When will these prices slow down??!!

[Anonymous]

Anonymous wrote:Is there a reason you can't stay in your townhome, OP?

+1

Make sure you factor in prepping the house for market, selling costs and buying costs. This is significantly eating into our equity on our 750k house, we are spending 15k to fix up and 45k in fees.

[Anonymous]

Thanks everyone. If we bought now, we'd only have enough to put down maybe 70k? And from what I can tell, that would mean financing an amount that would leave us with a monthly payment about 900 more than what we pay now and we just don't have that much room in our budget to make that amount appear in our monthly finances.

Yes, we could stay in our townhome. But we'd like more space, a yard, a garage, etc. Obviously if we can't ever do it financially then we won't. But I'd like to try to find a way.

MIL is gifting us some money this year and she's made some noise about gifting us more next year. I'm hoping that helps as bit. If she gifts us the money for two years, it'd be tight but we could stretch to buy. If she gifted it to us three times which puts us right at the two year from now mark that I was talking about buying, it'd probably allow us to do it without stretching too terribly much but that's only IF the prices don't continue to skyrocket.

Honestly, I think our best bet is waiting until the end of the buying season and trying to snag one of the homes that's languishing on the market. Of course that gives us a dilemma of trying to figure out when to sell our townhouse.

My plan right now is to continue to save and to meet with a realtor and mortgage broker early next year to get a firmer grasp on numbers...what we could qualify for, how much we could sell our house for, what kind of repairs/updates we need to do, etc and then get going with making things happen.

Thanks for all the input. Aside from the tangents about child support, it's been helpful.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think you might end up screwed, because even as prices are rising, you're not going to have these super low rates forever.

Lower rates are cheaper financing, that's true, as in a $400K loan at 6% is less per month than a $400K loan at 8%. BUT, when the upshift in rates occurs, the PRICES of homes, especially the non-cash market, will decline. This is simple finance math.

Not sure my finance pedantry helps the OP, but the market in metro DC and especially NOVA is driven by the warmongering that's been going on since 9/11. Believe it or not, if Trump were to scale back Middle East warmongering, that might help you see lower prices. HRC seems to be the neocon dream, so her election would keep them rising. Neither of those is a reason to vote for anyone, IMO.

If I were OP, I'd work to enjoy/resign myself to the townhouse. I'd also work on upping my non-home equity savings, probably in shorter (less than 3 years) maturity treasuries. And I'd keep in mind that being a teacher means a much more stable income than most have, even if that income seems smaller!

You're missing the key fact that interest rates increase when prices are increasing. The economy would be roaring at the same time should there be a massive increase in rates. Or simply runaway inflation. I wouldn't count on an increase in rates resulting in a decrease in prices. It hasn't worked that way in the past.

The decrease in prices due to increasing interest rates is finance math. If interest rates rise, ceteris paribus, prices decrease. Talk to a bond trader if you doubt this.

This is a fallacy. Housing prices are not corporate bonds -- prices and yields do not move inversely. I realize a lot of people believe that once rates increase, prices will fall. Historically, that hasn't happened at all because housing prices are not that elastic. Yes, we've been in an unprecedented era of artificially depressed rates, but the Fed is going to move VERY gradually to normalize -- could take a decade or more. It will take greater economic strength to push rates up -- and greater economic strength generally translates to more buying power. So this idea that when rates rise housing prices will fall in tandem is just foolish and wishful thinking. Might it happen? Sure. Is it possible? Maybe at the margins. But is it likely? Not really.

[Steve]

Anonymous wrote:Thanks everyone. If we bought now, we'd only have enough to put down maybe 70k? And from what I can tell, that would mean financing an amount that would leave us with a monthly payment about 900 more than what we pay now and we just don't have that much room in our budget to make that amount appear in our monthly finances.

Yes, we could stay in our townhome. But we'd like more space, a yard, a garage, etc. Obviously if we can't ever do it financially then we won't. But I'd like to try to find a way.

MIL is gifting us some money this year and she's made some noise about gifting us more next year. I'm hoping that helps as bit. If she gifts us the money for two years, it'd be tight but we could stretch to buy. If she gifted it to us three times which puts us right at the two year from now mark that I was talking about buying, it'd probably allow us to do it without stretching too terribly much but that's only IF the prices don't continue to skyrocket.

Honestly, I think our best bet is waiting until the end of the buying season and trying to snag one of the homes that's languishing on the market. Of course that gives us a dilemma of trying to figure out when to sell our townhouse.

My plan right now is to continue to save and to meet with a realtor and mortgage broker early next year to get a firmer grasp on numbers...what we could qualify for, how much we could sell our house for, what kind of repairs/updates we need to do, etc and then get going with making things happen.

