Home buying thread

Captain Suave

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Lambourne said:
Massively increasing supply
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"Massively increasing supply" is only true relative to the recent all-time bottom. We're not even close to oversupplying the market. 2005-2010 is what a bubble looks like. And it's even worse than this chart would indicate because in the background the population has grown by 50% since 1980.

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Lambourne said:
means lower prices
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Here's the relationship between inventory and price. At best the current demand mismatch going to roughly flatten prices on an illiquid market. They just don't drop significantly unless people are forced to sell en masse like '08-'10.

1755701818606.png

Anything above zero is increasing:
1755706363885.png


Lambourne said:
and it means those sellers that are under water are going to be under water even more so they are still stuck. It would help first time buyers though.
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If builders are not putting up starter homes and owners of existing properties are underwater if prices fall, who is going to sell low to first time buyers? Look at the activity of first-time buyers and the ages of people who DO buy. It's the same boomers/GenX churning houses between themselves and rolling over their wealth.

1755703136757.png
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Lambourne said:
Affordability is extremely low right now and it's going to correct to the mean eventually. A bunch of people are going to end up under water again until inflation catches up. I don't see a way out of this corner that they have been painted into by a number of factors. The boom & bust is inherent in the way our money works.
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Yeah, I think the market is going to be mostly stagnant until inflation drives up wages to match the nominal home prices. Then the march up will continue. We might see some temporary adjustment of mid single digit percentages, or even 10%+, but that doesn't put a dent in the spike of the last five years. It's also going to be a only for a historically tiny number of properties with the vast majority of homeowners sitting in place.

There just isn't going to be some broad-based 40% recalibration for tens of millions of homes that makes housing feel affordable for everyone that could possibly want to buy. Housing is going to remain expensive until we catch up on 15 years of under-development and then build faster than the population grows. That doesn't seem likely to happen, so it's just going to remain expensive.
 
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Gravel

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They keep saying that this is going to be the biggest wealth transfer in history as the Boomers die off, but the oldest are about to hit 80 next year, and it doesn't seem like it's happening.
 
Captain Suave

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Gravel said:
They keep saying that this is going to be the biggest wealth transfer in history as the Boomers die off, but the oldest are about to hit 80 next year, and it doesn't seem like it's happening.
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The inheritors will roll it deeper into real estate and drive prices up, lol.
 
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Cad

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Gravel said:
They keep saying that this is going to be the biggest wealth transfer in history as the Boomers die off, but the oldest are about to hit 80 next year, and it doesn't seem like it's happening.
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My boomer parents are already dead, not that they left anything worthwhile anyway.
 
Intrinsic

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I've been doing some reading and spending too much time seeing how to approach the home build. So here are more stream of thought notes to try and organize my thoughts... I'm using "mortgage" interchangeably with total escrow payment

It seems like there is a benefit (currently) to going through the build process that I wasn't really aware of. Excel'ing it out, I was toying with ideas:
  • Purchase lot with cash for $100k
  • Do the construction loan for whatever that ends up being (I assumed $780k)
  • Make the payments on the construction loan during the 12 - 18 month build process or whatever it is (assuming 1 year minimum)
  • While making those payments, go ahead and use our extra cash flow to make payments against principal (cash flow less construction loan payment > principal, will vary based on point in process)
  • At the end of construction convert to mortgage, we could pay down the mortgage an additional $100k during the construction process so the final mortgage amount.
  • Depending on the lender and what happens to rates over the next 12 - 18 months, we could potentially "float down" the rate on the construction loan to a lower permanent rate, if they fall.
  • We have the new mortgage, at the reduced principal (maybe reduced rate), and make our payments or whatever as normal.
  • Sell old house and have an extra $150k in cash ready to put back in brokerage or another lump sum payment to house, whatever.
  • By 18 months we have one kid out of daycare which frees up an additional $1,300 cashflow
There are some opportunity costs that come into play versus just buying an $850k house and what we do with our cash flow. The 12 - 18 month period offers a little more flexibility with the potential benefits of owning the land upfront, making earlier principal payments, getting one kid out of daycare, potential lower interest (if we speculate they'll fall over the next year).

