Will the prices really go down?

[DCLMP]

The little house our ds25 bought in March would have cost $100,000 less if he had bought it 2 years earlier according to Zillow's chart of the home's value over the years. Of course he was not ready to buy 2 years prior but dang that is ridiculous. He also insists on a 15-year mortgage because it costs so much more in interest to have a 30 year. He says he'd rather suffer now than drag it out until he's "old". He has to work OT to come up with money for fixing up the house so that's coming along slowly.

When he lived at home, he'd buy an annual pass that gives entry to various ski resorts in the Poconos, VT, etc. He says he doesn't have the time or the money for that this year.
When dh and I bought our house, it was also a fixer upper with good bones and he could do the work but he had me to help do the bills, cleaning, cooking and grocery shopping so he could focus on the remodeling projects. For ds, it's all on him and he's trying to work OT. Something's gotta give and I only hope it's not his mind.
Dh forgets all of this when he wants to go work on the house every Saturday & Sunday all day and says, "What do you mean you need to clean? Do that on weekdays." Lol. The kid works 10-hour days and comes home and cooks. How much more should he fit into one day?
He didn't want to wait until "someday when he gets married" because who knows if/when that will ever happen and he didn't want to pay rent which is such a money suck that it makes it even harder to save for a down payment.

I feel bad for young people these days.

On a positive note, if he stays there he'll be mortgage-free at 39.

He's doing better than a lot of young people. The average age of first time homebuyers is around 39 now. People think we have higher incomes that we do because of all the traveling we do. We were just lucky to be young at the right time.

 

[barkley]

He's doing better than a lot of young people. The average age of first time homebuyers is around 39 now. People think we have higher incomes that we do because of all the traveling we do. We were just lucky to be young at the right time.

it sounds like there were also some important decisions made on your part as well-if you bought the home you live in 30 years ago then you did'nt buy into the whole 'keep buying up' mentality that was really pushed in prior decades. I know far too many homeowners in your (also my dh's) age range that really regret not staying put in those first (or second that they really DID need to size up to when the multiple kids came along) homes that they would now be at or near payoff on.

 

[DCLMP]

it sounds like there were also some important decisions made on your part as well-if you bought the home you live in 30 years ago then you did'nt buy into the whole 'keep buying up' mentality that was really pushed in prior decades. I know far too many homeowners in your (also my dh's) age range that really regret not staying put in those first (or second that they really DID need to size up to when the multiple kids came along) homes that they would now be at or near payoff on.

I often wish we would have sold in 2021 and waited for the crash in prices that’s coming. Our house is 2700 sq feet. I never had the desire to size up.Its enough to clean. I would like to eventually size down.

 

[barkley]

I often wish we would have sold in 2021 and waited for the crash in prices that’s coming. Our house is 2700 sq feet. I never had the desire to size up.Its enough to clean. I would like to eventually size down.

I believe there's going to be another crash in prices as well. market is wonky here and reports say sellers need to be more realistic in pricing b/c they won't get the big profits that the people who sold them their homes saw in years past so they need to price them right if they don't want them to just sit. dh and I still thank our lucky stars that we got a gut feeling to sell our former home when we did in '06-i spoke a year later to the realtor who sold it and he told me it was the LAST home in that entire city to sell before the 'bubble burst'. we sold at 3x what we paid in '99, 5 years later our buyers short sold at 45% what they paid us and those homes just in the last 5 years are at the prices people were paying in the early 2000's (new construction).

 

[DCLMP]

I believe there's going to be another crash in prices as well. market is wonky here and reports say sellers need to be more realistic in pricing b/c they won't get the big profits that the people who sold them their homes saw in years past so they need to price them right if they don't want them to just sit. dh and I still thank our lucky stars that we got a gut feeling to sell our former home when we did in '06-i spoke a year later to the realtor who sold it and he told me it was the LAST home in that entire city to sell before the 'bubble burst'. we sold at 3x what we paid in '99, 5 years later our buyers short sold at 45% what they paid us and those homes just in the last 5 years are at the prices people were paying in the early 2000's (new construction).

Did you have to buy a new home in 06 when prices were high? What kept us from selling in 06 was the price to buy a new home. I'm thinking prices will drop back to 2019 2020 levels. Prices have to align with median incomes. The boomers own most of the houses in the country, but they are not going to live forever. Many of them own multiple homes.

They have built an insane amount of apartments in our area. I expect rent prices to go down when people can start buying again. The foreclosure rates are steadily climbing in Florida and California. I read one article that stated foreclosures have increased by 70% in Florida since last October.