Thanks for all the input. Aside from the tangents about child support, it's been helpful.

You think you'll get $50k+ equity out of your townhouse + savings in 2 years?? Let's assume you have the $70k now in both equity and savings:

+$70k current equity and savings
+ $56k gift tax exclusion (MIL+FIL to each of you)
+ $7k (2% agent rebate on the sale of your th)
+ $12k (2% agent rebate on the purchase of your sfh)
=$145k

You have enough for your $120k down payment and closing costs right now.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm trying to understand a life situation where child support and day are bills both go away in 2 years. One of you has a toddler and a 16 year old???

Not OP but my husband pays child support for his 16 and 18 year old, and we have an infant and preschooler in daycare.

18 isn't a child

So? In Dc at least the child support is until he reaches 21. Might be the same in VA or until finishes high school or even college if chooses to go.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

The decrease in prices due to increasing interest rates is finance math. If interest rates rise, ceteris paribus, prices decrease. Talk to a bond trader if you doubt this.

This is a fallacy. Housing prices are not corporate bonds -- prices and yields do not move inversely. I realize a lot of people believe that once rates increase, prices will fall. Historically, that hasn't happened at all because housing prices are not that elastic. Yes, we've been in an unprecedented era of artificially depressed rates, but the Fed is going to move VERY gradually to normalize -- could take a decade or more. It will take greater economic strength to push rates up -- and greater economic strength generally translates to more buying power. So this idea that when rates rise housing prices will fall in tandem is just foolish and wishful thinking. Might it happen? Sure. Is it possible? Maybe at the margins. But is it likely? Not really.

Missed the ceteris paribus I used before? I'm very familiar with the literature on how there isn't a lockstep negative correlation between interest rates and housing prices. I also know we are likely near the end of a decades long period of policies aimed at goosing assets prices. And absent increased household formation and increased household income (which, at the median has been in decline nationally for the last few years), there is an upper bound to the spending households can allocate to housing and that makes a break from recent experiences all the more likely.

While I'm trolling DCUM's many GS-14 Economists:
-Why, oh why do you have such confidence in the Fed? Especially if you are so committed to the idea of the recent past as being representative of the future? They've been behind the curve for quite a while and they control short term rates, not long term ones.

-And most importantly, given that my discourse on interest rate moves was driven by a desire to help the OP navigate a market that has been unkind to them, do you think there is any better course of action than for them than to increase their savings in something relatively risk free (treasury bond [funds] with maturities of 3yrs or less)? Especially given that at present, most of their future down payment is in home equity in their current townhouse? Please, if you feel the need to bicker about interest rates and their impacts on prices, also share some thoughts on what you would do financially in OP's situation.

[Anonymous]

Anonymous wrote:Thanks everyone. If we bought now, we'd only have enough to put down maybe 70k? And from what I can tell, that would mean financing an amount that would leave us with a monthly payment about 900 more than what we pay now and we just don't have that much room in our budget to make that amount appear in our monthly finances.

Yes, we could stay in our townhome. But we'd like more space, a yard, a garage, etc. Obviously if we can't ever do it financially then we won't. But I'd like to try to find a way.

MIL is gifting us some money this year and she's made some noise about gifting us more next year. I'm hoping that helps as bit. If she gifts us the money for two years, it'd be tight but we could stretch to buy. If she gifted it to us three times which puts us right at the two year from now mark that I was talking about buying, it'd probably allow us to do it without stretching too terribly much but that's only IF the prices don't continue to skyrocket.

Honestly, I think our best bet is waiting until the end of the buying season and trying to snag one of the homes that's languishing on the market. Of course that gives us a dilemma of trying to figure out when to sell our townhouse.

My plan right now is to continue to save and to meet with a realtor and mortgage broker early next year to get a firmer grasp on numbers...what we could qualify for, how much we could sell our house for, what kind of repairs/updates we need to do, etc and then get going with making things happen.

Thanks for all the input. Aside from the tangents about child support, it's been helpful.

We did what you're thinking, OP, we bought a home right after the start of the school year, when most people with families are not looking to move. That said, you might have to compromise on the garage...those are sometimes hard to come by in an "affordable" price range.

[Anonymous]

Since you are focused, have thought about being pro-active and approaching likely sellers? This approach is fraught, but if you can save someone the work of prepping a home for market and cut out the middleman (agent), those savings, maybe 10 or even 15% of the purchase price, can be split between the two of you. Not saying it's easy, but might work out if you are willing to do your homework.

