Isn't trading up going to end as folks are priced out?

[Anonymous]

Life is too short to unnecessarily live in a cramped house for 10+ years when you can afford to upgrade the house. Better financial decision or not.

[Anonymous]

Anonymous wrote:

Anonymous wrote:[i]

Anonymous wrote:

Anonymous wrote:I thought we were supposed to trade up because we went up a bunch of income rungs.

Well that, plus your house appreciation to make it possible for a larger house down payment, and wanting a larger house in response to a changed need for housing - in terms of size (kids and/or aging parents moving in), then ideally you can sell for profit to put in retirement

You aren’t “supposed to” do anything that’s just one of the strategies, buying younger/earlier/smaller and use the appreciation and your advanced income so you’re not priced out of a nicer house down the line when you need that

I don’t understand that because won’t all the houses have appreciated at the same rate? How would my appreciation help me trade up?

In theory, your appreciation lets you put down a larger down payment. You have also continued to save on housing cost (relative to renting) as you have lived in your home. And as your income has grown, you have hopefully saved more so you can afford to put down a larger down payment or handle a larger mortgage. The issue right now is that housing prices have grown significantly faster than your income isn't keeping up, and as rates have gone up, you also need to account for a greater interest payment.

This happened to us. We have a lot more wealth on paper (home equity) than compared to our salaries, which have gone up but not nearly 50% like housing around us. Also we now have kids so our other expenses have gone up. Not just childcare, extracurriculars, etc. in the immediate term, but any allocation of money toward a bigger house would take away from what we could contribute to their 529s. At some point you say the house is fine, we like our neighborhood, let’s put our extra income toward college. From talking to friends in Arlington, a lot of us are in the same boat. We can’t afford to upgrade in our school zone and don’t want to move farther out. Guess we’ll make our money when we cash out of the area someday.

[Anonymous]

Anonymous wrote:

Anonymous wrote:When I think of “starter home”, I imagine one where a family of 4 could not comfortably fit long term. If you were paying 750/800K for your starter home I would assume your projected income level is one where eventually $1.5m would be no big deal.

Well, yeah. Ok. But what our culture interprets as what "a family of four could comfortably fit long term" has evolved a great deal in the last couple of generations. Visit Fallingwater, Frank Lloyd Wright's masterpiece, built for a very rich family in 1936 -- and you will likely find it quite small. It's about 2900 sq feet (if you don't count the outdoor spaces -- which, with organic architecture, is, admittedly, a lot of the space).

lol, my “forever home” is about that size (and this is the 3rd property I’ve owned), 2 adults, 2 teenagers.

[Anonymous]

Sold my home in 2023 and it more than double in value when I bought it in 2015. They only way I could trade up would be to move to a very cheap area to live.

[Anonymous]

We can't afford to upgrade in our school district. That simple. Our house has almost doubled in value, and the taxes alone have practically doubled our mortgage payment. When we "upgrade" our plan is to buy a house in a lower cost of living area of the country. We can get a beautiful house for a fraction of the price, but we need to wait for the kids to graduate.

[Anonymous]

Anonymous wrote:There is an article that shows how the housing market is stuck because of these crushing mortgage rates. No one is going to give up their reasonable sub 3% rate for the crazy 5%+ rates

Are you 12 years old, or just have no knowledge of history at all?

I'm not disputing that years of historically low rates have creates pressure on inventory, but calling 5-6% rates "crushing" is pure idiocy.

[Anonymous]

We will not trade up. House paid off. Don’t want a mortgage and higher taxes.

[Anonymous]

Anonymous wrote:Life is too short to unnecessarily live in a cramped house for 10+ years when you can afford to upgrade the house. Better financial decision or not.

No, it’s not. I’d rather keep our 1000 square foot house and have financial freedom.

[Anonymous]

Anonymous wrote:

Anonymous wrote:There is an article that shows how the housing market is stuck because of these crushing mortgage rates. No one is going to give up their reasonable sub 3% rate for the crazy 5%+ rates

Are you 12 years old, or just have no knowledge of history at all?

I'm not disputing that years of historically low rates have creates pressure on inventory, but calling 5-6% rates "crushing" is pure idiocy.

With starter home prices in my area at 1m there is a major difference in 20% down on 3% and 6%. 6% rates make the monthly mortgage go up by 2K. its crushing, this is the realities we live in no rates should be that high with the value of the current homes, home values never go down in the DC area and right now the supply is tight. Someone needs to address this rate and the govt solutions of a few thousand downpayment assistance do nothing, its the rate dummy.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:There is an article that shows how the housing market is stuck because of these crushing mortgage rates. No one is going to give up their reasonable sub 3% rate for the crazy 5%+ rates

What area? Homes are still going quickly in my neighborhood and frequently above asking. None of the new owners I’ve met are 1st time buyers, they’ve all sold and taken on the bigger mortgage.