 

[ruadisneyfan2]

I totally understand his mindset on paying off sooner vs later. we considered a 15 year when we bought our current home but we had already experienced one instance in our marriage with a drastic unexpected lowering of income and that left a mark on me mentally budgeting wise. I did'nt want us put into a situation where a drastic income reduction OR a major unexpected expense put up on thin ice (or drowning) so we opted for a 30 year with no prepayment penalty but paid like we were doing a 15 (always applying the extra to principal) and ended up throwing more at it when we could paying it off well before the 15 year mark.



the sales prices of homes in our neighborhood have gone up stupidly high ever since the pandemic had people wanting to live ruraly. I can't imagine the kind of mortgages people have when ours would be considered in the middle price range and would run (with 20% down) over $4500 a month. I just would not feel comfortable knowing I had that kind of financial obligation.

Dh was laid off 3 weeks after we bought our house. We hadn't even made the first payment. I was out of work on maternity leave and the disability payments were much less than my regular pay. Scary doesn't even describe it.

I could not convince him to even consider a 30 year. He still puts away 10% toward retirement too. I suggested maybe lowering to 5% just for a few months to be able to buy carpeting and fully move furniture in. He still has no sofa, bedroom furniture, etc. I feel bad the only place he has to sit is at his kitchen table, his bed or the toilet. No place to really unwind.
He absolutely will not stop contributing the 10%. We bought him a used BR set on FB marketplace for about $300 and stored the pieces in his old BR here but he doesn't want to move it all in until he gets the carpeting. Our family had our Thanksgiving dinner last weekend so he and dh are going to refinish his living room floor over the real TG weekend and once that's done & cured, he can have our old LR set.

 

[ruadisneyfan2]

He's doing better than a lot of young people. The average age of first time homebuyers is around 39 now. People think we have higher incomes that we do because of all the traveling we do. We were just lucky to be young at the right time.

Most people wanting to move out of their parents house rent an apartment. I didn't stop him but I suggested he just "suffer" at home for a few years. I told him this: you'll never be able to save money like you can right now. Your only expenses are gas, tolls (to work) and car insurance. You could pack away a huge percentage of your paycheck and have a hefty down payment on a house. Once you get an apartment and start rent + bills, you're trapped in a position where it's hard to save money.

He also went to a trade school that was only $9000 which we paid. I say "only" as a comparison to a 4-year college which many parents can't afford and the kids end up with huge student loans. He is extremely debt-averse and listens to Dave Ramsey prophylactically. His only debt is his mortgage. He won't even do the 0% for 12 months offer at the carpet store.

 

[barkley]

Did you have to buy a new home in 06 when prices were high? What kept us from selling in 06 was the price to buy a new home. I'm thinking prices will drop back to 2019 2020 levels. Prices have to align with median incomes. The boomers own most of the houses in the country, but they are not going to live forever. Many of them own multiple homes.

They have built an insane amount of apartments in our area. I expect rent prices to go down when people can start buying again. The foreclosure rates are steadily climbing in Florida and California. I read one article that stated foreclosures have increased by 70% in Florida since last October.

we rented a handful of blocks from our former home for 10 months while we decided where we were going to move to (had not settled on which state-just knew we wanted to get out of California). the cost for renting a house shocked us b/c we had'nt been renters since the 90's but it was less expensive to rent a house w/a 3 car garage to put most of our belongings in vs. renting an apartment AND multiple storage units (side benefit-if most of your non day to day stuff is packed away for 10 months you learn which stuff you really don't need to hang on to so purging is much easier ).

I don't personally know too many of my 'boomer' peers that own multiple homes with a couple of exceptions (and in those cases they've mostly sold off whatever they did not consider their primary)-

-they too decided to move out of state to a lower cost state (ideally absent a state income tax) and it was during a point in time when prices were VERY LOW so they gambled on holding on to their existing home and renting it till the market rebounded, most I know doing this sold when prices improved.

-they inherited in whole or part a parent's home and use it an income source (paid in full, not in good enough condition to make a huge profit but suffices as a rental in a strong rental market),

or (and this really came into being during the housing crash)

-their adult child bought into one of those predatory adjustable rate home loans that got them into homes way over their means during the 'big short' period and not wanting to see their kid's credit trashed purchased the homes to get the kids out from under them. i don't know how that's worked out for this group b/c I look at my former neighborhood and it's only gotten back to the '04- early '06 selling prices in the last 5 years so that's ALLOT of years that they've been losing out on the earning power of the monies they've spent over the years (the kids most often moved on and the rent the parents could charge never hit a point there where they covered the payments).

