Buying a House in Sellers Market?

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KaskadeForever
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Buying a House in Sellers Market?

Post by KaskadeForever » Fri Jul 31, 2020 7:04 pm

I am 38, married, with young kids. We would like to buy a new house. We live in an older house in need of remodeling in a MCOL area. Our current house is worth about $250k and I've paid the mortgage down aggressively to $80k. We are in a good neighborhood, and could make due staying here a little longer, but we would like to have a nicer house with a bigger yard for the kids to play in. We looked at a house we like that is listed at $425k in a nice suburb a little further out. I make $250k, have low expenses, and my job is stable, so I feel we can comfortably afford it.

But, the real estate market is a seller's market right now and the house already received multiple offers and is going to sell for well over list price. I can afford to put in a higher offer to get the house, but I'm worried that if the economic downturn hits in full swing in a year or two, I will have bought right at the peak of the market. Ideally, we would like to stay there a long time and could weather out a downturn, but who knows if something would come up or we would want to move for some reason? Then another part of me says the Boglehead philosophy is not to time the stock market, so why am I trying to time the real estate market? Just buy something we would enjoy as a family and the investment part is secondary. Of course the house we would sell would get the benefit of the seller's market too.

I would appreciate anyone's thoughts about the wisdom of upgrading homes during such a hot real estate market.

runner3081
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Re: Buying a House in Sellers Market?

Post by runner3081 » Fri Jul 31, 2020 7:10 pm

If you are ready to buy and find something that fits your need, go for it.

If not, wait until you do.

Market status shouldn’t change that.

lakpr
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Re: Buying a House in Sellers Market?

Post by lakpr » Fri Jul 31, 2020 7:22 pm

I bought my current home in 2007. That should tell you all ...
Its value never recovered to its purchase price, even in nominal terms, forget growth.
(On the other hand, I sold my previous home in 2007 too ... )

That said, this house is in an excellent school district, which is why we moved here in the first place.

So, unless you have an additional reasons such as excellent school district, reduction of commute, etc. that makes the purchase more compelling, I advise you to WAIT. I doubt that, with this Covid-19 situation, high home prices are sustainable.

[ All bets are off though, if you are in Bay Area in California ]

BGeste
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Re: Buying a House in Sellers Market?

Post by BGeste » Fri Jul 31, 2020 7:49 pm

Sell now in a sellers market. Then rent. Wait for a buyers market or for the right oppurtinity regardless of market.

go_mets
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Re: Buying a House in Sellers Market?

Post by go_mets » Fri Jul 31, 2020 8:09 pm

BGeste wrote:
Fri Jul 31, 2020 7:49 pm
Sell now in a sellers market. Then rent. Wait for a buyers market or for the right oppurtinity regardless of market.
This!

000
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Re: Buying a House in Sellers Market?

Post by 000 » Fri Jul 31, 2020 8:12 pm

BGeste wrote:
Fri Jul 31, 2020 7:49 pm
Sell now in a sellers market. Then rent. Wait for a buyers market or for the right oppurtinity regardless of market.
Always danger in market timing. What if the buyer's market doesn't come for 5+ years?

birnhamwood
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Re: Buying a House in Sellers Market?

Post by birnhamwood » Fri Jul 31, 2020 10:13 pm

Things are too uncertain for my tastes right now. Personally, I would wait.

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UpsetRaptor
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Re: Buying a House in Sellers Market?

Post by UpsetRaptor » Fri Jul 31, 2020 10:31 pm

You won't regret it if you upgrade to the better house for your family.

novemberrain
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Re: Buying a House in Sellers Market?

Post by novemberrain » Fri Jul 31, 2020 11:04 pm

birnhamwood wrote:
Fri Jul 31, 2020 10:13 pm
Things are too uncertain for my tastes right now. Personally, I would wait.
+1

wackerdr
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Re: Buying a House in Sellers Market?

Post by wackerdr » Fri Jul 31, 2020 11:14 pm

000 wrote:
Fri Jul 31, 2020 8:12 pm
BGeste wrote:
Fri Jul 31, 2020 7:49 pm
Sell now in a sellers market. Then rent. Wait for a buyers market or for the right oppurtinity regardless of market.
Always danger in market timing. What if the buyer's market doesn't come for 5+ years?
Housing prices when they crash they take a looong time to recover. I bought at peak in 2006 in Chicago area. the price after 14 years just about recovered to my original purchase price. I have been staying in the same house and my net worth has grown substantially relative to house price. So I don’t think much about the fact that I bought at peak, and I have no regrets

I don’t know which market is this, but if it is stimulus, ppp driven money that is fueling the market,or the price increase in the past 6 months has been abnormal, then better to wait.

