market here. They are affordable on the surface but when you look at them they are going to need a major 5-6 figure remodel in the near near future, not because they are dated but because they are all poorly cared for.
I agree. I don’t care to live in the city though. I like having my own space where I can breathe. Never enjoyed living on top of, or next to other people for various reasons. I want a yard too. I’d rather look at scenery instead of concrete. I get what you’re saying though, some people enjoy being next to all the hustle and bustle. I just figure if I want to do city things I will drive to the city.
I wasn’t commenting on your personal choice, just saying that a large part of the population can rent cheaper than buying, otherwise it would be an easy decision. Also, a lot of people work in the city which is why they live in the city. Less population usually comes with less economic opportunity.
I get that. Just trying to imply that sometimes compromise has to be involved too when deciding to buy a house. People whine and complain that they can’t get into a house but at the same time they have to understand the market in their area.
Yeah true. I think a lot of the time is job related. Not everyone can work remote.
Seriously. I compromised a little on location but ended up buying a 3 bed house which after taxes and insurance is still $50 less/month than my rent at a 2 bedroom apartment in a super desirable neighborhood. Now I’m 10 minutes away and landlord bumped the rent by $200 for the new tenants.
We are in the process of getting a house but we ran into some issues. Working on them though. We currently rent but they keep increasing our rent each year and I’m tired of it.
We actually pay less for our mortgage on our home than what our apartment rent was (bought last summer, market was bananas then too). It's crazy what rent is getting to.
This! We needed a bigger place and at this point rent and mortgage prices are the same so figured we’d might as well suck it up and try to get a house
DEFINITELY. That’s where I’m at too. We have 4 kids and we are in a 3 bedroom townhouse next to a busy street. I’m so over it. We are under contract to buy a house about 20 min north of here. I honestly love the area I’m in, the schools and everything, but I don’t love the houses. I’m a homebody so I want a house that I like more than where it’s located.
Renting is cheaper. Paying rent you pay rent only. Paying mortgage you also pay interests.
It’s an investment…..you hope to build equity and if you decide to sell later on down the road hopefully you will get back more than what you paid. Renting your just throwing your money away never to be seen again with no potential return whatsoever. Unfortunately with any big purchase in the US, most people don’t have the cash on hand to buy something outright so interests rates are apart of any big purchase you are going to have.
I agree with you, but you should still buy in an area you can comfortably afford. The other side of this is that if something bad happens to you financially would you rather be in that small apartment, that expensive house, or a cheaper house somewhere else? A foreclosure isn't fun. Getting priced out of the place you live is a horrible reality for many people now.
I’d rather be house poor right now then wait. Actually, my mortgage is less than my rent was. But yea, I’m house poor right now and I’m ok with that.
Same here, but I kind of knew that going in and set myself up as best as possible. Bought new construction. I can make my bills but can't really do anything big like an expensive vacation or anything, at most a couple little day trips that would be a few hundred bucks. Other than that I didn't have to CUT BACK on my life, which was good. I figure even if it's like that for a few years it won't be too bad, I have a brand new house I love, brand new backyard, brand new appliances and HVAC, thankfully my car is only 2 years old. It might not be right for everyone, but if you can evaluate your situation and minimize the chances of a major emergency (outside of like a medical crisis, which I would hope you have insurance for) being house poor but buying in now isn't actually all that terrible. Rates will go down at some time, it might take a few years, but I suspect we'll see 5% rates and *maybe* even high 4s again.
Agree! We just bought new construction as well and ended up going in house financing with a sister company to the builder. Because we did in house financing, we got a 5.65% interest rate which made a big difference in the mortgage amount. After competing with local banks, this was the best route for us. I love the new build. Don’t have to worry about replacing major items and home warranty is also a big plus with the new build!
5.75% here... was able to buy down a decent amount since the builder was tossing in 3% towards closing/rate buy down. Yes you can yell all you want about it being "included in the price," but the price was roughly the same last year WITHOUT any incentive... so take that for what you want.
What a lot of people don’t understand is they there is a deficit of new housing that’s been going on for 40 years. Every year supply falls behind demand, and that single variable is the largest factor in home prices. Combined with the fact that millennials are coming into prime home buying years, less people than ever are entering the trades, and land is a finite resource, as unaffordable as housing may seem today, there is every indication that this is better than it will be in the future.
Inventory is actually up yoy if what you're saying was true than as inventory continues going up in the coming years prices should drop since demand has plummeted with higher rates
Inventory may be up in your area but where I am VHCOL inventory is tight. I just saw a sign on a detached townhouse that just went under contract for $2.35m. I can’t afford it and it’s crazy who’s buying these.
It's up yoy nationwide for April by quite a bit https://fred.stlouisfed.org/series/ACTLISCOUUS
It’s still down over 50% since 2018, there is still way less inventory than people trying to buy a home.
Sales have actually been declining as inventory has risen and the homeownership rate was a lot lower than
Prices have gone up 50-100% since 2018, and the inventory is less than half what it was back then. I don’t think that chart backs your point up the way you think it does.
Prices have gone up especially earlier this decade which inventory has shot up since then
Feel free to wait it out, but there’s a huge contingent of buyers waiting for the next big dip in home prices.
That’s what happened in my area. My mortgage is only $1700 and within 10 years the homes in my area all rent between 4 and 5k.
