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Buy now or risk waiting?

5,631 Views | 26 Replies | Last: 3 yr ago by Malibu
StrickAggie06
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10:40a, 3/25/22
AG
Recently got married, and my wife and I were wanting to buy a home in a year or so. However, with mortgage rates spiking, we are wondering if we should rush to buy now.

My concern is if rates continue to spike, will the price of homes fall? Would a cheaper price with a higher rate be a better deal? Or will limited housing inventory and supply chain issues continue to keep prices high?

We are looking to buy something around OKC, but I'm not sure that we will live here long term or not, so I'm also concerned about resale in the short term (say 2-5 yrs) if we decide to move to Texas. We we would probably be buying a new home, so that compounds the issue somewhat as we would be competing against new construction when reselling, potentially.

For details, we would probably buy something in the $350-500k range with 10% down. What do y'all think?
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Yesterday
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8:24p, 3/25/22
AG
Sounds like you should rent. Closing costs and realtor fees aren't cheap. I wouldn't buy until you're ready to stay there regardless of the market. This is assuming you won't keep the property as an investment. If that's the case then buy now. No one knows what the market will do or when it will do it. Many can guess.
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CS78
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9:20p, 3/25/22
If your personal situation says buy then now is as good of time as any. No way to know the future but time of ownership tends to smooth out the worst markets.

As for your personal situation, that does sound like a short timeframe to be jumping into that price of home. Maybe consider the option of buying but trying to stay cheaper knowing that you might not live there longterm. Maybe something under $300k? A lower end house will have easier exit strategies when it comes time for a change. Easier to sell. Or maybe rent it out. And it will be more insulated if the market turns negative.
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HECUBUS
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11:14p, 3/25/22
AG
Talked a Navy friend into buying a home he could barely afford 3.5 years ago when it seemed risky. Just gave a reference for his dream job which he landed and his home is up over 100%.

It's unpredictable. Worked out great for my friend, but it was a big risk at the time. Heck if anyone knows.

Best of luck.
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Diggity
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In reply to HECUBUS • 12:41p, 3/26/22
AG
HECUBUS said:
Talked a Navy friend into buying a home he could barely afford 3.5 years ago when it seemed risky. Just gave a reference for his dream job which he landed and his home is up over 100%.

It's unpredictable. Worked out great for my friend, but it was a big risk at the time. Heck if anyone knows.

Best of luck.
this is actually a pretty solid argument to not buy now.
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aggiepaintrain
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3:02p, 3/26/22
AG
be careful with that range it's pretty broad

prices are not going down

the upgrade market is g.o.n.e
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Ol_Ag_02
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5:43p, 3/26/22
AG
Rates aren't spiking. They're rising.
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mazag08
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In reply to Ol_Ag_02 • 4:44p, 3/27/22
AG
Ol_Ag_02 said:
Rates aren't spiking. They're rising.


You're both right and wrong.

Rates are rising, but the recent spikes are based on absolutely ridiculous levels of fear and uncertainty in the lending community. When the FED gets hawkish, the lending community freaks out like a 5 year old who had their ice cream taken away.

Don't believe me? Go quote me rate caps today vs what they were 9 months ago.

That's called a spike. And rates today are higher than they SHOULD be today.
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TamuKid
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In reply to Ol_Ag_02 • 7:34a, 3/28/22
AG
Ol_Ag_02 said:
Rates aren't spiking. They're rising.
The near vertical line on the right would be considered a spike, IMO.
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XXXVII
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11:08a, 3/28/22
I'm in a similar situation. My wife and I need to move out of the Austin area for better schools for our kid who will start school in about 2 years. Do we buy a home in a good school district now, or wait a little bit? We're wanting to find something that is new construction in the area surrounding Austin or maybe further south of Austin.

The timing of this interest rate spike is really stressing me out. It couldn't have happened at a worse time.
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Ted Lasso
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11:23a, 3/28/22
AG
We recently sold our house and are expected to close on new build this summer. Dont think theres much we can do right now except lock when get around 60 days out. Way I will look at it is get in the house, and if mortgage rates go down, refinance later on...
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Yesterday
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In reply to XXXVII • 12:18p, 3/28/22
AG
XXXVII said:
I'm in a similar situation. My wife and I need to move out of the Austin area for better schools for our kid who will start school in about 2 years. Do we buy a home in a good school district now, or wait a little bit? We're wanting to find something that is new construction in the area surrounding Austin or maybe further south of Austin.

The timing of this interest rate spike is really stressing me out. It couldn't have happened at a worse time.
No one can say definitively. Price reflects demand. Obviously cheap money inflates demand but is what Texas is seeing all from cheap money or mostly from people flocking to Texas? I would say the latter which means I would still buy now rather than wait because I don't think people are going to stop moving to Texas. If rates end up close or above 6% then you're talking real money. A $400k mortgage will go up roughly $400/month if rates move from 4-6%.