I think the opportunity cost on 18 months of shifting cash flow from 100% investing is minimal, but there are "soft" benefits. And there's nothing saying we couldn't just spend 18 months making extra payments on a home purchase. Of course, not knowing anything about the process the headaches with building may outweigh the convenience of just buying something and moving in :p

Also, based on y'all's feedback I'm getting answers to estimates for things not included in the ~$220/sqft. Making sure we really understand the site prep, any electrical or water costs, uncovered areas, etc.

Regarding the inventory discussion, almost everything here is falling price wise daily. Our Zillow emails have had a lot of "Price Cuts" on houses we tagged.
 
Guurn

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l'm not sure if this is the best thread but here goes. My wife and I are bored with our house (it's fixed up and done), we've fixed up houses before but we're not really interested in moving yet. We have always wanted to buy a nontypical place and fix it up as a retirement house or just a place to stay, not really a cabin. Maybe just to sell. It's more about the work than what it is for. How can you find those types of properties? Like an old gas station in the middle of no where or a defunct hardware store in a tiny town kind of thing. They aren't really businesses and they don't have beds. I'm not going to find it on Zillow, at least I don't think I am. Any ideas?
 
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Lanx

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Guurn said:
l'm not sure if this is the best thread but here goes. My wife and I are bored with our house (it's fixed up and done), we've fixed up houses before but we're not really interested in moving yet. We have always wanted to buy a nontypical place and fix it up as a retirement house or just a place to stay, not really a cabin. Maybe just to sell. It's more about the work than what it is for. How can you find those types of properties? Like an old gas station in the middle of no where or a defunct hardware store in a tiny town kind of thing. They aren't really businesses and they don't have beds. I'm not going to find it on Zillow, at least I don't think I am. Any ideas?
Click to expand...
is this what youre looking for?
9e433c9f0a0fde1b83f6d7bf6f49ef52.jpg


using this website, thats what i found

Abandoned Places Near Me - Urban Exploration - Lost Places - Urbex

Most complete free urbex map on the internet. Over 60,000 locations of spots of lost places listed by the community. Abandoned world. Help you find abandoned or haunted places near you. Also, a unique set of mapping tools to help you discover new potentially abandoned places for your urban...
urbexology.com

just click a leaf (for abandoned) and open in googlemaps, i chose nyc cuz obviously i know the place and it would have the most updated map photos and this is from 10/2024 and it looks pretty abandoned
 
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Control

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Guurn said:
l'm not sure if this is the best thread but here goes. My wife and I are bored with our house (it's fixed up and done), we've fixed up houses before but we're not really interested in moving yet. We have always wanted to buy a nontypical place and fix it up as a retirement house or just a place to stay, not really a cabin. Maybe just to sell. It's more about the work than what it is for. How can you find those types of properties? Like an old gas station in the middle of no where or a defunct hardware store in a tiny town kind of thing. They aren't really businesses and they don't have beds. I'm not going to find it on Zillow, at least I don't think I am. Any ideas?
Click to expand...
Last time I was really looking at things on Zillow, you could find places like that by opening the search range way up, sorting by max sqft and min price. Lots of junk entries of course, but that would let you find old/vacant businesses if you weren't picky about the location. There are lots of run down 4k+ sqft businesses that are (relatively) cheap, not that many residences. Or just use commercial RE sites.

Or if you're interested in a specific area/small town, drive around and note the addresses of anything that looks interesting. In small towns, places might have a for sale sign up but not be listed with any realtor (or at least any that would show up on the national sites). Or if no sign, you can check the records for the owner and try to contact them directly, or check with a local RE agent. An old local agent probably knows the story behind any notable property and might be able to get the ball rolling on something that isn't listed.
 
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Guurn

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Lanx said:
is this what youre looking for?
9e433c9f0a0fde1b83f6d7bf6f49ef52.jpg


using this website, thats what i found

Abandoned Places Near Me - Urban Exploration - Lost Places - Urbex

Most complete free urbex map on the internet. Over 60,000 locations of spots of lost places listed by the community. Abandoned world. Help you find abandoned or haunted places near you. Also, a unique set of mapping tools to help you discover new potentially abandoned places for your urban...
urbexology.com

just click a leaf (for abandoned) and open in googlemaps, i chose nyc cuz obviously i know the place and it would have the most updated map photos and this is from 10/2024 and it looks pretty abandoned
Click to expand...
Yeah, that exactly what I'm looking for, except not in a big city. Looks like I'll plow through the listings near me and do some driving.
 
