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Old 05-19-2018, 03:13 PM
 
1,037 posts, read 755,682 times
Reputation: 1646

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Quote:
Originally Posted by CGab View Post
The OP has no idea what the market will do! And drop 50%, I doubt it! People buy houses all the time no matter what the market is doing. Who’s to say it will crash anytime soon anyway?!?
His timing probably isn't right, but his logic is.

There really isn't a bubble in the whole market, but there definitely is one in the "affordable" home market.

In 2007, the whole market was in a bubble. Everyone was buying $500k McMansions using subprime loans.

Today, people are paying $300k for small ranchers that fetched $200k during the 2007 bubble.

The $500k McMansions are still $500k, but most are sitting and not selling. There are very few buyers that can afford those homes using traditional loans.

In a few years, the main buyers of homes will be Millennials, and many are drowning in student loans and consumer debt.

Low interest rates have also masked the amount of debt that is floating around out there. Those interest rates are starting to rise.

The amount of outstanding consumer/student debt and rising interest rates will eventually push a pin into this new bubble.
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Old 05-19-2018, 03:28 PM
 
10,274 posts, read 6,510,807 times
Reputation: 10855
Quote:
Originally Posted by Lockdev View Post
His timing probably isn't right, but his logic is.

There really isn't a bubble in the whole market, but there definitely is one in the "affordable" home market.

In 2007, the whole market was in a bubble. Everyone was buying $500k McMansions using subprime loans.

Today, people are paying $300k for small ranchers that fetched $200k during the 2007 bubble.

The $500k McMansions are still $500k, but most are sitting and not selling. There are very few buyers that can afford those homes using traditional loans.

In a few years, the main buyers of homes will be Millennials, and many are drowning in student loans and consumer debt.

Low interest rates have also masked the amount of debt that is floating around out there. Those interest rates are starting to rise.

The amount of outstanding consumer/student debt and rising interest rates will eventually push a pin into this new bubble.
If he wants to hedge his bets and keep throwing money away on rent and be priced out of the market in a few years when housing prices continues to rise a few % a year so be it. Prices are not high everywhere, local bubbles mean nothing in the grand scheme of the entire counties housing system.
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Old 05-19-2018, 07:04 PM
 
Location: Salem, OR
13,749 posts, read 31,577,375 times
Reputation: 12115
Quote:
Originally Posted by LifeIsGood01 View Post
You don't know when "year 3" will be, it could happen in 3 years, it could happen in 10 or 15 years or in 30 years. You sit back and what for year 3 and you lose because you will be priced out of the market.
That's why if the OP is confident it will fall 50% they have to be able to stay put to ride it out.

Quote:
Originally Posted by RoamingTX View Post
OP has also relocated to find work multiple times - which they would have been challenged to do while owning. Many times, renting is the right answer.
I don't disagree with that, but I'm just giving the OP an opinion based on 1) not arguing about the impending 50% drop in housing prices, and 2) whether or not the OP even likes Jacksonville and wants to set roots down there. The facts given were that the market is going to drop by 50% in two years and that the OP likes Jacksonville enough to buy a home.
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Old 05-19-2018, 07:35 PM
 
Location: The Berk in Denver, CO USA
13,119 posts, read 18,738,395 times
Reputation: 20434
Default Flying off the shelf

Quote:
Originally Posted by Lockdev View Post
The $500k McMansions are still $500k, but most are sitting and not selling.
Not where I live.
In greater Denver those $500K houses are now more expensive and sell, on average, in a few weeks.
https://www.dmarealtors.com/dmar-rea...-report-may-18
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Old 05-19-2018, 10:45 PM
 
1,037 posts, read 755,682 times
Reputation: 1646
Quote:
Originally Posted by davebarnes View Post
Not where I live.
In greater Denver those $500K houses are now more expensive and sell, on average, in a few weeks.
https://www.dmarealtors.com/dmar-rea...-report-may-18
There are a couple of hot markets. Denver, Austin, and other "California Exodus" hotspots are definitely some of them. Grand Rapids is another due to the Chicago exodus. Some places that generally have higher house prices would also be excluded from that list.

What you are seeing in Denver is not representative of the whole country.
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Old 05-19-2018, 11:00 PM
 
3,995 posts, read 8,732,476 times
Reputation: 3177
Quote:
Originally Posted by RoamingTX View Post
If you think they’re going to lose 50% of their value in the next 2.5 years - but you'd rather buy because you've spent $11K/yr on rent....

