Buyer's market or potential risk?

SixSpeedFury

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As the title states, would we be taking a risk buying a home during this pandemic? The wife and I were house hunting well before shit hit the fan. We found a great place for $800,000 back in Feb. Two days ago, the seller told us that he is motivated to sell and lowered his asking price to $600,000. We're waiting on our advisor to get back to us to see what steps to take.
 

Dr Lecterr

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From 8 to 6 is a huge jump. I’d take it! But, depends on the market in your area.
Stock market will tumble in my opinion at some point until we really see the virus start to fizzle. I think the latest uptick is due to the stimulus. I think it’s short lived though.
 

David O

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I closed on my house a little over a month ago. If I had waitied I probably could have saved another eight of a point. I got under 4% on a 15 year so I was still happy
 

JMC9389

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It depends.

Are you going with a 15 or 30 year mortgage? What percentage of a down payment?

If you have enough of money saved up for 3-6 months after your down payment and you and/or your wife have stable jobs, it's a good time to buy.

If things really go to shit, there's going to be no such thing as a bank to hassle you for your monthly payments anyway :bag:
 

Eloe2000

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It is an amazing time to refinance.

But unemployment claims just hit 6x the previous record high. Housing market is headed south for sure. It is just a question of how far south for how long.

If you can find a relatively affordable house that you plan to live in for a long time then yeah sure building equity and hopefully not going in the red more than you would have been by renting then go for it.
 

boltonguy

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Is your job secure? Do you plan to stay in the home for 5 - 10 years? If so, sounds like the price is right. Good luck. Selling right now would be tough - explains the value you are seeing.
 

Ethan

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I’m no economist but...

I’d be surprised if we don’t experience significant inflation due to the huge bailout. Plus we’ll likely see interest rates go up lockstep with inflation.

Could be a good idea because real estate is typically a good hedge for inflation and locking in a mortgage now guarantees a low rate.

I may be completely off but those are my two internet cents. Everyone’s situation is different and which ultimately dictates the right move.
 

Sparty

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Many factors come into play IMO.

How stable is your job? Your wife's? What's your nest-egg / retirement look like? How old are you? Do you have kids (& what age)?

I'd do a 15 year mortgage where the monthly mortgage (including your insurance & taxes) payment is less than 1/4 of your take-home pay. Please put enough $$ down so that you don't have to pay PMI (insurance FOR THE BANK - not you!; huge waste of your money).
 

JStew

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$800k to $600k? I was always taught if a deal sounds too good to be true it probably is. I would sit tight but I’m a nit.
 

Sparty

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...and remember, if this house is much bigger than your current one; just filling it with furniture will cost much more than you expect.
 

juankay20

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As the title states, would we be taking a risk buying a home during this pandemic? The wife and I were house hunting well before shit hit the fan. We found a great place for $800,000 back in Feb. Two days ago, the seller told us that he is motivated to sell and lowered his asking price to $600,000. We're waiting on our advisor to get back to us to see what steps to take.

Sounds like the seller priced in a $200k buffer, which lowers your risk. Unless there's something wrong with the property, your job, or the area (i.e. killed off industry and lost jobs due to the pandemic), then sounds like a better deal than a month ago. Rates are also at the lowest it's been in a decade. Just my 2cents.
 

LotsOfChips

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A risk? Probably, but most things in life have some risk involved.

The resale market is very uncertain at the moment. If the pandemic and associated financial disruption is short lived (wishful thinking IMO), then people may have the money and confidence to buy again in a few months to a few years. If the disruption is more extended, it may take several years before the economic effects are dissipated enough that the real estate market returns to full strength.

It also depends on your goal. If you plan to live there long term and have an affordable home, and the possibility of having your house worth less than you paid for it for a few years doesn't freak you out, then that is different than if you may need to sell it within the next 5 years and risk a fairly substantial loss.
 

allforcharity

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"There's no such thing as good and bad markets, only good and bad deals."

This is potentially your home. If this is what you want/need, and you have the means, and you manage the debt with the deal you can make now, then go ahead and make the deal.
 

abby99

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I would try to find out why the ask was reduced 25%. That's huge! I'm like, What's wrong with it???

Mortgage interest rates are historically low, so you've got that working in your favor. I second the suggestion to avoid PMI. Also, a dedicated poker room with a Chanman table would be fabulous. :tup:

Good luck!
 

Frogzilla

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I think the answer is going to vary by location...some markets have much bigger bubble and inflated prices than others. It’s reasonable to expect those bubbles to deflate in this climate.

That said. I don’t think you’ll see anything near the fire sale of 08/09 due to the heavy restrictions on mortgage underwriting which should curb those positive feedback loops somewhat. If you are ready to buy at 800, 600 seems absolutely fine, as long as your job situation isn’t at risk
 

Thomacetti

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I closed on my house a little over a month ago. If I had waitied I probably could have saved another eight of a point. I got under 4% on a 15 year so I was still happy

4% ???
Why are you paying almost 3% too much David ?
I could get 1.1% on 15 years fixed rate without trying (500K, online) right now.
Something i'm missing ?
 

Marius L

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Crazy 200k discount. I wish people would panic as much in the real estate market over here, as we are also currently looking to buy a home. Seems prices have not been impacted much here yet at least.
 

David O

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4% ???
Why are you paying almost 3% too much David ?
I could get 1.1% on 15 years fixed rate without trying (500K, online) right now.
Something i'm missing ?
No pandemic when I closed. Pretty easy to get one lower now. Believe me, I shopped rates all over and it was the best at the time with a plus 800 score.

today’s average is 3.29% on a 15 yr
 
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Thomacetti

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In EU / Belgium rates have been below 2% since end of 2017...no idea the difference would be this big between EU & USA

And if you opted in on 4%, you could already refinance at 3% less (that's a lot of moolah)
 

David O

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In EU / Belgium rates have been below 2% since end of 2017...no idea the difference would be this big between EU & USA

And if you opted in on 4%, you could already refinance at 3% less (that's a lot of moolah)
I am under 4 and I have been running scenarios. Unfortunately with closing costs it is still not enough to refinance to get a full ROI. That and I always pay more each month and will most likely pay it off in 10 years or at least that is the plan.
 

Josh Kifer

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Depends also on the market in your area. In Idaho, our market is still going nuts and even with a full burst the market here will stay afloat with the influx of people moving to Boise. We are 15000 condos and 4000 family homes short in the market as of last year....

Certain locations, I'd be weary, but alot of places if you have a good job and know your position, you'd be plenty safe.
 
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