The real problem with trading up is a lot of us can’t downsize due to the huge equity in our homes. They’ve doubled or more in value so if we downsize we get gob-smacked. Many of us are stuck.

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.

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.

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).

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.

Anonymous wrote:We bought our house for $775, it’s now maybe $1.075 or something. We refinanced into a 15 year mortgage at 2.25 and have $350k left.

Yeah, there’s no way I’m going to sell, but a $1.75 million place and saddle myself with a million dollar 30 year mortgage at 6.5%. Ugh. Right now the housing problem is solved for our family and we’re just on autopilot until we actually own it. The thought of resetting the process just to have bigger bathrooms and a mud room seems awful.

Talk to me again if I ever have $2 million in cash on top of full retirement and education accounts. Then maybe. But now, never, for exactly the reasons you mentioned.

We are in pretty much the same exact position you are.

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.

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

We renovated instead. Paid $850k, spent $250k after 5 years (some of this was stuff like roof and appliances, which would have been replaced no matter what), refinanced to 2.75%. House now worth at least $1.3M (this is Redfin estimate not taking into account upgrades).

To meaningfully “trade up” we’d have to spend close to $2M. Even the houses in the $1.5-$1.7 range have weird quirks or some outdated kitchen/baths or floor plans I don’t love vs my house now which is smaller but the way I want it. I just wish we had a real guest room, but the basement pull out couch will have to do at these interest rates. Even if we came up with extra cash to put down, the same mortgage we have no at a 6% rate is a lot more money.

[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?

My neighborhood isn't super expensive but it's fairly nice and a lot of the people moving in are not *local* people trading up. Instead, the new families tend to be transplants from areas where home prices are even higher --think San Francisco, Seattle, NYC suburbs, etc.

Anonymous wrote: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.

Why can't you trade down in the same neighborhood? Assuming you have owned your home for a bit and seen appreciation, you can buy with a smaller to no mortgage, no?

We bought our house for $775, it’s now maybe $1.075 or something. We refinanced into a 15 year mortgage at 2.25 and have $350k left.

Yeah, there’s no way I’m going to sell, but a $1.75 million place and saddle myself with a million dollar 30 year mortgage at 6.5%. Ugh. Right now the housing problem is solved for our family and we’re just on autopilot until we actually own it. The thought of resetting the process just to have bigger bathrooms and a mud room seems awful.

Talk to me again if I ever have $2 million in cash on top of full retirement and education accounts. Then maybe. But now, never, for exactly the reasons you mentioned.

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

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.

All houses are expensive to maintain. These new builds are often not well built and have issues of their own. Many look cheap, even though they’re $$$!. I’d rather see the old houses fixed up. These new builds are so ugly and look tacky.