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Living in a hot housing market; do I buy now?? Help!

Home Mortgages and Home Buying Living in a hot housing market; do I buy now?? Help!

  • Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3030
    Joined: 09/18/2018

    @gasdic86,
    “Mainly in order to have a larger down payment. ”
    “We know we’ll need a house eventually but we like the idea of putting off all the associated expenses for another year.”

    Pluses:
    First yr loans paid,
    stuffing retirement,
    saved $200k
    No “want” to flex your financial muscles.
    Big shovel

    Minuses:
    Crickets
    Any move you make will probably “hurt” the nicely tuned race car you are driving. Keep it running like that for two more years and where will you be? Likely the land of “mortgage paid off” because you paid cash for the house. That brings housing down to the “apt rent level” and your still accumulating cash at a high rate.

    Just wanted to give you praise for using the word “need” on housing. My crystal ball shows you might skip the mortgage in a couple years. Crap, that’s not even 5 years. Congratulations!
    Strong work to get yourself in a sweet position. Exploit it while you can.

    #225718 Reply
    Avatar Dont_know_mind 
    Participant
    Status: Physician
    Posts: 944
    Joined: 11/21/2017

    What’s your execution risk ?
    Your plan seems to change like a noodle in the wind. What happens to the idea of having a well thought out plan and executing that plan ?
    How is your strategy different to any market timing gamble ?
    You are short 1 house. You flipped heads and got it right!
    So now you are going to flip a few more times to hopefully save to pay for the house in cash.
    That sounds like a crap plan to me. Any housing market I’ve been interested in has a reasonable positive return over time. Deferring buying for long periods tends to have a negative expected value over 3-5 year periods.
    Hard to bite the bullet.
    Maybe you’ll win.
    Experience has taught me not to short appreciating assets for periods over 2 years.
    You are short one house or 500k-1M in house. Don’t kid yourself. If the underlying rate of appreciation is high for the area, the longer you stay short the more likely it will blow up on you.

    #225755 Reply
    Avatar StarTrekDoc 
    Participant
    Status: Physician
    Posts: 2040
    Joined: 01/15/2017

    Good job for not allowing lifestyle creep over the past year and sticking to savings.

    DYM is correct about market timing. You got lucky this year. No one predicted an inversion to happen. VHCOL markets wre fickle and will stall and surge in fits not unlike a growth stock.

    If your ultimate goal is a house there. Do it when you’re fina cially ready. Not when younthinknthe market is right to get in.

    #225761 Reply
    White.Beard.Doc White.Beard.Doc 
    Participant
    Status: Physician
    Posts: 936
    Joined: 02/06/2016

    There are signs that housing is potentially at a peak and ready to come down.   Particularly in places like Seattle and San Francisco.

    Don’t let market timing dictate your decision, but do take it into account with other factors such as whether the house you buy will be a shorter or longer term purchase, mortgage rate trends, etc.

    In other words, if you are buying a 20 year house after becoming partner in a practice, then the current state of the market is less important if the house you are buying is easily affordable.  Buy it for your family and for the stability.

    However, if this is an interim house purchase, shorter term, these other factors become much more important to consider.

    https://wolfstreet.com/2019/06/26/from-less-splendid-housing-bubbles-to-crushed-markets-in-america-june-update/

    #225775 Reply
    hatton1 hatton1 
    Participant
    Status: Physician
    Posts: 3062
    Joined: 01/11/2016

    I think it is a very good idea to not initially buy a house.  First jobs are so unstable.  I think you really need to work at least 1-2 years to decide if the job is right for you.  A house really makes it hard to change jobs.

    #225800 Reply
    Liked by Peds
    q-school q-school 
    Participant
    Status: Physician
    Posts: 2629
    Joined: 05/07/2017

    I think it is a very good idea to not initially buy a house.  First jobs are so unstable.  I think you really need to work at least 1-2 years to decide if the job is right for you.  A house really makes it hard to change jobs.

    Click to expand…

    i agree in principle.  what i wonder is given the explosion of employed positions, whether the historical rates of physicians leaving remains the same or changes.  in some ways, working for megacorporation death star a or b or c may not be that different, and people may stay longer.  eventually the organizations will put in bigger golden handcuffs or penalties to moving in exchange for the higher startup salaries they are offering new grads.

    curious to see how this plays out.

     

    #225801 Reply
    Liked by hatton1
    Avatar Dont_know_mind 
    Participant
    Status: Physician
    Posts: 944
    Joined: 11/21/2017

    Sorry about getting snarly. I have this traumatic memory about being absolutely slammed the last time I got market timing a house to live in wrong.

    Market timing can probably be done, but doing it with your primary residence if your partner is set on having a house at some stage is to me super risky. No way I am ever doing it again.

    The way I think about it (and it maybe wrong), is that being short a house is like the housing market in your area having you by the balls. You might pay 500k or 1M but in reality you will just pay whatever you have to.

    I would not attempt to market time the primary residence. Investment properties I think it is ok to try to market time.

    If you do buy, Murphy’s law, you have to be prepared for it to go down 30% the day after you buy.

    #226043 Reply
    Avatar Infinity 
    Participant
    Status: Physician
    Posts: 91
    Joined: 05/25/2019

    Student loan crisis reduces affordability for the first homeowners in lower end houses.  On the other hand, $10k cap in interests and property taxes affect the price increase for the higher end houses.  I think it is less likely that a short-term housing market in your area will raise much more than 6.8% (your student loan interests).  Unless you know that Amazon 2nd headquarter will be there.  I am agreeing with other posts, don’t rush, take your time.

    #226262 Reply

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