Gad! House buying today

[newbury]

Just read some headlines:

Americans say it’s the worst time ever to buy a home​

and

Mortgage rates top 7%

When I was buying my first home (1978) we would have loved a 7% mortgage.

We survived.

 

[2515R Dude]

It is a great time to buy real estate!

 

[jyoutz]

One of my sons is buying a house at 3.9%. It’s a VA loan.

 

[goeduck]

Our first house was in the early 80s. I think interest rates were north of 13 or 14%. Makes a big difference.

 

[jyoutz]

My first house in 1987 was a mortgage at 10%

 

[newbury]

It is a great time to buy real estate!

Not quite yet, wait some more for the bottom to fall out.
I might yet get my square mile of earths surface.
So far I've only about 2 square kilometers.
That house I bought in '78 was at about 12% interest, VA, adjustable.
When getting the loan they went into great detail about the annual ceiling on rate RISE limits (something like no more than 1.24%/yr IIRC) and about ROTFL when I asked about if there was a floor on the rate. We road it down to about 4% before we refinanced.
Still complaining to my wife that she wouldn't agree to mortgage our properties again when rates hit 2.7% in January of 2021. Now she finally sees my wisdom.

 

[Hay Dude]

Just read some headlines:

and

When I was buying my first home (1978) we would have loved a 7% mortgage.

We survived.

Interest rates are very high, but the real reason it’s the worst time to buy a home is because of the inflation of the cost of homes.

Just a few years ago, the average wage earner could qualify to buy a starter home in 35 states. Today, they can only qualify to buy a home in only 12 states.

There’s other reasons than high cost of homes and high interest rates. Homeowners insurance is at all time highs. Utility/energy costs are at all time highs.

 

[paulsharvey]

Yes, it's the combination of skyrocketing prices (which was livable with low intrest rates) mixed with the high intrest rates.

The average new home is $411,000; a 4% intrest, 3.5% down, at 3%=is only $1730/month before property taxes and insurance;

now; $411,000 @ 7%=$2910

Now; the hidden part; the taxes and insurance; that's gonna be close to directly tied to purchase price; Excpet; all our homestead tax breaks; which come off the top; so you get $50,000 off the appraised value, and then pay about 1.8% of the remaining appraised value per year;

What that kills you on; a $150,000 home, your taxes were like $1,800/year; but a $500,000 home. that's gonna be $8100/year.

We are in the realm of a new purchase of an average home being $2910+541.50+300=$3755 per month

10 years ago; we probably were $150,000k home; $790/month+$100 in insurance; and $150 in taxes=$1040;

So; a average home is 3.6 x the cost per month as 10 years ago.... How's your pay check compare to that? If we assume you got 3% per year, each year for last 10 years; we are at like a 35% increase in pay vs 360% increase in cost of new housing.


Edit: that probably extreme, 10 years ago was 2014; so that $150,000 should have actually been $178,000.

 

[Hay Dude]

But “wages are keeping up with inflation”.
I saw that on TV!!!!!

 

[buckeyefarmer]

But “wages are keeping up with inflation”.
I saw that on TV!!!!!

My son hasn't had a raise in 3 yrs, I told him his salary just went down 25%....

 

[Tinhack]

Isn't that the truth. I couldn't afford to buy this place if I had to now. Subdivisions are creeping up all around me (within a couple of miles). Home lots are going for $60-$80k per acre and they're getting it. That's staggering since it used to be about $2k an acre about five years ago. The draw seems to be the "17-minute drive to San Antonio". It won't be that for long if the build-up continues.

Edit: My mistake--That's $60-$80k for a 3/4-acre lot.

 

[NHBX]

If ya need a few xtra bux McD’s pays $20 hr to stuff fries in a bag!

 

[Tinhack]

But “wages are keeping up with inflation”.
I saw that on TV!!!!!

I think you're watching the wrong channels.

 

[tacticalturnip]

Congratulations on living through the Carter administration; can I get you a cookie? Perhaps some milk?

 

[workinonit]

Those property taxes are ridiculous. I sure am glad I live where I do.

 

[paulsharvey]

Those property taxes are ridiculous. I sure am glad I live where I do.

So, that's the dark side people dont talk about when they say we are lucky to not pay state income taxes. Florida has aggressive property taxes; Tennessee has an extremely high sales tax, 9.75%, don't know about the other ones; but as much as we hate to admit it, the state/county does have to college revenue some how.

 

[Tinhack]

If ya need a few xtra bux McD’s pays $20 hr to stuff fries in a bag!

Not around here. They use machines now.

 

[Hay Dude]

In my area, property taxes border on obscene. The game here is to find 10+ acres to get an “ACT 515/319” land tax assessment , but these small farms are overpriced, out of reach for most of us, so the up-front purchase price wipes out the future tax savings in most cases.

The very-rich get the lower taxed farms, yet most know little to nothing about farming.

 

[Hay Dude]

I told my 24 YO son to stay with us and save for a DP on his 1st house. He’s already saved quite a bit in his first year since graduation, but has a way to go.

 

[LittleBittyBigJohn]

I just lived this exercise. We quoted the house in late 2020 and almost pulled the trigger. Wanted to wait and see if materials would come down.... Finally built it and just moved in a few months ago. In the time we waited, the cost increased by almost $120,000 and interest took a hit too. We were able to lock in at 6.25%.

We were blessed though in that both my wife and I got promotions and higher salaries with them in that same timeframe.