Isn't trading up going to end as folks are priced out?
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Anonymous
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I completely understand and appreciate the concept of "you need to buy a starter home, build equity, trade up, etc". But this makes sense only up until a certain house price point. DCUM loves to say save, get your foot in the door, get that fixer upper, etc. I agree. But home prices are rising dramatically faster than wages are, interest rates are higher, and new housing starts are still low. I think i read something like 70% of existing outstanding mortgages in America are 3 points lower than the current rate.
So at some point, isn't there going to be a severe lack of buyers for the $1.5M+ home? I know, tiniest violin, but I am genuinely curious if someone who owns a $600K home thinks the trade-up can still happen. |
Anonymous
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Homes will always sell if they are priced to sell. |
Anonymous
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They aren't building that many single family homes. The population is still going up, therefore demand will continue to increase.
I will say I do not think buying a starter home is always the best choice. If you buy early enough (in your 20s, early 30s) sure, you can build up equity and have energy, perhaps no kids yet, to put work into the home. My DH and I though were househunting when we were close to 40. We were lucky to find a home in good condition we are happy to stay in indefinitely. A lot of the "starter" homes these days are 70+ years old and are not the best investments IMO after you consider the costs of fixing the inevitable issues they will have. Recently heard in our neighborhood the pipes in a lot of those old homes are failing. No thank you. |
Anonymous
| PP, you can get insurance for those pipes for next to nothing. Not a reason not to buy a starter home. Someone has to live in them! |
Anonymous
| Trading up has pretty much stopped. |
Anonymous
| I have a starter home and trading up does feel really difficult. Even if rates come down a bit more, prices are so high I am not sure it is worth it. |
Anonymous
| Not going to end but going to slow down tremendously. |
Anonymous
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I think that a lot of people move into their "starter home" and then end up staying because it's fine.
In this area, fine is as good as you're going to get. To get "exciting" I have to pay triple what my house would sell for. Most houses are just fine, but not great. And so are the other houses I would move into. |
Anonymous
Same here. The increased value of my home doesn't make up anywhere near the gap between its cost and the next level up. |
Anonymous
| We made $300K in 10 years on our starter home and were able to trade up to a $1M+ home even with a 6.5% mortgage. THIS YEAR. |
Anonymous
| Over the long term you would see living conditions and standards decline more than running out of buyers. Like more people in smaller spaces. Look at how people live in places like NY and Hong Kong. |
Anonymous
| I have a starter home that I am fixing up right now. I plan to sell it once I’m finished. 20 years is long enough for a starter home. |
Anonymous
Thai. I’m not going to sell my $2.2m house just to pay $2.8-$3m for the same thing just a few years newer. |
Anonymous
PP makes a good point though. We bought one of those "starter homes" with very old pipes (along with most everything ese that we are slowly trying to fix up. At some point the pipes will fail and it will involve tearing up a basement floor with asbestos tiles or replacing the line outside from the house to the street. Each of these can potentially cost $10-20K or more, and home insurance won't cover it. You can get separate coverage for the outside line, and a rider on your home insurance policy in case of a pipe failure or sewage back-up, but from what I hear these companies always are looking for ways to screw you over. Definitely recommend a sewer scope as part of the home inspection. |
Anonymous
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Trading down is not likely in the same area anymore.
Our plans have failed, now we have to age in place! I wish there is a place where people can trade homes or make me move, that would be a win-win. |