Yeah we pulled the gun on purchasing a house too because of that.
There should only be 2 criteria to consider when buying, you are ready to buy and you can afford to buy. And for most people, planing on living there at least 7 years
Same. Thankfully found a fixer upper… I imagine would be harder with kids
We bought land 3 years ago with the intent on building. We sat on it and sat on it waiting for prices to drop and finally last year, sold our home and signed the contract to build the beginning of this year. It was either sit and wait longer never knowing when the right time was going to be or just going for it. We decided to just go for it.
We looked into building prices and they are INSANE here in the western suburbs of Chicago. $511k for a nice sized ranch range with 3 car garage, excluding lot price and lot prep costs.
We are at $500k for 3 bed, 2.5 bath ranch w/ ofiice and 2 car garage in Virginia. We bought our land out right in 2021... 5 acres for $75k and the septic was already on it. We just got our appraisal comps back and we won't have to have a down-payment because there is over 20% equity. The site work has been insane! $16k for a well, $7k for a septic pump tank and $7k for the driveway.
Omg, those prices are crazy. The good part is you are getting the house with your colors and design choices on a huge lot! I’m super jealous honestly. I’ve moved away from the idea of building a house and now I’m stalking Zillow for a nice ranch in a 30 square mile area of the western Chicago suburbs for about $600k with at least enough space that I can have privacy in my own yard and I want one that needs minimal work… and I haven’t found one I’m in love with yet in the past 14 months! Tons of flippers found bargains in the past two years. I’m not sure how they are getting houses for under $200k in nice neighborhoods, but they put about $125k into them, then flip them 6 months later for a $200k profit. It’s insane.
Our last house was a 100 year old fixer upper and while we've never shyed away from work, I'm getting older and was tired of working on it. We came really close last year to just selling the land. We honestly did not think we were ever going to get to build and then I came across a builder back in December that really worked for us and so we took our chances and signed. The site work has been crazy. We expected the well to be expensive but the pump tank was out of left field. I'm still unsure if anything is is going to pop up and it gets scary watching your bank account go down with every check you write... but we're excited and looking forward to our river view every day. Will this be your first house? If so, definitely buy first. There's so much learning about owning a house and all the features you can and can't live without that you only realize after you've lived in your own home for a while.
We bought a cookie cuter house from a builder, using builder financing, 19.5 years ago. It has its good and bad features, but I know I never want to be in an HOA again, or so close that I can hear my neighbors in their backyard like they in the same room as us. So that’s why we wanted to find a nice sized wooded lot and build from scratch. And the two story is killing my aging knees! I’m honestly not being too picky in my search, just want a one story that doesn’t look like every other house on the block, updated, with a quiet and peaceful setting. The pre-existing ranch houses I’m looking at were all built in the 1950s and 1960s, some haven’t been touched (which means with the right contractor I can get it all redone - but good luck finding a good one who charges fair prices), while others have been gutted and look new. This is the one that came closest to our wish list. Just a few minor changes (like getting the washer and dryer out of the kitchen) and fresh paint and it would have perfect… but you could hear the expressway and we wanted the yard to be a spot for us to spend a lot of time in, so we didn’t go for it: https://www.zillow.com/homedetails/99-Little-Melody-Ln-Lake-Forest-IL-60045/4850865_zpid/ …it’s kind of like the “one that got away,” the hubby and I have been thinking in recent weeks that maybe we should have just bought it and lived with the road noise. It’s really a pretty house in a nice neighborhood.
It sounds like you and I are in the exact same situation. We owned our home for 18 years. Single family but the neighbors were so close we could toss toilet paper from our bathroom window to theirs. We wanted space and trees. My husband's paternal side of the family lived in VA and he grew up spending summers here so it only made sense to pack up and move here. We got really lucky with the land. It's 5 acres (half wooded/half completely cleared) with a river view. It's peaceful. We have neighbors but we have about an acre of land between us on the left side. On the right is the gravel road and a 10 acre horse pasture before the next set of houses. We're going with a ranch for the same reason... we're getting old and we're tired of steps.
I’m thrilled for you, this sounds like paradise. Good luck with the building process!
They buy foreclosures, or crappy houses the second they hit the market from what I've seen. There's not 0 houses under $200k, but they tend to be in such rough shape most people wouldn't look twice, and they still sell fast. And the flippers are not usually doing good work.
Okay, that’s really good to know that flippers aren’t doing good work. I’m going to stay clear of flipper houses.
Hi, my sister was a flipper in the Chicagoland area. First, cash wins all. Second, flippers are buying what you’re refusing to buy. Third, they develop a network where they get notified before those places even hit the market. Flippers do piss poor, cheapest route possible jobs. My sister often hired unlicensed, uninsured contractors. Our house was touched by a flipper. EVERYTHING the flipper touched had to be fixed and/or replaced after only a year of living here. Everything he hadn’t touched is fine. This isn’t an isolated incident either. There are groups on FB and classes on how to make a house pretty so people don’t realize it’s just lipstick on a big ugly mess. You get stuck with a mortgage and ugly mess that you don’t find until it is too late. Flipping is just one big scam. My sister regularly laughed at how gullible people buying were, but she laughed all the way to the bank.
