i just bought an apartment. it made sense for me for a few reasons...
1) i've been screwed over by too many landlords and have become so exhausted with renting (i was forced out of my last apartment for complaining about not having hot water. i know this is illegal, unfortunately there is nothing you can do about it.)
2) the apartment i found was _perfect_ for me. it had everything i wanted...quite rare
3) i was not thrilled about the idea of waiting for mortgage rates to drop, home prices to go up and then ensuing bidding wars bringing you far over asking, like what happened in the early covid days.
4) rates will drop eventually and i'll refinance
maybe it doesn't make all the financial sense in the world, but it worked out for me.
You absolutely made the right choice. You needed a place to live, and didn't want to continue setting your money on fire paying rent.
The best time to buy is as soon as you can. High, low, whatever, it makes no difference in the long run. In that long run, you've bought a house you chose, are not throwing away money, and will eventually make back any money you lost buying high.
I have a feeling all the people giving advice to not buy in climate X at any given time are only saying so to feel better that they currently can't.
This feels like such a weird take to me. There's never been a time that I know I'm going to stay in the same city for more than four years...ever. Since graduating college, I've been to grad school, postdoc, employment, whatever but there are very few places I know I can stay for long enough to make a purchase worth it. in hindsight, I'm sure a short term buy would have made financial sense, but so did leaving assets in the S&P and I didn't have to worry about anything.
I wish it weren't such a default assumption that everyone has to buy a place given the massive friction this puts on relocation.
I meant all this for slightly more settled people, but since you bring it up, I still think it makes sense for people like you too.
I bought a house in a city about a year before I knew I was likely to leave for another country. When I was sure, and told people I was leaving, they presumed I meant some long term plan. They thought I was delusional when I said I meant in a couple of months. Everybody said it couldn't be done; what about this, what about that, it's not as easy as just packing up and going!
Yes, yes it is. I did as much prep as I needed to, packed my bags, and left. I rented the house out _whilst_ was in the other country, and eventually sold it for a nice profit when I'd had enough of that. It was incredibly easy, and I haven't even gone into the parts that should have been difficult given a particular situation I was in.
Yeah - perhaps the unique and unfortunate constraints of an academic track, where it's heavily penalized to not move locations for Phd, then postdoc, then professorship. Similar but not as severe for my wife in Medicine, where you have to move after MD to Residency, then fellowship, then physician job.
We "made" $190k selling a home we bought as a foreclosure in 2009 in 2021. In reality we didn't make jack squat. We paid that much in interest alone over the course of those years. The blood, sweat equity, and money we spent on upkeep and upgrades is incalculable to double entry standard, but I can tell you it was an absolute shit ton. I didn't even do the math on our property taxes, refinance charges, and closing costs because it's maddening to think about.
Since we have been renting our accounts have gone parabolic. We are able to save my wife's entire check, every month. There is no money burning a hole in her pocket to redo the kitchen, or bathroom, or backyard. There is no money going toward a new garbage disposal or A/C unit. We have more money despite two teenagers that have gone parabolic fees for club sports, driving, clothes, and FOOD.
We could absolutely buy right now, but I have my foot firmly down as a HARD NO. I would rather buy her a new car to assuage the urge to buy a home. If I could wave a magic wand and remove the desire completely, I would in a heartbeat. A home, from a 100% economic POV, is a waste of time and money. It is only complicated because of emotions and "what everyone else" is doing. There is zero logic in a mortgage and what is worse is that you never truly own the dirt your home is sitting on, at least in the USA.
Edit: I feel like the people that encourage others to buy a mortgage are doing so out of ignorance and have never actually thought it through to the end of days. I see old people living in nursing homes every day. None of them tell me about the homes they lived in while we wait for transport to the ER. They all talk about experiences, places they have traveled, their families, and the parts of their working lives they loved and hated. Never had a person talk about their "mortgage", I mean "home" on their deathbed.