Lanx

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Guurn said:
Yeah, that exactly what I'm looking for, except not in a big city. Looks like I'll plow through the listings near me and do some driving.
Click to expand...
it works for houses too, i checked out the palisades
1183388f7927c997d042986621554639.jpg
 
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Intrinsic

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We're attempting to move forward with our land purchase it looks like.

Spent an hour or more with the builders on Labor Day looking at lots and eventually settled on two parcels. Individually they aren't big enough for what we want so we'll be paying more but end up having a buffer on either side with trees between us and neighbors. 5-10 Acres in a very rural area sounds amazing, but in looking at it from the family perspective, it just isn't right at this time. Being in a community with other kids around, social meet ups, bus stops, whatever.

I put together a presentation for the builder to engage the developer on purchasing the two adjacent parcels. One of the parcels has an extra Utility / Drainage easement of 5' along the outside perimeter. Our builder suggested a further 10' setback to it. We asked for a reduction in cost of that parcel due to practical available square footage. Also asked for a slight reduction for the purchase of two, a cash offer price, and then some consideration of market conditions and how long they've been available. Altogether it was really only about a 18% discount for them. We should know by the end of the week if they accept.

We're really hoping it comes through b/c there's an extra level of excitement now to get started on the build process. We also got more details on the builder information and his next steps, how far the budget will go, what his estimates at $220/sqft covers and does not cover, and we'll be going into more depth on that moving forward.

The good news seems to be that we're still good on timeline. If we can close on the land in the next month, the baby is due Sept 30th. They're fine with us sitting on the land for the next 4-6 months while we work on the newborn and getting design decisions made. At that point we can begin the construction loan and construction process which will be 12 - 14 months, and we'll still be on our 18 to 24-month timeline that we wanted.

I'm going blind looking over floorplans and layouts now though. It is all bleeding together. I'll crowd source some questions once we hear back from builder on land, just so we don't get too far ahead of ourselves. We're not as fixated on exterior right now, finding an interior layout is challenging enough at the moment.
 
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Siliconemelons

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Have a master bedroom with an attached living room/sitting room just for the master it’s like, the bestest.
 
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Onoes

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Man, went outside last night and my next door neighbors were putting a for sale sign in their front yard. They are like 80+ years old and just need to go to assisted living. They are asking $400,000 which is probably fair or near fair.

My wife immediately went into "What if we bought it".

We've talked about buying property as an investment in the past... but I don't think that's what this would be. Her reasoning is more along the lines of "We could rent it to friends and have them as neighbors, or what if we wanted to take care of our parents at some point in the future and they could just be next door, OR maybe rent it to our kids as they get older and want their own place but they could still be RIGHT THERE." kind of situations. I'm guessing it would end up costing like $3k a month with current rates, which we could technically afford, but just barely.

I like the thought of owning multiple properties and having two houses right next to each other would be potentially nice if we did want to rent them in the future or something... but I don't know. Anyone have insight into why this would be a good, or a terrible idea?
 
Captain Suave

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Onoes said:
Anyone have insight into why this would be a good, or a terrible idea?
Click to expand...

I wouldn't rent to friends; someone will feel like they're being taken advantage of. In the family, though, having nearby properties can be great. My in-laws have three siblings on the same block since the 80's and it's been wonderful for them.
 
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Control

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Onoes said:
Man, went outside last night and my next door neighbors were putting a for sale sign in their front yard. They are like 80+ years old and just need to go to assisted living. They are asking $400,000 which is probably fair or near fair.

My wife immediately went into "What if we bought it".

We've talked about buying property as an investment in the past... but I don't think that's what this would be. Her reasoning is more along the lines of "We could rent it to friends and have them as neighbors, or what if we wanted to take care of our parents at some point in the future and they could just be next door, OR maybe rent it to our kids as they get older and want their own place but they could still be RIGHT THERE." kind of situations. I'm guessing it would end up costing like $3k a month with current rates, which we could technically afford, but just barely.