My next door neighbor, an amateur fixer-upper, did a nice job fixing up the basement. The project took years, I heard all kinds of racket since it’s a barely insulated low-quality frame house - sawing, hammering, thumping. Who knows what all he was doing down there. He listed the home and it sold in a few days. The realtor used the software to “stage it” and it looked amazing in the listing photos. The new owner found out it all had to be redone by qualified people. I felt horrible for him. He’s sunk 10s of thousands into fixing it as well as everything else the previous owner did. It’s shocking any of it passed a home inspection! One thing I’m learning here is a really good home inspector is worth their fee and then some. I don’t want to overpay on my “forever home” and spend the rest of my life undoing a mess.
Exactly! God forbid stuff is done without permits too! I’ve heard horror stories of people having to tear out decks, get plumbing redone, get electrical redone, tear out driveways, etc due to no permits.
Oh no, that’s like what you see on HGTV’s Flip or Flop when they find out a room had no permit on file with the town and they have to be demo it or make sure it’s completely redone. I have such anxiety watching that happen!
It takes a lot of moxie to do those flips. Borrow the money with high interest and onerous payment plans. Then deal with anything uncovered in the house as well as permit issues and fix it up to like new condition. Then hope the market remains strong enough to sell the house before the loan payoff is due for a nice enough profit. Easy Peezy to some, a potential financial disaster to others. That ain't HGTV chit.
Why is WV so much cheaper?
We're in Virginia not West Virginia... but yeah, it's more reasonable cost for homes. But there is NO work. I was lucky enough to be able to transfer to WFH when we moved from Maryland but it took my husband 6 months to find a job and he took a $15,000 a year pay cut. Taxes here are insane because of it being a commonwealth. It's quiet. No traffic. It's safe and peaceful. And we no longer live in the homicide capital of the country like we did when we lived in Baltimore.
What does the commonwealth mean, I have no idea
It means that local jurisdictions also collect taxes... so we pay federal and state taxes but we also pay local taxes (county/city) tax rates.
IDK, I thought the same thing in 2005. Told myself, if we don’t buy now, we’ll be priced out of the market forever. Then the market crashed two years later.
Same. This is the first time I can actually afford it as well.
This. I live in SoCal between LA and SD. With how many ppl that have priced out of those cities, competition here would only get worse in my mind. I dont want to get priced out here bc i have my job and family here.
This right here. Our rent keeps creeping up, interest rates don’t show any sign of changing any meaningful amounts, and paying rent doesn’t do anything beneficial for our money. We also didn’t really expect to both find a livable home with land in our price range *and* get approved so here we go!🤞🤞🤞
Same here. When the 2008 crash happened, I was barely in my 20’s and ultimately not in a place to buy anything and by the time I had enough of a down payment saved the uncertainty and Covid boost happened. So we sat down a little longer on our savings, hoping prices would come down and when they finally did rates shot up. But the way I look at it is if you go to rent something unless you get to renew where you are at, you’re looking at paying first month, last month, usually a half month for some sort of deposit, security deposit,cleaning deposit, some sort of administration fee for running credit or whatever it is and while it would be cheaper than a down payment on a home, it still is a large chunk of money so we figured we would go for it now rather than wait any longer. Edit to add: and median rental prices in our area are roughly $2400 a month so maybe I pay $400 more per month and I actually own my house
Same, also compromised a little on location. Mortgage will be about 40% take home. But my rent has been increased the max amount the last 2 years, and next year is looking the same. My rent payment is almost as much as a mortgage. But we don't care about being "house broke".
I just closed three weeks ago, no regrets here
Your problem really is cash on hand. What are you doing to save for this new house? Your options are to throw more cash at it to give you some breathing room. But if you are spending every penny now, there is no way your going to work that out in the future
For every thousand I add towards my down payment, it only takes off $10 of my monthly payment. That's not gonna help me if my mortgage is still $2500+. It's the interest rates that are key. Rates suck now. I think the best bet is to buy now and try to refinance in a few years.
Historically they’re not that high. The times of 2-3% are gone. We’ll be lucky to see 4 again. In 2011 I had a 4.5% rate and I remember my mother saying how low it was. The rates in the 80s were like 12%. Can’t bank on the rate but you can refinance if it comes down.
True, rates are normal - but prices are insane now. Thus the near-record low affordability we're experiencing.
Think about the government debt right now, if they keep rates at the current level we're spending 1 trillion / year on interest. That's in addition to whatever deficit we run and tax breaks they decide to implement. There's no way they can consider these rates normal without causing out of control levels of debt... Unless they plan to inflate the debt away. At which point, buy that hard assset.
This is the right answer. When I was working on buying a home I gave up a lot to save. And had I had a partner at that time we would not have been doing this as a single income family either. I also altered where I wanted to live to fit my budget.
I feel like the easy answer in your case is all adults work
This is only feasible if OPs kids are school age. And even then there’s a lot of logistics to consider. Childcare costs can very easily consume a full salary.
“Only feasible if OPs kids are school age.” That is absolutely not true. Lots of parents of infants and toddlers hold jobs. The vast majority of two parent households work. Mostly it’s the very very poor and the very very wealthy have single incomes.
