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

[Anonymous]

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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.

Sigh. It's about looking out for the national economy, as a whole. Preferring one interest to the exclusion of all other is a recipe for disaster.

[Anonymous]

Anonymous wrote:

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.

The pp said "when you can afford to upgrade the house." If you would have to give up financial freedom, then you can't afford it.

[Anonymous]

Trading Up Only makes sense when home prices are falling not rising.

Lets say I buy a house for one million cash but want a two million dollar home. Home prices rise 50 percent.

I sell my million dollar home for 1.5 million but that two million dollar home is now three million.

But lets say prices fall 50 percent. I sell my one million dollars home for 500k and buy that two million dollars home for one million.

To trade up in rising market I need to come up with 1.5 million to do it.

To trade up in a falling market I need only 500K to do it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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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.

Only in DCOM do we cry a river for folks stuck in 2,400 houses worth 7 figures.

[Anonymous]

I'm trading up soon, but I had to wrap my head around it mentally. Spending $1.7 - $2M is still a mental block for me. We can afford it, but I cannot believe that is what it takes.

[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.

This. I realized that I want to live a certain way and I am not going to be cramped. I don't want to live like that.

[Anonymous]

Anonymous wrote: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.

Goals

[Anonymous]

I think I would rather buy a second/vacation home before we move up in primary house. This is because moving up up in our area, we would be looking at going from selling at 700 and moving to a 1.2-1.5M-- and at 6% rates. Yikes.

[Anonymous]

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Anonymous wrote: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!

Someone likely will, but no, nobody has to live in them. Certainly not me. Most of these are not historic homes worth preserving. Eventually, they will hopefully be torn down.

Why? They are well-built houses made of solid materials. They need new plumbing and electrical but there's no reason they should be torn down and replaced with a monster McMansion made out of particle board.

Because they are not great houses, not efficient, and are aging and expensive to maintain.

My solid brick 1950s house is actually quite efficient and not particularly expensive to maintain. Also, since it's a duplex, it won't be a tear down and neither will my neighbors' houses. We like it this way, actually. I sneer at McMansions.

[Anonymous]

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

But, the thing is, as long as you have three bedrooms and adequate space you never "need" a bigger house. You might want one, but it's not the same thing.

[Anonymous]

The truth of the matter is that homes are terrible investments. Once you add in the rising costs for insurance, rising taxes, repairs, and maintenance, you're better off investing in the stock market instead.

Americans have an ingrained mindset that they have to own, but the vast majority of the world often rents and are. Upgrading a whole bunch of times because you're bored of your home is stupid. What a waste of transaction fees and fees to the realtor. Upgrading is a concept invented and promulgated by the realtor industry.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote: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!

Someone likely will, but no, nobody has to live in them. Certainly not me. Most of these are not historic homes worth preserving. Eventually, they will hopefully be torn down.

Why? They are well-built houses made of solid materials. They need new plumbing and electrical but there's no reason they should be torn down and replaced with a monster McMansion made out of particle board.

Because they are not great houses, not efficient, and are aging and expensive to maintain.

My solid brick 1950s house is actually quite efficient and not particularly expensive to maintain. Also, since it's a duplex, it won't be a tear down and neither will my neighbors' houses. We like it this way, actually. I sneer at McMansions.

Duplex is sad. It's not even your own home

[Anonymous]

We bought a starter home with the goal of trading up. Now feel very stuck. Have considered fixing our place, but the cost and time commitment is so huge, I end up hoping the market magically corrects instead.

[Anonymous]

We had a vision of trading up from a townhouse to a SFH in a very leafy neighborhood. Renovating the SFH has been challenging for reasons stated above--everything is old and figuring out one problem often leads to another. If the DC suburbs want to preserve older homes in established neighborhoods, they need to consider grants for aging infrastructure--particularly the sewer lines which are unfairly the responsibility of the homeowner and very expensive to replace. I was always opposed to teardowns, but they make sense when the cost of renovating is more than the cost of new construction.

[Anonymous]

Anonymous wrote:

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.

This. I realized that I want to live a certain way and I am not going to be cramped. I don't want to live like that.

+1