I like the thought of owning multiple properties and having two houses right next to each other would be potentially nice if we did want to rent them in the future or something... but I don't know. Anyone have insight into why this would be a good, or a terrible idea?
Click to expand...
While it would be convenient and nice for keeping an eye on the place, if you do rent it to non-family, do everything through a property manager (and probably title it through a business name) and don't let the renters know that the landlord lives next door.

Also, assuming it's primarily an investment, don't let the fact that it's next door and familiar weigh too heavily in the decision. If it wouldn't be a good idea if it was across town, it's probably not a good idea next door either. If you're gonna spend $400k on an investment property, are there more profitable properties you could spend it on? If you can barely afford it, you should be really sure that the investment makes sense. Are you gonna be ok if it sits vacant for 6 months? or you get a nightmare tenant that takes months to evict and destroys everything? or if all illegals get deported and average rent drops 30%? If you lose your job and it takes months to replace it? etc. etc. Just make sure that you've thought through all the new and exciting ways that life can fuck you as a landlord.
 
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Khane

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EDIT: ChatGPT is completely inaccurate when trying to get it to calculate things like this so the below numbers are just flat out wrong

I was bored this morning so I decided to run some calculations using AI to compare 30yr vs 15yr fixed mortgage + investment strategies.

According to AI the current national average rates for 30yr are 6.7% and for 15yr are 5.7% and the national average in 2021 (historic lows) was 2.65% for the 30 and 2.10% for 15. Using those numbers I had it calculate total net worth after 30 years in both scenarios for comparison using a monthly DCA strategy into the S&P500 using its average CAGR since 1957 which is roughly 10.3%

At current rates the comparison looks like this for a $300k loan amount:

1757243513843.png


And at the historic low 2021 rates it looks like this:

1757243559169.png


Pretty substantial differences in both scenarios and I'm guessing the break-even point is somewhere in the 5.5% + range for 30 year assuming the 15 year is a similar % lower. I'm using free versions of AI to calculate so it wouldn't run the math on trying to find the actual break even numbers.
 
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Intrinsic

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Khane said:
I was bored this morning so I decided to run some calculations using AI to compare 30yr vs 15yr fixed mortgage + investment strategies.

According to AI the current national average rates for 30yr are 6.7% and for 15yr are 5.7% and the national average in 2021 (historic lows) was 2.65% for the 30 and 2.10% for 15. Using those numbers I had it calculate total net worth after 30 years in both scenarios for comparison using a monthly DCA strategy into the S&P500 using its average CAGR since 1957 which is roughly 10.3%

At current rates the comparison looks like this for a $300k loan amount:

View attachment 600931

And at the historic low 2021 rates it looks like this:

View attachment 600932

Pretty substantial differences in both scenarios and I'm guessing the break-even point is somewhere in the 5.5% + range for 30 year assuming the 15 year is a similar % lower. I'm using free versions of AI to calculate so it wouldn't run the math on trying to find the actual break even numbers.
Click to expand...
I’ve been doing a ton of scenarios lately for our home build project and done too many of these lately. Glancing at your table something feels off. It may be a misunderstanding on my part. My spreadsheets are getting a little out of hand with all the research and planning I’m doing for this project. Planning on starting over today

Double check your $580/m for 30 years. Unless I missed something in your table / notes that seems very low. Smaller’ish amounts over longer time period should surpass (within reason).

That may impact your breakpoint.

IMG_0973.jpeg
 
Khane

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I just plugged the #s in, I admittedly did not check the formulas it was using figuring it would be able to do that level of math.
 
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Intrinsic

Intrinsic

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Khane said:
I just plugged the #s in, I admittedly did not check the formulas it was using figuring it would be able to do that level of math.
Click to expand...
Yeah I’m the same way until I start trying to migrate to excel then I try to manually do the formulas to double check myself and the GPT. It gets tricky with the way you ask and how it interprets that and I usually ask it to give me a table of monthly amounts and totals broken out by categories so I can review it and look to make sure it is assigning things correctly.
 
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