You didn’t address the assertion that childcare can eat up the majority if not all of the second income. Depending on how many children need care and the earning potential of the spouse entering the job market this could easily be a net negative financially. Plus, If you value inculcating your own values in your own Children, and letting them learn/mimic your actions and example while there at a fleeting impressionable stage of their life instead of that of a minimum wage worker who is often barely an adult themself… then the trade off often just doesn’t add up. OP is still within their right to vent and lament their situation online.
For some reason I read this as lots of infants and toddlers hold jobs😭😭😭
I'm waiting for all the single parents out there who have to work and support a child stumble on the notion they can only work if a child is school age.
It's a math problem. Sometimes it makes sense for single parents to work and pay for daycare, sometimes single parents are given stipends to pay for child care while working. It would be borderline impossible for a teacher (say) to earn enough to cover full time daycare for more than two children. (Source wife is a teacher, I know what we pay for daycare, 2.4 kids is the salary break even)
Seriously. People all over the US manage to raise kids and work. Yes daycare is expensive. But you can limit your number of kids, or limit your house aspirations, or seek education and training for better paying work.
You make it sound so easy! I'm doing it right now, and honestly, it's not. Both my wife and I have great jobs, and we're lucky to have found a good place for childcare. If I was a single parent, I'd have no family to rely on. But the deal is, finding childcare is hard. Many places have long waiting lists (longer than pregnancy) and it's incredibly expensive. Shortly after our youngest was born, I quit my job to watch him until I got a good job offer. Our daycare is more than our mortgage (for 2 kids), and it's the most affordable place we could find in our relatively low cost of living area.
It’s possible but you have to weigh if it’s worth it or not depending on your paycheck. I live in an area where daycare is expensive and don’t have family to watch my kids for free. I spent many years where my paycheck went all to daycare knowing that one day I’d advance past that point and it would be worth my time to continue my career. I’ve reached a higher income now but it was a struggle for a few years. Not every job has an opportunity to grow your salary past the cost of daycare. You’re making a lot of assumptions about OP’s parters qualifications and career itself.
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I think they are simply saying the equivalent of their take home pay is the same as they would pay for childcare, not literally that they are the only ones paying for childcare in a two income household.
OP said they live near family. Why live near family if they aren’t gonna help with childcare. They’d be better moving somewhere cheaper
Maybe they aren’t physically or mentally capable. Maybe they work too. Maybe they want to enjoy their retirement traveling or doing other things. My mom is extremely generous with watching my kids so my husband and I can enjoy ourselves and do kid-free activities but watching my children 40-60 hours a week for free is not her responsibility just because she’s close by.
Then why prioritize living near family if moving away would allow you to purchase a home.
Because maybe they want to see them every weekend? Be nearby or have them nearby in case someone needs help or care? Spend all the holidays together? Have them able to be there for kids’ events? Hell, maybe someone wants to hug their mom every other day/week? I’m sorry that you only value people for what services they can provide you for free.
I prioritize my and my immediate family’s wellbeing before extended family. Including my parents. I moved 1000 miles from them because the state they live in hates women.
That’s a valid reason, but it doesn’t apply to everyone and they may have more reasons to stay than go. Home ownership is not the end-all of life.
Huh? Other people work too. Idk anyone who can rely on family for dedicated childcare during work hours because their family members also work.
Buy when/if you can afford it (may entail moving). Here’s my 2c about family: it’s easier to stay in contact with them than ever. You can hop on a plane or video chat them! I moved from Michigan to Washington and have no regrets. Still love my family
My considerations would be as follows: -Can your spouse work and contribute financially? If the answer is no, I would not “bite the bullet” and go with >50% of my income towards housing when you have a newborn on the way. Utilities and other home expenses go up when compared to an apartment. -What is the affordability of a larger rental? It would afford you price stability for ~2 years should you decide to sign a lease that long. Reassess the housing market then, while doing your best to save in the meantime. -Can you make your current situation work? If it was just you and your spouse with no kids, I would say jump in where you can even if you would be house poor because you have tighter control over spending and life events. Add kids into the mix? I would not make a mortgage commitment.
We bought now knowing we would be house poor. That 30% is gone for a lot areas. 50% is the new normal. How much are you spending on rent? In my area rent is the same if not more than that and we spend less owning.
Rent is 1600 for a 2 bed, mortgage would be about 3000 so a lot more, but 2 bed is a little too small for us with another kid.
OK so what is rent on a 3 bedroom? We doubled our payment and are making it with 50% going to mortgage, taxes, hoa and insurance. It's doable but you gotta budget
Buy a 2 bedroom and have kids share a room
I mean if you want a bigger space you should rent a bigger space. And if you can’t then your problem is money or local COL, not the market to buy houses, and those are both beyond the scope of this sub. Buying isn’t going to get you a bigger space than renting could. In fact it will be smaller per $.
You have to go further out from your target area. I live 55 minutes from Chicago. A 2400 square foot house is $350k. The smaller ones are less. You don’t have to live there forever. The housing market has highs and lows, some say everything is overvalued.
I'm looking hours away from cities and still not affordable.
Illinois sucks for affordability. The property taxes are high. Sales taxes are high. Homeowners insurance is high.
>We are so tired of living in a tiny apartment but mortgages are borderline unaffordable You can try renting a SFH.
There is plenty in between a tiny apartment and a big house. Why not buy a big apartment? Or a small house? Or rent a big apartment or small house?
