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Old 11-27-2018, 01:06 AM
 
3 posts, read 1,399 times
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Hello Everyone,

My Fiancé and I are looking to move out of our parents house and finding our own place. We have enough money saved up to purchase a home (down payment and reserve money) and were set on buying. However my parents as well as my uncles have told me to wait until the crash and that we're still at the top of the market. I always grew up being told never to rent because we will be paying someone else mortgage and not our own. So my question to you is what would you do? we do not want to move into each others parents house and no longer want to live separate. So rent or buy?

Northern California

Do you see a crash coming? if so when?
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Old 11-27-2018, 07:28 AM
 
10,351 posts, read 6,657,696 times
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Quote:
Originally Posted by RD18 View Post
Hello Everyone,

My Fiancé and I are looking to move out of our parents house and finding our own place. We have enough money saved up to purchase a home (down payment and reserve money) and were set on buying. However my parents as well as my uncles have told me to wait until the crash and that we're still at the top of the market. I always grew up being told never to rent because we will be paying someone else mortgage and not our own. So my question to you is what would you do? we do not want to move into each others parents house and no longer want to live separate. So rent or buy?

Northern California

Do you see a crash coming? if so when?
I don't see a crash coming. Also keep in mind that after the last crash home prices plunged but rental prices did not, some private landlords kept the rent stable but larger companies kept increasing rents modestly every year.

Find out why the last crash happened and you will see that a housing crash does not just happen. Once and if it starts to happen you will see foreclosures everywhere.

Prices are not going down, right now is a good time to buy because in most places prices have leveled off to what they should have been if the crash never happened.

and Yes for the most part renting is throwing money away to live in a place under someone else's rules. With the money I spent on rent in 7 years I could have paid off my home that I have now.

Your mortgage will never increase besides the taxes and insurance. Rent will always increase. In 10 years your mortgage payment may be what people are paying to rent a 1 bedroom apartment.
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Old 11-27-2018, 07:45 AM
 
Location: Cary, NC
31,804 posts, read 55,738,437 times
Reputation: 30473
Quote:
Originally Posted by RD18 View Post
Hello Everyone,

My Fiancé and I are looking to move out of our parents house and finding our own place. We have enough money saved up to purchase a home (down payment and reserve money) and were set on buying. However my parents as well as my uncles have told me to wait until the crash and that we're still at the top of the market. I always grew up being told never to rent because we will be paying someone else mortgage and not our own. So my question to you is what would you do? we do not want to move into each others parents house and no longer want to live separate. So rent or buy?

Northern California

Do you see a crash coming? if so when?

All real estate is local. And, there are not a lot of crystal balls you should put your faith in.
We have an ownership mentality because we want to own the dirt under our home, and want to own it free and clear when we get to retirement age. We have owned for years, renting only on relocation to learn the areas. Ownership has treated us well, generally, but not a slam dunk by any means.

And, there is a bit more to the "paying someone else's mortgage" story. An owner also have to cover repairs, taxes, assessments, HOA, etc.

We have plenty of properties here in NC that do not generate enough rent to cover a loan at current prices and provide cash flow.
The landlords making cash flow on average property purchases are buying it with cash purchases, or with low LTV loans. Put 50% down, and you can cover expenses from rent.
I.e., if you have to borrow 80% or more, renting may be a logical choice, may be a decent option.
It is great that you have ample savings. Have you confirmed numbers with a lender or 2 or 3?

And, again, your local market tells you the story.
Renting a first landing pad when you are just getting started, if rents are decent vs. sales prices, may be a great option.
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Old 11-27-2018, 08:54 AM
 
Location: Florida -
8,336 posts, read 10,122,982 times
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Both buying and renting have a place, depending mostly on your situation, the local housing and rental market, the relative home to market value ratio, plus rising interest rates.

The fear of another RE market crash as occurred in 2007-2009, is a far greater factor than the realistic near-term probability. The conventional wisdom of buying, versus paying rent, held firm for many decades and is again a truism (in most areas). Thus, basing a decision to buy or rent on fear of another crash, is like avoiding banks or stocks for half a century following the Great Depression of the 1930's.

A more relevant factor is how long you foresee yourselves living in the same area? Not many young folks just getting started, are ready to lock themselves into a single local job market and living area. Another consideration is the stability of your local housing market? Are salaries keeping up with housing prices? (Will you be able to keep-pace with rising RE prices a year from now, if they continue up at the prevailing rate? What impact will rising interest rates have on your housing outlook?