[Steve]

Anonymous wrote:Since you are focused, have thought about being pro-active and approaching likely sellers? This approach is fraught, but if you can save someone the work of prepping a home for market and cut out the middleman (agent), those savings, maybe 10 or even 15% of the purchase price, can be split between the two of you. Not saying it's easy, but might work out if you are willing to do your homework.

Funny thing is. We've already done all the legwork for the OP. We've got 9+ pre-market homes in Burke around Terra Centre Elem School based on outreach we did for one of our users. The reason you can't see homes listed on our site is because owners search for buyers and get alerts when new buyers pop up. They can then pre screen them before spending time on showings. We thought owners would appreciate this amount of privacy and control.

[Anonymous]

Steve wrote:

Anonymous wrote:Since you are focused, have thought about being pro-active and approaching likely sellers? This approach is fraught, but if you can save someone the work of prepping a home for market and cut out the middleman (agent), those savings, maybe 10 or even 15% of the purchase price, can be split between the two of you. Not saying it's easy, but might work out if you are willing to do your homework.

Funny thing is. We've already done all the legwork for the OP. We've got 9+ pre-market homes in Burke around Terra Centre Elem School based on outreach we did for one of our users. The reason you can't see homes listed on our site is because owners search for buyers and get alerts when new buyers pop up. They can then pre screen them before spending time on showings. We thought owners would appreciate this amount of privacy and control.

Not buying this as helpful. OP, you need to find things like homes with the original buyers in the Burke subdivisions built in the 1960s-1980s. These are now elderly folks ready to move on in life. And they are not likely to being the social networking tool du jour.

[Anonymous]

This whole, "higher interest rates lowers home values" argument is invalid. Lower the value of people's homes and they're underwater again. Remember 2009? Remember how the only houses for sale were foreclosures? It would be that against except without the foreclosures.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

The decrease in prices due to increasing interest rates is finance math. If interest rates rise, ceteris paribus, prices decrease. Talk to a bond trader if you doubt this.

This is a fallacy. Housing prices are not corporate bonds -- prices and yields do not move inversely. I realize a lot of people believe that once rates increase, prices will fall. Historically, that hasn't happened at all because housing prices are not that elastic. Yes, we've been in an unprecedented era of artificially depressed rates, but the Fed is going to move VERY gradually to normalize -- could take a decade or more. It will take greater economic strength to push rates up -- and greater economic strength generally translates to more buying power. So this idea that when rates rise housing prices will fall in tandem is just foolish and wishful thinking. Might it happen? Sure. Is it possible? Maybe at the margins. But is it likely? Not really.

Missed the ceteris paribus I used before? I'm very familiar with the literature on how there isn't a lockstep negative correlation between interest rates and housing prices. I also know we are likely near the end of a decades long period of policies aimed at goosing assets prices. And absent increased household formation and increased household income (which, at the median has been in decline nationally for the last few years), there is an upper bound to the spending households can allocate to housing and that makes a break from recent experiences all the more likely.

While I'm trolling DCUM's many GS-14 Economists:
-Why, oh why do you have such confidence in the Fed? Especially if you are so committed to the idea of the recent past as being representative of the future? They've been behind the curve for quite a while and they control short term rates, not long term ones.

-And most importantly, given that my discourse on interest rate moves was driven by a desire to help the OP navigate a market that has been unkind to them, do you think there is any better course of action than for them than to increase their savings in something relatively risk free (treasury bond [funds] with maturities of 3yrs or less)? Especially given that at present, most of their future down payment is in home equity in their current townhouse? Please, if you feel the need to bicker about interest rates and their impacts on prices, also share some thoughts on what you would do financially in OP's situation.

How does generational wealth transfer from babyboomers factor in to your model? Seems like it allows your upper bound to increase even without an increase in HHI

[Steve]

Anonymous wrote:

Steve wrote:

Funny thing is. We've already done all the legwork for the OP. We've got 9+ pre-market homes in Burke around Terra Centre Elem School based on outreach we did for one of our users. The reason you can't see homes listed on our site is because owners search for buyers and get alerts when new buyers pop up. They can then pre screen them before spending time on showings. We thought owners would appreciate this amount of privacy and control.

Not buying this as helpful. OP, you need to find things like homes with the original buyers in the Burke subdivisions built in the 1960s-1980s. These are now elderly folks ready to move on in life. And they are not likely to being the social networking tool du jour.

Why not? We did exactly as you suggested and it worked. What you might not know is that we sent physical letters and hung door tags to reach the majority of owners who aren't paying attention to our social media ads. Only a couple of people preferred to call the phone number rather than signing up to contact the buyer directly.