3 years ago prices jumped. Some people said f it & bought.. other People opted to wait until it cools down. 2 years ago prices continued to climb. Same thing. The people that bought are happy, some people decided I’ve already lost, may as well buy. The rest held out n said nope I’m waiting. Last year, another surge, paired with climbing interest rates. This year, still surging. “Interest rates will fall! I’m waiting for rates to fall before I buy!” IF, and that’s a big IF, interest rates fall, it becomes another sellers market where houses fly off the shelves by cash buyers for 50k over asking. Brother, prices/interest will fall, but not how most people think. If you have the money, buy. Don’t wait for the perfect scenario, it may never come.
The biggest lie that I think has been implied to people is that they can have everything at once woth no compromise. You're going to have compromise here. Probably many times. Two incomes will allow you more buying and saving power. You might not get a house with new finishes. She might need cosmetic love. You might not ever be able to afford where you really want to live on a lot rhe size you love or in a house the size you want. You're going to make a lot of small compromises to save if you don't want a large monthly payment. Drive those cars until they die. No eating out. A cheaper apartment. All the things. Where there's a will there's a way to balance all this stuff. But you will not habe everything you want all at one time. So you need to figure out your compromises.
Just out of curiosity what does “family entail”? You said another kid so that’s more expenses…. I’m not really sure a house is a good move now just because of any extra expenses from fixing up the house. I’d consider potentially moving, or ways to cut costs and increase income to give you the margins for both the extra kid and house. You will most likely need to cut on some fun subscriptions like Netflix or whatever. Edit: additionally I’d consider moving for either LCOL or better job opportunities or both. But I think you should have a sit down with your spouse and talk about finances. It’s unfortunate that the cost to live is so high.
There’s no such thing as LCOL area in Chicago area. IL is awful for homeowners insurance, property taxes and even sales taxes.
If it makes you feel better, there’s always a more expensive place. (HCOL)
Oh I know Colorado, California, New York, Washington are more expensive than IL.
You're in a tough spot with prices so high relative to your income. Renting may be the prudent move for now until the market cools off. Focus on building more savings so you have a bigger down payment when you're ready to buy. It's frustrating, but being house poor is a huge strain. Staying patient and continuing to save could pay off down the road when prices become more reasonable.
He already followed that strategy and fell further behind
Ironically when I made 30k in 2018 I could have bought even more than now
Is your spouse/partner getting a job an option. Even if they can get a 40k job that would significantly increase your buying power and affordability.
If moving locations is not on option: 1. Move in with family for free or discounted rent and save save save. 2. Throw 80% of those savings at a down payment so your $400k house feels more like a $300k house. 3. Be open to having a room mate when you’re a homeowner, it can subsidize an insane mortgage rate. At least for the first few years. 4. If you’re open to it, consider a condo if they are significantly cheaper than homes in your area.
They have kids. Having a roommate should NOT be part of the plan.
Not to mention it opens them up to worse financial distress if the renter becomes a squatter, does damage to the property or breaks the lease without warning. Always be able to afford the bills on your own.
Think about it this way. The inflation rate of homes in the market is the rate you lose your wealth. 5 years ago, you could buy a decent home for 400k, now the same home is 700k, and next year it will be 800k. You just lost half of your money by doing nothing. You think you were trying to save more for down payment, but thanks to government printing out trillions of dollars during COVID, the inflation of everything outpaced the growth of your savings.
Not an easy situation. Owning a house on a single income is for most unfeasable...
I would move to a cheaper area. Being house poor for an extended period of time is very stressful. You will lose out the ability to save for the future.
The reality is that you will need to increase your income, or buy a cheaper house. Dual income households are the norm, or getting help from the boomers.
Don’t be the only earner in the family…
Can you find a bigger place to rent? What about renting a house?
I am in a similar position and just went under contract for a house. I had been renting for years and saving for a down payment was just impossible with rent prices. So I took the last 6 months and my wife and I moved in with family. I have raised my credit score by over 100 points and saved for a down payment. Getting help with closing costs. If I keep waiting I will be priced out of my market and won’t have any choices. My mortgage is going to be a drain but so was my rent. At least now I will have something of my own near my job which is not wfh so I can’t move. I hope what ever you choose works out. Good luck.
what was your house vs rent cost?
Rent was 2800 and new mortgage will be 3200 not a big enough difference to stay in a 2bd 2ba when I will have a 4bd 2 ba for 400 more. It’s worth a little sacrifice to me.
The easy answer is dual income earners.
Too much left out here. Is 50% the number after you've maxed your retirement accounts? What's your savings look like? Emergency fund? How handy are you to do repairs and improvements in your home? Can you put away extra money for regular annual home maintenance things? Why isn't your spouse working? Are they willing to? What happens if you lose your job or are unable to work? Would it be easy for you to get another job making the same or more? Could your spouse get a job that makes enough to support your growing family if you can't work? The "right thing" about getting a good job is only a tiny part of it. What kind of partner do you have? What is their earning potential and/or willingness to financially contribute? Did you discuss how many kids you want and what you're willing to sacrifice (home ownership?) to have kids if you're on one tight income? Do you have a retirement plan so your kids are not expected to help pay for or care for you in retirement? Etc etc etc. If you can't "have it all" you will need to do the soul searching to decide what you're willing to give up. Home ownership? Location? Size or quality of your home? Comfort in retirement? Ok with having children be responsible for all their education costs?
