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Old 05-17-2018, 08:46 PM
 
Location: Jacksonville, FL
11,031 posts, read 13,371,681 times
Reputation: 6744

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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?

Last edited by nep321; 05-17-2018 at 08:55 PM..
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Old 05-17-2018, 08:51 PM
 
Location: planet earth
2,897 posts, read 1,017,878 times
Reputation: 6602
If you can afford home ownership in the current market is the question.

You should not think of it as an "investment," per se, but a place to live with tax advantages.

If you have a crystal ball and know this is the height of the market, then wait until your crystal ball advises it's going to crash.

Otherwise, do what you want and can afford to do.
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Old 05-17-2018, 09:25 PM
 
10,265 posts, read 6,495,798 times
Reputation: 10842
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?
If you are throwing money away on rent and you don't like apartment living than buy a house. Think of it as renting a house from the bank but your mortgage will never go up, besides the escrow for taxes and insurance and Florida has homestead exemptions. In 30 years you will own the home or sooner if you pay extra each month.

We are not at the peak and prices in many areas are not at the height that they were before the bubble burst. Investors have been scooping up properties to rent out for a few years now, they started selling those homes a few years ago and there is less inventory which is causing prices to go up, and the Fed raised interest rates because everything is okay. If things were bad they would keep them low so more people could buy.

It's not going to burst for the same reason it did last time, not any time soon unless Trump tells the bank to start giving loans to unqualified applicants.

IF you can buy a home for less than you are paying in rent, or for less than the house you want would rent for than it's a great deal. You snooze you lose.

A home is a place to live and an investment in the long run. Rent is an expense. Rent makes your LL richer, owning makes you richer.
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Old 05-17-2018, 09:38 PM
 
1,512 posts, read 564,668 times
Reputation: 2944
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.
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Old 05-17-2018, 09:43 PM
 
10,265 posts, read 6,495,798 times
Reputation: 10842
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.
Let's say they buy a $100K house, a small 3/1 in north Florida. Principal and interest is $500 or so. insurance and taxes $200 or less $700 a month payment. Their rent is probably more than that.

Lets say the house drops in value to $50K, which is shouldn't. Cheaper homes retain their values the best as long as they are taken care of,


They still are paying $700 a month, rents are not going down and in 10 years the home will be worth $100K or more again.

Worry about having a place to live that you can afford. Not if the housing market goes up or down.

If they want to move they can rent the home for at least $800 a month and go live or buy somewhere else when prices are low.
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Old 05-17-2018, 09:53 PM
 
1,512 posts, read 564,668 times
Reputation: 2944
Quote:
Originally Posted by LifeIsGood01 View Post
Let's say they buy a $100K house, a small 3/1 in north Florida. Principal and interest is $500 or so. insurance and taxes $200 or less $700 a month payment. Their rent is probably more than that.

Lets say the house drops in value to $50K, which is shouldn't. Cheaper homes retain their values the best as long as they are taken care of,


They still are paying $700 a month, rents are not going down and in 10 years the home will be worth $100K or more again.

Worry about having a place to live that you can afford. Not if the housing market goes up or down.

If they want to move they can rent the home for at least $800 a month and go live or buy somewhere else when prices are low.
Doesnít apply to the scenario.

Iím paying $1000/ mo in rent on a $200K home. I decide Iíll buy that home (basically payment is the same).

Iím paying $1000/mo for an asset that is depreciating and has me chained down and will force me to ruin my credit and life if I need to move from JACKSONVILLE if I need to find better job prospects. (Mind you, the economy is on a precipice that will lead to a meltdown).

Or. I wait and rent. And spend 9K more in rent to save $100K on the purchase price. 7.5 years later I have $125K in equity. Not a bad return for my 9K investment over time.
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Old 05-17-2018, 10:05 PM
 
10,265 posts, read 6,495,798 times
Reputation: 10842
Quote:
Originally Posted by RoamingTX View Post
Doesn’t apply to the scenario.

I’m paying $1000/ mo in rent on a $200K home. I decide I’ll buy that home (basically payment is the same).

I’m paying $1000/mo for an asset that is depreciating and has me chained down and will force me to ruin my credit and life if I need to move from JACKSONVILLE if I need to find better job prospects. (Mind you, the economy is on a precipice that will lead to a meltdown).

Or. I wait and rent. And spend 9K more in rent to save $100K on the purchase price. 7.5 years later I have $125K in equity. Not a bad return for my 9K investment over time.
I don't understand any of what you mean.


You are you going to pay only $9K rent over 7.5 years?

and in my scenario you can get a lower paying job and still pay the $700 a month mortgage. Jacksonville is huge, there is work everywhere.

If you are not a stable person who can hustle and find work or keep a job you shouldn't be buying a house.
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Old 05-17-2018, 10:13 PM
 
10,265 posts, read 6,495,798 times
Reputation: 10842
What people are calling a bubble is prices getting back to what they were in 2006 to 2008 plus some are increasing since it's now 10 years later and rents did not go down.
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Old 05-17-2018, 10:14 PM
 
1,512 posts, read 564,668 times
Reputation: 2944
Quote:
Originally Posted by LifeIsGood01 View Post
I don't understand any of what you mean.


You are you going to pay only $9K rent over 7.5 years?

and in my scenario you can get a lower paying job and still pay the $700 a month mortgage. Jacksonville is huge, there is work everywhere.

If you are not a stable person who can hustle and find work or keep a job you shouldn't be buying a house.
And thatís why I said rent.



Iíll try to slow the math down for you.

200K to 100K happens in 2.5 years under the OPís pipe dream.

I wait 2.5 years to buy.
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Old 05-18-2018, 12:01 AM
 
Location: Future Expat of California
588 posts, read 260,120 times
Reputation: 515
Yes and no.

Yes, if you know that you will be in the house for 5-10+ years and will be able to weather the storm of the upcoming economic downturn based on your current occupation and employment. It seems you've been renting for long enough and you've had it and have the funds to buy.

No, if you're going to be moving away from your current location in under 5 years.

But this is not my decision to make. Good luck with it.
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