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geerhardusvos
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Re: Buying a House in Sellers Market?

Post by geerhardusvos » Fri Jul 31, 2020 11:46 pm

KaskadeForever wrote:
Fri Jul 31, 2020 7:04 pm
I am 38, married, with young kids. We would like to buy a new house. We live in an older house in need of remodeling in a MCOL area. Our current house is worth about $250k and I've paid the mortgage down aggressively to $80k. We are in a good neighborhood, and could make due staying here a little longer, but we would like to have a nicer house with a bigger yard for the kids to play in. We looked at a house we like that is listed at $425k in a nice suburb a little further out. I make $250k, have low expenses, and my job is stable, so I feel we can comfortably afford it.

But, the real estate market is a seller's market right now and the house already received multiple offers and is going to sell for well over list price. I can afford to put in a higher offer to get the house, but I'm worried that if the economic downturn hits in full swing in a year or two, I will have bought right at the peak of the market. Ideally, we would like to stay there a long time and could weather out a downturn, but who knows if something would come up or we would want to move for some reason? Then another part of me says the Boglehead philosophy is not to time the stock market, so why am I trying to time the real estate market? Just buy something we would enjoy as a family and the investment part is secondary. Of course the house we would sell would get the benefit of the seller's market too.

I would appreciate anyone's thoughts about the wisdom of upgrading homes during such a hot real estate market.
I would stay put if I was you, and keep costs low. Continue to invest for retirement. If you can stay in your house, it’s a good choice

We recently sold our home and now we rent because we are tired of owning and we are wanting to move in the next five years.
VTSAX and chill

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gr7070
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Re: Buying a House in Sellers Market?

Post by gr7070 » Fri Jul 31, 2020 11:52 pm

runner3081 wrote:
Fri Jul 31, 2020 7:10 pm
If you are ready to buy and find something that fits your need, go for it.

If not, wait until you do.

Market status shouldn’t change that.
This 100%.

Especially so in MCOL. You're not talking likely bubble.

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Ralph Furley
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Re: Buying a House in Sellers Market?

Post by Ralph Furley » Sat Aug 01, 2020 1:48 pm

The number of new homes being built has been underpacing household formation for years. This has created a shortage of single family homes that is even more pronounced in desirable locations. When will this buyer's market show up?

Lee_WSP
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Re: Buying a House in Sellers Market?

Post by Lee_WSP » Sat Aug 01, 2020 1:55 pm

If you don't look at buying a house as an investment, you'll come to the right decision for yourself.

scout1
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Re: Buying a House in Sellers Market?

Post by scout1 » Sat Aug 01, 2020 3:22 pm

It was a sellers market when I was buying a house 5 years ago and it's still a seller's market today except prices are ~50% higher. Don't time the market.

Golf maniac
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Re: Buying a House in Sellers Market?

Post by Golf maniac » Sat Aug 01, 2020 3:51 pm

Lee_WSP wrote:
Sat Aug 01, 2020 1:55 pm
If you don't look at buying a house as an investment, you'll come to the right decision for yourself.
+1. Houses are a lifestyle not an investment. If you want the lifestyle upgrade and can afford it then go for it. If you can upgrade your existing house to meet your lifestyle needs then that may be a better move. Only you and your family can answer these questions. I have noticed realtors always say it is a sellers market when I am buying and a buyers market when I am selling.

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Bogle7
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Buy what you need

Post by Bogle7 » Sat Aug 01, 2020 5:15 pm

1. All markets are hyperlocal.

2. No one can predict the future.
We sold our previous house in 2011 at the nadir of the market. Our selling agent told us it was was a 100% buyers' market and we experienced that with 26 open houses, 63 showings, having to fully stage it, and taking 7 months to sell at 85% of original list.
We also got to buy in that market. We watched our developer build our [soon to be house] for 8 months and he received exactly one offer after the house was completed. We got a 2% discount.
Then, in February of 2012 (just 8 months after we bought), the market flipped overnight to a 98% sellers' market. Every real estate agent was stunned. Not a single one saw it coming. I talked with over 30 of them at various open houses. It has been a strong sellers' market ever since. Still is, even with Covid-19. Case-Shiller data says house prices (inflation adjusted) in our fair city have increased by 62% since we bought our current house.

3. Houses that you live in are not investments. They are your home.

Topic Author
KaskadeForever
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Joined: Wed Nov 22, 2017 7:58 am

Re: Buying a House in Sellers Market?

Post by KaskadeForever » Sat Aug 01, 2020 7:33 pm

Thanks everyone for the great advice. I went with not trying to time the market and I made an offer. Waiting on a response, we shall see.

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