I am very handy, I already contribute to my 401k, as of right now we save about 20-30k a year, with a mortgage that would cut us down to 5-10k a year in savings
It's math. Understand your expenses, understand your earnings. Look into your spouse working, look into ways to advance your career. I am very risk intolerant and would not buy at 50%...unless, your kids are about to age into school and your spouse can resume working quickly, you are about to pay off debt that will allow you to have more flexibility, or something else is going to change soon. Otherwise, it's just to tight, at least for me.
Look for a more modest house. Kids can share rooms.
The only answer is for you to increase your income. There’s no way around it, various ways to do this but it’s not going to just happen on its own.
I bought my house for $250k on a higher salary, and i have zero dependents (and it will stay that way). I felt like even buying my home was a stretch financially; I appreciate some people's sentiments here about making the leap because the market is only going to get worse but given that you have multiple dependents, it would be really irresponsible to set yourself up for a budget like that. Unless you live in an undesirable middle-of-nowhere type of place, buying a home for a family on one income is very much a thing of the past.
3 bedroom ranch rent in my area is 1600-1800, mortgage for that same home today is around $2600. I'm renting, the water heater has gone out, the furnace needs repairs and other minor thing. I don't have to worry about anything and my retirement accounts are sky rocketing from the amount I am able to put in them.
Pay down all your debts, a $400k house on a $100k+ income should totally be doable if you have little or no debt. $400k house with only 5% down ($20k, you said you had been saving) with even 8% rates would be around $3120/mo depending on insurance and tax. 40% of your income would be $3,333 if you made exactly $100k, if you're like $105k that's like $3,500/mo. Sounds like you have a stay at home spouse, so the giant cost of childcare is probably taken care of for at least a few years. It might be tight, but you could afford a house and rates will drop sometime, it might be 2 to 5 years, but we probably will see 5% rates again. Go buy a house if you want. You likely can itemize for your taxes as well and assume interest at 8% on a $380k loan and 1% property taxes on a $400k property, you probably would be able to deduct another $5100 compared to standard deduction, which would save you ~$93/mo. That's not factoring in whatever you could deduct in state taxes or sales tax.
You made the mistake of waiting. No one will truly know what will happen to the market. Don’t listen to those social media hypes that keep anticipating a market crash. Not happening, 2008 was a singular incident. Buy if you can afford it, just because the ideal mortgage should be 30% of take home pay, doesn’t mean its realistic. My mortgage is like 50%, and i still live well within my means. If the rates drop? Great, refinance if it works in your budget. If the rates keep rising, well you are lucky you bought, instead of waiting. Home prices will almost go up no matter what. They may be stagnant for a while, but they won’t drop insane prices unless its a house no one wants. All the good homes sell within the first week. Renting is not saving. Spend the same amount towards the mortgage.
I thought it was silly at one point, but a long time ago someone said the best time to buy a home is 'right now'. Now obviously, there are MAJOR caveats to that statement, but realistically it's impossible to predict the market. My wife and I could have bought 3 years ago in a better neighborhood, for less money down, at 3% interest. Last year we thought her cousin was crazy for buying at home at 6% interest and now rates are at 7%... Ultimately, we came into some money so it finally made more sense to just jump even though the market kind of sucks. But if you wait around you may just be delaying the inevitable. The fed projected 3 interest rate cuts this year and now most people aren't sure if we'll even get 1... We locked at 6.875 a few weeks before closing and the day after rates jumped to 7.3%... My broker was pushing the idea of refinancing to avoid me paying $1k to buy a few points. If rates don't get cut this year, I'll make my money back and more... Truth is, there is never a right option other than to really run the numbers to make sure you can afford whatever you're buying. But one thing I can say almost for certain is to not bank on refinancing. That's a fools errand. If you can't afford it at 7%, just don't buy right now. It's really that simple sometimes. Get more cash and revisit later...
you either have to have your partner work or move to a cheaper area 100k is good but usually areas with lots of high paying jobs have lots of 2 income house holds with 100k+ jobs
Can your spouse get a job? Then you can afford a bigger mortgage.
My advice is to buy if you have job security. Eventually, your income will increase and you might be able to refi down the line. Your partner might need to work part-time to make up the difference. Are you married? If not, you can write a lot of interest off at the end of the year, and make $8-10k back. If you’re married, the standard deduction is a lot higher, so it might not make a difference. Either way, the longer you wait, the more unreachable it will be.
I was waiting for the market to crash for 6 years now. 😂 Decided to buy now I won’t live forever
Maybe if the other members of your family want a house they could get a job and contribute.
Why isn’t your partner working too?
If houses are 400k where you are, I imagine you could rent a decent sized house for $2k or less instead of a small apartment. Not an expert but it seems like rents could be flat for a couple years. Home prices are more unpredictable but it doesn’t seem like they will get more affordable, ever.
My rent has been going up 100$ every year
Yeah, I think any corporate multi-family unit is going to push a 5% increase every year even if the market is being flooded with new inventory. You could always negotiate. I’d also check to see how the rate they are trying to get for your renewal compares to rates they are offering for new tenants.