Finally, since you are new to marriage, living on your own, home-buying (and even renting), one wonders if you have a realistic handle on your anticipated joint budget, living expectations and ability to carry a sizable mortgage. Many young people find they greatly underestimate the cost and obstacles inherent in living on their own for the first time. Along these lines, you might be wise to rent for a year or so, just to validate your life, budget and housing expectations.

You might also get better, more objective advice from one or more local mortgage bankers, than from relatives or anonymous CD responders. Good Luck!

Last edited by jghorton; 11-27-2018 at 09:10 AM..
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Old 11-27-2018, 11:38 AM
 
Location: Salem, OR
13,766 posts, read 31,756,197 times
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Most economists agree that a recession is heading our way, but that isn't the same thing as a crash. In recession home prices generally stay flat. There are advantages to buying in a recession as there generally aren't as many multiple offers and buyers have more negotiating power over repairs.

That said if you are buying a home for the long haul, then it really doesn't matter when you buy as real estate will cycle up and down during your ownership period. If you aren't sure you will live there for a long time, I would wait a year to see what the market brings as you will potentially have more negotiating power, BUT you need to talk to local agents because your area might be a high growth area which isn't impacted as much by a recession.
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Old 11-27-2018, 12:27 PM
 
10,351 posts, read 6,657,696 times
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Quote:
Originally Posted by jghorton View Post
Both buying and renting have a place, depending mostly on your situation, the local housing and rental market, the relative home to market value ratio, plus rising interest rates.

!
The difference is that most renters can't afford to buy and most owners can afford to rent.

Ask most renters if they would prefer to rent or buy and see what they say.

The American dream of owning your own place is still real.

Where I grew up in the northeast and now in south Florida it's cheaper to pay a mortgage than it costs to rent that same home.
In 10, 20, 30 years your rent will go up but the interest and principal will not on a mortgage.

Last edited by LifeIsGood01; 11-27-2018 at 01:13 PM..
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Old 11-27-2018, 01:05 PM
 
65,471 posts, read 66,912,679 times
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homeowners have the resourses to buy (hopefully) .

renters are a mixed bag of very poor to very wealthy
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Old 11-27-2018, 01:11 PM
 
Location: Columbia, SC
8,881 posts, read 17,535,296 times
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We are at top of market but interest rates are still very low by historical standards. If you wait until the crash there some unknowns to take into account.
1-We don't know when the market will crash.
2-We don't know if rent is affordable in your market.
3-You may get a lower price by waiting until the next crash, but since financing is involved the lower price may be offset by higher interest rates.

If you are happy with your projected payments and you plan to be in the house for a while, then buying now may be a fine option. If you think you may be moving again in 3-5 years it may be a good idea to wait until then to buy.
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Old 11-27-2018, 01:15 PM
 
10,351 posts, read 6,657,696 times
Reputation: 10964
Quote:
Originally Posted by Brandon Hoffman View Post
We are at top of market but interest rates are still very low by historical standards. If you wait until the crash there some unknowns to take into account.
1-We don't know when the market will crash.
2-We don't know if rent is affordable in your market.
3-You may get a lower price by waiting until the next crash, but since financing is involved the lower price may be offset by higher interest rates.

If you are happy with your projected payments and you plan to be in the house for a while, then buying now may be a fine option. If you think you may be moving again in 3-5 years it may be a good idea to wait until then to buy.
and if you can afford the home there is no need to worry about a crash if it's going to be your forever home or for the next 10 years. In real estate what goes down must go up as long as you take care of the home and buy in a stable and safe area.

If a person waits 10 years and a crash has not happened that's 10 years less that they paid into the mortgage, then they think everything is great and it's time to buy except that they are now priced out of the market, and then the crash may come if they buy 10 years from now.

Where i live the small starter homes that are older have doubled in price in the last 3 years.
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Old 11-27-2018, 02:12 PM
 
16,723 posts, read 17,874,561 times
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Let’s assume there will be a crash. It won’t be like last time. Why? Because we already had a trial run and everyone needs a roof over their heads. Banks will simply sell to hedge funds or investors. The rest will go to mom and pop landlord investors and what’s left over to flippers or people who have money and a job to buy and sustain a home.

Let me put it to you another way.
When my wife and I bought back in jeez I think 93 and by I think 96 we had a huge price drop. We lost about 1/3 of the value. But we still needed to live somewhere. So we could sell at a loss or tighten our belts and keep,the place. Right now that property we are renting it for basically twice what was our mortgage amount. Even if I lived there and made payments I would have a cheaper COL than someone who rented today.
Not to mention the house appreciated about 3.5x what the initial purchase price was in 1995.

My current house we bought over two years ago and right now would rent for a bit over what I pay for the mortgage but it appreciated 100,000 in 2.5 years.
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