My wife and I have been saving for a house for the past few years, and were thinking about purchasing one this year. And with COVID-19, I’m curious what people think will happen to the housing market?
It depends on your market. But if you are in an under appreciated housing market in a decent size city with good growth potential, and you have secure income, now is a great time to buy a home. With the recent fed rate cut mortgages will be at an all time low (if you have good credit and can get a loan).
Prices should go up and up on average since there is on average a national inflation of about 3%. If it goes up about 3% only you just come out about even (well actually you lost "purchasing power" since buying a house comes with a tons of fees).
Real estate is a lagging indicator, meaning it lags quite a bit behind changes in the economy. I suspect home prices will drop after this crisis. Probably 1-2 years from now. The economy is going to take a big hit, maybe the largest since the great depression.
I'm not qualified to offer financial advice, but that's what I've been thinking for myself personally. I don't have a crystal ball though.
This is a common fallacy. Lower mortgage rates mean that houses are more expensive as other bidders are able to qualify for the same mortgage rates. There is actually quite a lot of papers showing that it's better to buy at a high mortgage rate and refinance down the road.
As for your other comment, renting or paying a mortgage is a cost/benefit analysis that is way more complicated than "paying someone else's mortgage". If you live in a desirable locale (Bay Area, Seattle), the Buy/rent ratio means that at this point you are most probably ahead by renting and investing the difference in the stock market.
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[ 2.9 ms ] story [ 23.6 ms ] threadI'm not qualified to offer financial advice, but that's what I've been thinking for myself personally. I don't have a crystal ball though.
With mortgage rates as low as they are right now, chances are your paying more in rent than you would paying off a mortgage.
So it's really how you look at it, I see it like you have two choices, pay someone else's mortgage by renting or pay your own.
As for your other comment, renting or paying a mortgage is a cost/benefit analysis that is way more complicated than "paying someone else's mortgage". If you live in a desirable locale (Bay Area, Seattle), the Buy/rent ratio means that at this point you are most probably ahead by renting and investing the difference in the stock market.