Then again the Fed could keep raising rates and people will freak out, market crashes and you bought at the absolute top of it. My first house I ever bought was a rental in College Station 8 months before the 2008 crash. We didn't get our value back for 10 years. But we did get it back and all the equity from renting.
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dsvogel05
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In reply to XXXVII • 8:32a, 3/29/22
AG
I think Austin is in a little different situation than most because of all the tech firms, Tesla and the new Samsung plant coming to Taylor. Yes, the influx of out of state people moving here is one thing, but there is still a tremendous short supply of housing and I don't think we anticipate a reversal any time soon.
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Medaggie
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1:28p, 3/29/22
I have many regrets not buying a handful of properties in the past 10 years. I have many regrets selling a few properties in the past 10 years.

I do not know of one person in the past 30 years who bought a house and regretted it if they held for 5+ years. I have many family/friends who regret not buying in the past 10 years. Some due to indecision/analysis by paralysis kept pushing back buying a house and now they are paying 2x as much for the same house.

There is no way anyone can tell you for certain that buying is the right/wrong decision but the betting man says its the best to do it now.


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BTHOtrolls
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7:17p, 3/29/22
AG
I wouldn't buy a home, if you're on a 2 to 5 year timeline for relocation. The closing cost on two transactions (purchase / sale) and money you'll potentially sink into non deferrable repairs will quickly offset any financial gains.

If you were in the home long term and have reliable income to meet the mortgage payments, your question of better to buy in a high rate / low price vs. low rate / high price environment is really insightful for first time home buyers.

You can't ever change what you paid for a home once you buy. However, you can always refinance, if rates materially drop in the future. I like the gamble of buying at a high rate with (presumably) lower price and hope for another low rate environment in the future to refinance.

The USA national debt is out of control relative to the tax revenue taken in which will be exasperated if rates return to historical norms. That's why I'm of the opinion that we will revert back to a 3% mortgage rate environment in the medium term.
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74Ag1
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In reply to BTHOtrolls • 7:33p, 3/29/22
AG
BTHOtrolls said:
I wouldn't buy a home, if you're on a 2 to 5 year timeline for relocation. The closing cost on two transactions (purchase / sale) and money you'll potentially sink into non deferrable repairs will quickly offset any financial gains.

If you were in the home long term and have reliable income to meet the mortgage payments, your question of better to buy in a high rate / low price vs. low rate / high price environment is really insightful for first time home buyers.

You can't ever change what you paid for a home once you buy. However, you can always refinance, if rates materially drop in the future. I like the gamble of buying at a high rate with (presumably) lower price and hope for another low rate environment in the future to refinance.

The USA national debt is out of control relative to the tax revenue taken in which will be exasperated if rates return to historical norms. That's why I'm of the opinion that we will revert back to a 3% mortgage rate environment in the medium term.

Definition of medium term
6 months
Year?
3 years
What
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BTHOtrolls
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In reply to 74Ag1 • 4:33a, 3/30/22
AG
74Ag1 said:
BTHOtrolls said:
I wouldn't buy a home, if you're on a 2 to 5 year timeline for relocation. The closing cost on two transactions (purchase / sale) and money you'll potentially sink into non deferrable repairs will quickly offset any financial gains.

If you were in the home long term and have reliable income to meet the mortgage payments, your question of better to buy in a high rate / low price vs. low rate / high price environment is really insightful for first time home buyers.

You can't ever change what you paid for a home once you buy. However, you can always refinance, if rates materially drop in the future. I like the gamble of buying at a high rate with (presumably) lower price and hope for another low rate environment in the future to refinance.

The USA national debt is out of control relative to the tax revenue taken in which will be exasperated if rates return to historical norms. That's why I'm of the opinion that we will revert back to a 3% mortgage rate environment in the medium term.

Definition of medium term
6 months
Year?
3 years
What


Personally, I would bet that 30 years mortgage rates are back at 3% within the next 5 years. If rates continue to spike and cause depressed home prices, I'm excited to buy. Then carry the inflated payments until rates come back down and refinance.

When 50% of federal tax revenue was already allocated towards paying interest on the national debt in a low interest rate environment… it seems likely that political pressure on the fed to keep rates low will be enormous. The political party in power will apply pressure for low rates and select Fed nominees accordingly to avoid cutting goverment services (social security) or raising taxes to pay interest.

It's a gamble, but betting on the goverment to manipulate the financial system to have low rates and therefore be able to spend more money can't be too far off based on recent history haha. The present day American voters demand instant gratification and no politician will be able to sell the idea that they're supportive of the Fed raising rates for the long term benefit of society at the expense of short term pain.
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74Ag1
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In reply to BTHOtrolls • 6:47p, 3/30/22
AG
BTHOtrolls said:
74Ag1 said:
BTHOtrolls said:
I wouldn't buy a home, if you're on a 2 to 5 year timeline for relocation. The closing cost on two transactions (purchase / sale) and money you'll potentially sink into non deferrable repairs will quickly offset any financial gains.

If you were in the home long term and have reliable income to meet the mortgage payments, your question of better to buy in a high rate / low price vs. low rate / high price environment is really insightful for first time home buyers.