Maybe a difference in American made houses vs. European ones. I don't know, but generally when you buy a house here, it's not a money-pit.
I'm happy you're doing better renting, and I agree that experiences are far more important than "stuff", but I don't count a home as stuff. Unless you're doing something cool like nomading it, I see buying a house as just having one of your basics covered and out of the way, like buying shoes.
I'm paying a little under 3/4 of what I'd be (was) paying in rent, and whilst there's the interest to take into account, the maths easy: If the interest is less than what rent would be, then having interest is better than paying rent, since 100% of rent is up in smoke, whereas only the interest is up in smoke for a mortgage.
When we rented, anytime the market shifted, the landlords raised rents on us. It was hell. I was paying more than what a mortgage was.
When I bought, all that went away. We bought a nice house that didn't need immediate work done. My mortgage was below rental rates.
So my point is that it takes a little insight when buying a house, but if rents are expected to go up (which are expected almost always), then it's a wise decision long term. Yes, house maintenance needs to be factored in, but those costs are amortized over long-term.
Have you factored in property taxes, impact fees if any, landscaping, HOA fees if any, school district fees/changes/bonds, fire protection fees/bonds/changes, Home owners insurance, sewer or water treatment bonds/fees/changes, utility bonds/fees/changes, and more?
Have you factored in a terrible neighbor? A halfway house or care home next door?
Rent may be going up or down or sideways... you have the option to move if you don't like it. I could realistically move in less than a week and I have a full blown wood shop in my rental garage, two teenagers, wife and a dog. It would be messy, but we could do it with basically zero consequences.
If you care about your credit score, you are not going to just walk away from your mortgage. We can jam out of here if the wind blows a direction we don't care for.
With all three cars paid off, I truly have zero debt. A few of my friends tell me they have "zero debt except for the mortgage"... I am like that is a giant ball and chain around your neck broham... Nothing about that says "debt free" or "freedom."
> Have you factored in property taxes, impact fees if any, landscaping, HOA fees if any, school district fees/changes/bonds, fire protection fees/bonds/changes, Home owners insurance, sewer or water treatment bonds/fees/changes, utility bonds/fees/changes, and more?
All this leads me to believe the situation is very different in America. I'm not even sure what any of that means. Here in Europe you buy a house, pay interest on the mortgage, and that's about it.
>> I am like that is a giant ball and chain around your neck broham... Nothing about that says "debt free" or "freedom.
Mortgage debt is not a concern, houses can be sold on a market. If you feel that having no mortgage empowers you, then that's great for you! I don't think this "fear" applies to everyone. Debt can be used very strategically.
It depends. Do you expect mortgage rates to go down in 2+ years? Refinancing will lower those rates. Also, if rates do go down, house prices will jump up. How many people are waiting for houses right now? House prices will not stay the same, even if inventory increases, as demand will go up as well.
The 30 year mortgage already has future rate expectations priced in. You are not smarter than the bond market. If rates stay higher for longer home prices will stagnate
or go down, you can’t predict which will happen.
You think the bond market knows? I don't think they do otherwise rates would not be change dramatically.
My point is that housing prices have historically kept going up. I'm not referring to YoY trends, but median long-term. I think prices will continue to rise over decades, give or take a market correction, because demand is still strong.
I think you made a reasonable decision and you should not get caught up in these cycle narratives. Prices go up and down. You could try to time the market but I think a better strategy is just get what makes sense for you, when it makes sense for you.
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1) i've been screwed over by too many landlords and have become so exhausted with renting (i was forced out of my last apartment for complaining about not having hot water. i know this is illegal, unfortunately there is nothing you can do about it.) 2) the apartment i found was _perfect_ for me. it had everything i wanted...quite rare 3) i was not thrilled about the idea of waiting for mortgage rates to drop, home prices to go up and then ensuing bidding wars bringing you far over asking, like what happened in the early covid days. 4) rates will drop eventually and i'll refinance
maybe it doesn't make all the financial sense in the world, but it worked out for me.