Dh was laid off 3 weeks after we bought our house. We hadn't even made the first payment. I was out of work on maternity leave and the disability payments were much less than my regular pay. Scary doesn't even describe it.

oh believe me I get it-it's terrifying. I became suddenly and totaly disabled in '03. you're sooooo right-disability payments are much less than regular pay and while i'm a huge proponant of short term and long term disability insurance it's mind boggling how long it can take to get all the paperwork done let alone for the insurance company to get their ducks in a row with medical verifications to get those even much lower replacement income checks (and then plan on a BEST case scenario-back then, it's longer now-of a minimum one year time consuming process for social security to make a decision all while disability insurance is pestering you for updates on it b/c it's a requirement to apply).

I consider us very fortunate though-about a year or so prior I had a co-worker who was 8 months pregnant, newly settled with her dh in their new home wake up to find that her dh had passed in his late 20's to a massive heart attack. no life insurance, not enough quarters in the social security system (chose not work even part time in college) to collect. she was soon to go on maternity leave and a leave of absence when her world exploded. the only thing that saved her financialy was that her mom (who worked with our same employer) had hoarded sick leave in anticipation of retiring in a couple of years (we could sell back) ended up using the sick leave to care for her post partum during which she sold her own home to move in and help with the mortgage payments and fast tracked her retirement to become the grandbaby's full time daycare provider when co-worker returned to work a year before she had planned.

 

[ruadisneyfan2]

we rented a handful of blocks from our former home for 10 months while we decided where we were going to move to (had not settled on which state-just knew we wanted to get out of California). the cost for renting a house shocked us b/c we had'nt been renters since the 90's but it was less expensive to rent a house w/a 3 car garage to put most of our belongings in vs. renting an apartment AND multiple storage units (side benefit-if most of your non day to day stuff is packed away for 10 months you learn which stuff you really don't need to hang on to so purging is much easier ).

I don't personally know too many of my 'boomer' peers that own multiple homes with a couple of exceptions (and in those cases they've mostly sold off whatever they did not consider their primary)-

-they too decided to move out of state to a lower cost state (ideally absent a state income tax) and it was during a point in time when prices were VERY LOW so they gambled on holding on to their existing home and renting it till the market rebounded, most I know doing this sold when prices improved.

-they inherited in whole or part a parent's home and use it an income source (paid in full, not in good enough condition to make a huge profit but suffices as a rental in a strong rental market),

or (and this really came into being during the housing crash)

-their adult child bought into one of those predatory adjustable rate home loans that got them into homes way over their means during the 'big short' period and not wanting to see their kid's credit trashed purchased the homes to get the kids out from under them. i don't know how that's worked out for this group b/c I look at my former neighborhood and it's only gotten back to the '04- early '06 selling prices in the last 5 years so that's ALLOT of years that they've been losing out on the earning power of the monies they've spent over the years (the kids most often moved on and the rent the parents could charge never hit a point there where they covered the payments).






oh believe me I get it-it's terrifying. I became suddenly and totaly disabled in '03. you're sooooo right-disability payments are much less than regular pay and while i'm a huge proponant of short term and long term disability insurance it's mind boggling how long it can take to get all the paperwork done let alone for the insurance company to get their ducks in a row with medical verifications to get those even much lower replacement income checks (and then plan on a BEST case scenario-back then, it's longer now-of a minimum one year time consuming process for social security to make a decision all while disability insurance is pestering you for updates on it b/c it's a requirement to apply).

I consider us very fortunate though-about a year or so prior I had a co-worker who was 8 months pregnant, newly settled with her dh in their new home wake up to find that her dh had passed in his late 20's to a massive heart attack. no life insurance, not enough quarters in the social security system (chose not work even part time in college) to collect. she was soon to go on maternity leave and a leave of absence when her world exploded. the only thing that saved her financialy was that her mom (who worked with our same employer) had hoarded sick leave in anticipation of retiring in a couple of years (we could sell back) ended up using the sick leave to care for her post partum during which she sold her own home to move in and help with the mortgage payments and fast tracked her retirement to become the grandbaby's full time daycare provider when co-worker returned to work a year before she had planned.

Oh my, how devastated. It certainly makes me appreciate what I have, even if it's not a lot.