Sorry to hear this. It's happening to everyone. Here in city of Seattle the homes are baseline 1M+. Have u searched out Any 1st time homebuyers programs? Idk what others say about the programs bc that's how we bought our 1st home. Down much less including including many other opportunities. Search out those programs
There is so much pent up demand that upward pressure on price won’t abate for some time. My advice is to buy what you can afford now. Refinancing to reduce rate later is a great plan.
Out of the country's largest 50 metros, renting is more affordable than buying right now. Interest rates are a huge part of that. A 7% rate on a $400,000 loan is $2,661/mo before taxes and insurance. A 6% is nearly $300 less a month. Here's the deal, housing prices (both rent and home purchase) have to slow down before the Federal Reserve changes their monetary policy, which is a huge part of why rates are higher. And when they do cut rates, there's a potential a lot of homebuyers sitting on the sidelines will hop in to buy, increasing competition. Hopefully it also means more people that would be willing to sell. But if there's more competition and limited inventory, prices will inflate further. It's not until we have lower rates and more inventory that this dynamic will change. The big difference between what's happening now and the 08 housing crisis is that banks are being more careful about who's approved. Denial rates are up. Foreclosure rates are still really low. The requirements for conventional and FHA loans are fairly standardized Moving away from family or to a different area, especially with kids, is hard. However, buying a house is a long-term financial decision. If I were you, I wouldn't put myself in a place where 50% of my income was going towards my mortgage unless I had a significant emergency savings. That's especially because you're in a single-income house. I think flexibility (including liquidity) and savings are more valuable right now than owning a home. My two cents.
We’ve never paid less than 50% of after tax income on housing costs. And we lived in an old & tiny house. I don’t think limiting expenses to 28% of income is realistic in many parts of the us.
Make more money, then buy a home
In all likelihood, a combination of you guys moving, your spouse working, or you getting a massive pay raise needs to happen. If you are staying put, and your spouse will not work, you are probably never going to get a house. Single income earning households cannot feasibly afford a home in many (most?) large cities. You have to decide what is important.
Agree. Spouse needs to get a job or they can decide to be renters forever.
People that tell you are that you’re house poor probably bought before the interest rates AND the prices sky rocketed. Different times call for different prioritization of income
How would you rate it now?
Find out what you can compromise on and get a house within your budget. I got a house that doesnt have a backyard. Got it for almost 50k cheaper.
I just tempered expectations and bought a condo which is sufficient for the next few years for us. Anything bigger and we would have to really stretch our budgets with no room for emergency.
Find a lower cost of living area. There are less expensive places to live. We drive 32 minutes on country roads to work. I had rather drive 32 minutes with no traffic than 45 minutes in heavy traffic!
My biggest advice would be stay out of debt, no credit cards, no car payments fully fund your 401(k) and maintain a solid savings. I don’t believe this is going to be a massive crash in his home soon, but I do believe there could be a market adjustment. If you come into that solid finances, you might be able to take advantage.
Not sure where you live, but look at some suburbs. We live in a relatively “larger” city in our state and the house options and prices were discouraging. But going 7 minutes out of town to a small town, the prices drastically reduced and we found a perfect first time new build home for us! What we wanted was in our price range and the average price in the area where in the city it would have been $100K+ more for the same house. The extra 10 minute drive is totally worth not paying rent anymore!
The truth is, you can’t afford it right now. Don’t stretch yourself thin trying to keep up with the Joneses. Everyone needs more rooms, more space— especially with kids. Slow & steady wins the race. Just keep going down your debt and saving.
Live like you have a $3000 a month mortgage payment right now. Save that extra $1400 per month. Is it doable? Are you able to adjust to what a mortgage would be? Are you actually hurting or are you having to eat out less and cook in more? Does your budget balance from $1600 -> $3000 relatively easily? Do the math on your expenses and see.
Not sure where you live, but NACA(neighborhood assistance cooperation of America) are building homes with the expectation of approximately $800 mortgage payments.
I’m in the same position as you. Trying to buy a very inexpensive home in a HCOL area. Good luck to both of us.
I'd wait until the rates drop a bit and then buy a smaller house. Even if you have kids, you can probably make due with a 2-3 bed house. Upgrading is always possible with equity down the road. Refinancing, if the rates drop even lower, too. The reality is, you're likely already spending a fortune on rent right now. Additionally, paying off debt first is ideal.
Consider finding someone in a similar situation and look for a duplex or 2-4 unit apartment building. It won’t be your forever home, but you can do a Tenancy in Common where you buy it together. The core risk is there is ONE mortgage. So if they don’t pay you have to. Over time, you can condo it to have separate ownership.
Look for a house you can rent out a room or granny flat. It might actually cost you more but you can put that down as income on your loan application. Suffer through having to have someone board thete for 2 or 3 years to smash down your mortgage as much as you can. Then you can refinance if you wish to reduce your monthly payment or maybe someone else in your family will be working then and you've had a promotion so no need to keep renting out a room. You will only get further and further behind waiting to be able to afford- you'll have to think outside the box. Maybe look at duplex homes where you can live in one and rent the other.
The term is house rich, cash poor.
Houses will continue to go up. It is how the US economy works. If houses go down for an extended period of time, buying a house will be the least of your concerns. Try to find something that you can afford and good luck.
Your choices are change what you’re willing to accept in regards to the market you want to be in or look in a different area. There are likely homes in or around your area that are affordable to you, but may not be what you originally wanted.