Damn, it’s no wonder you hate accounting. Your math is ****ed up.

I’ll tell you why not to buy, with your own math.

The 27K you’ll spend on rent for the next 2.5 years will be dwarfed by the amount of money you’ll spend on a house that is 50% less than today’s value.

Keep renting.
This. If you hate hearing your neighbors, rent a SFH.

In reality, I dont think housing prices are going to fall 50% in the next 3 years and the entire premise here is wrong
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Old 05-20-2018, 03:17 AM
 
Location: Cary, NC
31,622 posts, read 55,349,802 times
Reputation: 30183
Quote:
Originally Posted by Lockdev View Post
His timing probably isn't right, but his logic is.

There really isn't a bubble in the whole market, but there definitely is one in the "affordable" home market.

In 2007, the whole market was in a bubble. Everyone was buying $500k McMansions using subprime loans.

Today, people are paying $300k for small ranchers that fetched $200k during the 2007 bubble.

The $500k McMansions are still $500k, but most are sitting and not selling. There are very few buyers that can afford those homes using traditional loans.

In a few years, the main buyers of homes will be Millennials, and many are drowning in student loans and consumer debt.

Low interest rates have also masked the amount of debt that is floating around out there. Those interest rates are starting to rise.

The amount of outstanding consumer/student debt and rising interest rates will eventually push a pin into this new bubble.
Rates are higher than the last couple of years, but are still relatively in a low range considering historical data.

Click "Max" on this chart:

https://fred.stlouisfed.org/graph/?g=NUh

.Should I buy a house at the height of the market?-fredgraph-5-20-2018.png
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Old 05-20-2018, 07:13 AM
 
12,404 posts, read 9,209,597 times
Reputation: 8868
Quote:
Originally Posted by nep321 View Post
So, I am now 34 years old and finally in a position where I should be able to afford my first ever home this year; probably around September. I live in Jacksonville, FL. I am currently renting and my lease ends Nov 15. However, I truly believe that 2018 is the peak of the housing market, since we're in a huge housing bubble now. I believe that the market decline will begin later this year and that homes will lose up to 50% of their value by 2021. Please don't debate with me whether the housing market is at its peak. Even if it's not at its peak yet, let's just assume that it is at the peak, for purposes of this discussion.

With that said, should I buy a home if *I* believe the market is at (or near) the peak? I have been renting and living in apartments for 12 years now and spent nearly $130,000 in rent over these years. I can't stand apartment living, because I hate hearing neighbors through the walls and them hearing me. I don't like how apartments are so close to each other and there are parking issues, etc. I don't care for, and never use common areas or amenities. And I want outdoor space and don't mind devoting some of my time to maintenance.

So what are your thoughts? Can anyone speak from experience? Is this such a bad idea? Or is it okay to buy at the height of a housing bubble?

I'm leaning toward purchasing regardless. At least I'll have a house to live in and I would easily be able to afford it. But convince me otherwise?
Well, if you really think the market will tank soon, you'd be nuts to buy now. Rent and save like crazy, then when the market crashes you can buy a cheap fixer-upper foreclosure with cash and get a big discount!
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Old 05-20-2018, 07:23 AM
 
Location: Central CT, sometimes NH.
3,256 posts, read 4,910,950 times
Reputation: 3019
Quote:
Originally Posted by nep321 View Post
But we are in a housing bubble. Ever heard of the Case Schiller index? Home prices are higher today than they were just before the previous crash. Dallas metro, for example, has 50% higher home prices today than they did in 2007. Same with many, many metro areas all over the nation. And the nation as a whole is seeing higher home prices than in 2007. We could argue about the peak being today, later this year or next year, but we're pretty much there.
Nep,

Didn't realize you moved again. Thought you were back in CT. Here in CT there is no bubble maybe in Jacksonville but the own versus rent figures are still quite favorable in many places in the US for someone who plans to stay in place for the next 7 to 10 years.
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Old 05-20-2018, 07:28 AM
 
3,187 posts, read 2,726,999 times
Reputation: 6487
Quote:
Originally Posted by LifeIsGood01 View Post
If he wants to hedge his bets and keep throwing money away on rent and be priced out of the market in a few years when housing prices continues to rise a few % a year so be it. Prices are not high everywhere, local bubbles mean nothing in the grand scheme of the entire counties housing system.

That is true but unfortunately, we buy individual properties in local markets, not a share in the entire market. Individual markets can stray significantly from the overall market.



Is it still "throwing away money on rent" when house prices are in decline?
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