No PP, but instead of writing "no one one is going to give up their reasonable sub 3% rate" they should have written "no one smart is going to give up their reasonable sub 3% rate." Lots of fools get caught up in keeping up with the Joneses in the DMV, which often leads to poor financial decisions. My neighbors are leasing a Range Rover, lol. Because they don't have the money to buy one.

We are in this position - one kid, a HS junior, in a house that we purchased, gutted and renovated 9 years ago, mortgage at 2.625%. Our house is a rarity - a recent renovation that isn't huge, at least for our neighborhood (4 BR, ~2400 sq. feet). We have toyed with various options in the next decade and into retirement - selling and buying a condo in the city after kid leaves for college, selling and buying two smaller places for retirement, etc. But our incredibly low rate changes all that - we will be much better off staying put until we need to move.

No one should feel sorry for us, at all - this is not really a "problem" using any rational definition of the term. But circumstances have forced a change to our plans, and more importantly, a normal-sized house suitable for a family of 4 in a great neighborhood within walking distance to wonderful schools won't be on the market in the near future. This phenomenon, repeated over and over, limits supply, and makes it harder and harder for people to move up.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:There is an article that shows how the housing market is stuck because of these crushing mortgage rates. No one is going to give up their reasonable sub 3% rate for the crazy 5%+ rates

Are you 12 years old, or just have no knowledge of history at all?

I'm not disputing that years of historically low rates have creates pressure on inventory, but calling 5-6% rates "crushing" is pure idiocy.

With starter home prices in my area at 1m there is a major difference in 20% down on 3% and 6%. 6% rates make the monthly mortgage go up by 2K. its crushing, this is the realities we live in no rates should be that high with the value of the current homes, home values never go down in the DC area and right now the supply is tight. Someone needs to address this rate and the govt solutions of a few thousand downpayment assistance do nothing, its the rate dummy.

So you think interest rates should be determined solely by home prices, without considering anything else? No other factors in the national and global economy. THe Fed's sole concern should be making it easy for people to buy homes? That's so simple-minded it's almost Trumpian.

[Anonymous]

Yes this is us. Live our tiny old house and with only 3 of us we can make it work. To move to a bigger house in Arlington we would have to atleast 3x or 4x our current mortgage. Our location is also very convenient. We do jot use APS so no need to move for a specific school.

Yes I would like a another bedroom and another bathroom but I can get over it. Better use of our money is funding 529, investments- we have 2 federal tsps- and fun things to fo like travel, cool activities, etc. i feeli like the minirity though. We also have wealthy friends in huge houses in McLean but such is life. We are still lucky 🍀 and blessed 💕

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:There is an article that shows how the housing market is stuck because of these crushing mortgage rates. No one is going to give up their reasonable sub 3% rate for the crazy 5%+ rates

Are you 12 years old, or just have no knowledge of history at all?

I'm not disputing that years of historically low rates have creates pressure on inventory, but calling 5-6% rates "crushing" is pure idiocy.

With starter home prices in my area at 1m there is a major difference in 20% down on 3% and 6%. 6% rates make the monthly mortgage go up by 2K. its crushing, this is the realities we live in no rates should be that high with the value of the current homes, home values never go down in the DC area and right now the supply is tight. Someone needs to address this rate and the govt solutions of a few thousand downpayment assistance do nothing, its the rate dummy.

So you think interest rates should be determined solely by home prices, without considering anything else? No other factors in the national and global economy. THe Fed's sole concern should be making it easy for people to buy homes? That's so simple-minded it's almost Trumpian.

Yes, the government exists for the people and the people feel like the fed and administration our out of touch with the needs of everyday people. but ok feel free to worry about billionaires and companies over 99% of the people and see how that works out.

[Anonymous]

Locked into a 2.80% interest. Going to be very difficult to trade up. It just isn't worth it. It's hundreds of thousands of dollars in extra interest payments for no reason other than getting bored with the current house.

I'd rather just make our starter home our forever home and retire with a lot more money.

[Anonymous]

That already happened in my neighborhood. Our house was about $220k when purchased in the late 90s. Neighborhood gentrified and it's now worth $1.3M. We did a not-huge renovation (mainly expanding the kitchen/dining + big screened porch) to make it work better for us long term. If we could have afforded something larger in our neighborhood we'd have moved but renovating made more sense. And, now the kids are off to college and the smaller home still feels right vs. if we'd bought something much bigger.