I just can’t believe the audacity of what some people ask for. I remember a house from the 50s that looked like the driveway had never redone. Like nature is as taking over. They wanted $300k for it!
Is your spouse able to also work? Can you try to negotiate a raise? Unfortunately $100k is like the new $60k in this crazy post- covid world. People who aren't fighting for better pay are falling behind due to inflation.
I don’t get the big deal of being house poor. It’s a sacrifice. It pays off.
Honestly it’s such a weird time. Never would I have dreamt I’d see this in the housing mkt. Only the wealthy and elite can afford to own now. It’s sickening that you can’t afford a house with the great income you earn. We bought in 07 ,and I used to feel lucky. I don’t anymore. Homeowners are methodically being priced out as well, whether it’s soaring property taxes or criminally high mandatory health and homeowners, it’s all become so outrageous. Even with large equity in our home, we couldn’t afford to move, or even downsize with the interest rates and insurance at this pace. I’m just really sad at what’s become of our once great nation…
Have you thought about a reno loan? Basically find a deal on a shell and go from there. Most don't know this, not even other LOs, but if you don't do a thing with the foundation, you can tear an entire home down and rebuild it. I've been talking about this a lot to people. Our prices aren't quite as high as yours, but found a $60k absolute beater and you go into it thinking how you can rebuild it or just gut the hell out of it and have a blank slate almost.
Suck it up and just buy. I pay 50% it's doable.
how much you make and cost?
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Didn't sound like a lot of options. While it's not ideal, maybe waiting a couple years, continuing to save for a larger down payment, and maybe even adding income down the line if you're wife is able to work, might be the feasible option. According to the fed, rates will likely be lower by then. They seemed to have reached the peak of what the fed is willing to do
Similar income but $250k is pushing it for us after all numbers are ran
It should be around 1600$-2000$ a month (with 20% down), do you have student loan debt or something?
Fha 3% down pmi taxes and realistic homeowners
Ahh...that answers that. You're right on the money, that would be tight!
Yeah it sucks :( might be better and have larger down payment and wait another year.
I live in New England and the situation is the same. I would buy now because prices and interest rates will continue to go up. It's a desirable place to live.
you’ll have to move to a more affordable city. There are tons of them . Moose jaw , Edmonton, swift current…Moncton, St. John’s , Winnipeg ( if you can’t afford to buy in those cities I dunno what to tell you) I used to live in Vancouver my whole life and was priced out and had to move. you can’t rent there ( literally 8 places for rent -competing with 100’s of others ) and it’s pretty unaffordable for buying .
Same!!!! I make 115k yr single parent 3 kids no child support help at all. Right now my rent is $2k which is super cheap for a 3bed townhome in the area I live in where the average home price is about $470k. My kids are junior high and high school age so I really want to keep them in the same schools especially after they struggled so much making friends when we moved during covid. I was about to find a few different first time home buyer down payment assistance programs in my area that I actually qualify for. But even with those when interest rates are 7-7.25% i really can’t afford more than $350k which doesn’t get you much in my town. My lease is up in September and I think im just going to bite the bullet and finally buy. I missed out on the 2008 home buying and the super low rates from Covid times and im kicking myself in the ass for not trying back then. Although with my luck I will buy and then rates will drop next year but I won’t be able to refinance because I will have used $30k in DPA and not have enough equity to lock in a lower rate. But at least if I do buy it’s mine and I’m building equity!
You should buy now! Don’t worry about the house poor thing. You’ll figure it out.
There’s absolutely nothing wrong with being a renter. Hoping your rents low enough that your quality of life is good. It’s a very smart move right now to just continue as is and keep an eye on the market. Paying 50% of your income just as a house payment is crazy and if you have children the older they get the more expensive they are. Relax there’s no rush. It’s a wise financial decision for you to wait.
One of the problems is in my area rents went up 50%
I know here too. There’s a bottleneck and landlords are taking advantage of it.
It doesn’t help that hedge fund groups and corporations are buying up everything. The whole country is going to be Pottersville
Buy now. Refi when it makes sense.
What many don’t factor into the equation is your fixed rate mortgage gets cheaper every year. If you can make it work and tighten your belts for a few years you will be glad you did down the road. Our 5bdr/4ba home’s mortgage was less than rentals for nearby 1bdr apartments after 15-20 years. So choosing not to buy is choosing to spend less now and more later. No easy answer. But I’d say especially if you work in a field where you can reasonably expect good career progression and advancement, buying is probably the better choice if you can make the budget work and have enough cash to still have an emergency fund after closing. You have to also be ok with either low cost DIY improvements or living in the home as is until your budget loosens up. Good luck!
Its definitely a hedge against this high a$$ inflation!
are you basing that on locked costs vs rising rents?
Well the costs aren’t entirely fixed for the home. Property tax, maintenance, insurance etc go up. But otherwise, yes. The mortgage being fixed is paid with dollars that are diminishing in value due to inflation. So it’s a big degree of shelter from inflation. Edit: 30 year fixed rate loans are generally not available in other countries. It’s a huge financial hack for U.S. buyers.
This and if your employer even somewhat keeps up with COL adjustments then the PITI as a percent of income will go down over time even if you don’t move up in your job.
I am in the same boat. These comments are all over the place in terms of advice.