You can't ever change what you paid for a home once you buy. However, you can always refinance, if rates materially drop in the future. I like the gamble of buying at a high rate with (presumably) lower price and hope for another low rate environment in the future to refinance.

The USA national debt is out of control relative to the tax revenue taken in which will be exasperated if rates return to historical norms. That's why I'm of the opinion that we will revert back to a 3% mortgage rate environment in the medium term.

Definition of medium term
6 months
Year?
3 years
What


Personally, I would bet that 30 years mortgage rates are back at 3% within the next 5 years. If rates continue to spike and cause depressed home prices, I'm excited to buy. Then carry the inflated payments until rates come back down and refinance.

When 50% of federal tax revenue was already allocated towards paying interest on the national debt in a low interest rate environment… it seems likely that political pressure on the fed to keep rates low will be enormous. The political party in power will apply pressure for low rates and select Fed nominees accordingly to avoid cutting goverment services (social security) or raising taxes to pay interest.

It's a gamble, but betting on the goverment to manipulate the financial system to have low rates and therefore be able to spend more money can't be too far off based on recent history haha. The present day American voters demand instant gratification and no politician will be able to sell the idea that they're supportive of the Fed raising rates for the long term benefit of society at the expense of short term pain.

Thanks
Good post
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GoodAg84
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9:23p, 3/30/22
AG
I have been in this business since 1985 and my opinion is that the 2 to 4 percent rates over the past few years were the anomaly, and not the norm. Rates will continue to rise to traditional 7 to 10 percent range as the market adjusts back to norms as the fed unloads to try and strengthen the dollar over the coming months.
Gig Em!

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Yesterday
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In reply to GoodAg84 • 10:35p, 3/30/22
AG
84CTSQ5 said:
I have been in this business since 1985 and my opinion is that the 2 to 4 percent rates over the past few years were the anomaly, and not the norm. Rates will continue to rise to traditional 7 to 10 percent range as the market adjusts back to norms as the fed unloads to try and strengthen the dollar over the coming months.


That's assuming the FED will let the economy crash by doing so. This market tanks If rates get to 7. We need it but what politician has the stomach for it?
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Red Pear Felipe
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In reply to XXXVII • 10:09a, 3/31/22
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AG
XXXVII said:
I'm in a similar situation. My wife and I need to move out of the Austin area for better schools for our kid who will start school in about 2 years. Do we buy a home in a good school district now, or wait a little bit? We're wanting to find something that is new construction in the area surrounding Austin or maybe further south of Austin.

The timing of this interest rate spike is really stressing me out. It couldn't have happened at a worse time.

Was there a particular district you were interested in moving to? My family and I moved out of Austin to Dripping Springs in 2020. There was too much uncertainty regarding COVID with AISD and I didn't want my kids to do virtual learning. It's been a great move and my kids love their schools. Our house has also gone up in value by about 50% since 2020.

Feel free to send me an email if you have any questions. You can email me at felipe@myredpear.com. We offer 1% listings and 2% buyer rebates.
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HECUBUS
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In reply to Diggity • 7:54p, 4/7/22
AG
I wouldn't argue either way.

Feels like the crazy is waning and prices might level off, finally.
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Texker
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9:08p, 4/7/22
AG
This came on the market the other day. Multiple offers. Went immediately to pending the day after B&F so assuming the winning offer was cash. The $/sq ft is double(maybe more depending on contract price) what we paid 3 years ago and our pool was 2.5 years old at the time. Their pool is 2003.

https://www.ebby.com/ListingDetails/1305-Champions-Drive-Rockwall-TX-75087/20022493
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74Ag1
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In reply to HECUBUS • 9:57p, 4/7/22
AG
HECUBUS said:
I wouldn't argue either way.

Feels like the crazy is waning and prices might level off, finally.

Early signs of it slowing
https://www.cnbc.com/2022/04/07/rising-mortgage-rates-cause-more-home-sellers-to-lower-asking-prices.html
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HECUBUS
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In reply to 74Ag1 • 11:45a, 4/9/22
AG
Hmm, house across the street is under contact after being on the market five days with a listing price $1,245,000 more than the flipper paid for it two years ago. Flipper just did a cheap surface makeover. Saw an inspector there this morning. Of course they claimed to have taken it down to the studs. Purchasers must have locked in a good interest rate. I still expect it to cool when the lock rate is 5%.
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HECUBUS
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12:08p, 4/9/22
AG
Another home on the street just went on the market $1,000,000 over the listed price four years ago. These are the only two homes to have sold on the street in forever. Both previously occupied by the same owners for more than thirty years. Three other homes have moved to the next generation in that time.

I think this second one is more of a cash out while you can sign of the cooling market. The flipper got lucky with great timing and he clearly knew what he was doing.

Edit to mention both houses under contract in five days or less.
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Malibu
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In reply to mazag08 • 10:34p, 4/10/22
2.9 in January on a Freddie loan. 4.3 on Friday from the same lender. Wild!
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