Real estate market

[sterlingmossy]

Hi, my wife and I are looking at houses in Tetonia ID.

We are worried that the property market is at a peak right now and prices may drop as interest rates rise.

On the other hand the age wave means that more and more baby boomers are retiring and this will steadily drive prices up (even if there is a dip) for 20 years.

Also there seems to be a building shortage right now that is also holding prices up.

While I know that each local market is unique are there any folks with Real Estate expertise that can share a perspective?

Thanks

 

[RunningBum]

Nine days ago you were trying to decide between UT and WY. Now ID is in the mix? I know this is close to Jackson, but I thought the advice to try a year of renting in each place was good. Prices may go up, but so could your invested money, and you'll be more certain about picking the right place.

 

[Golden sunsets]

Why would baby boomers retiring drive prices up? I would have thought that retiring baby boomers would downsize creating excess inventory in larger homes.

 

[Dtail]

Why would baby boomers retiring drive prices up? I would have thought that retiring baby boomers would downsize creating excess inventory in larger homes.

+1

 

[mrfeh]

Why are you so concerned about the value of your residence?

Treat it as a home, not an investment.

 

[sterlingmossy]

Nine days ago you were trying to decide between UT and WY. Now ID is in the mix? I know this is close to Jackson, but I thought the advice to try a year of renting in each place was good. Prices may go up, but so could your invested money, and you'll be more certain about picking the right place.

Haha, Well this is in the Jackson area, just the other side of the Tetons. The houses are more affordable here.

We are actually driving out to Utah where we have rented a house for the month of March but we are stopping in the Jackson area along the way to look at houses.

Glad to see you are paying attention

 

[sterlingmossy]

Why are you so concerned about the value of your residence?

Treat it as a home, not an investment.

Fair point. I guess it would mentally hurt to buy a place and watch it drop 20% but hey wait a while and it always comes back up. Was just looking for perspective.

Thanks for yours.

 

[sterlingmossy]

Why would baby boomers retiring drive prices up? I would have thought that retiring baby boomers would downsize creating excess inventory in larger homes.

Because all of the places we are looking are places where baby boomers would move to after they sell their home.

 

[mrfeh]

I guess it would mentally hurt to buy a place and watch it drop 20%.

As a mental exercise, ask yourself why this would bother you.

 

[sterlingmossy]

As a mental exercise, ask yourself why this would bother you.

Say I paid $500,000 for a place and it dropped 20% I would feel like I had “lost” $100k. I would kick myself for bad timing.

 

[mrfeh]

Say I paid $500,000 for a place and it dropped 20% I would feel like I had “lost” $100k. I would kick myself for bad timing.

Understood, but assuming you weren't selling the home, why would the paper loss bother you?

 

[Senator]

There are always deals to be had. Pay full price or look for a deal.

 

[RunningBum]

Understood, but assuming you weren't selling the home, why would the paper loss bother you?

Why are you assuming they'll never sell their home? I'd guess that most people who move to a resort area, especially a cold weather one, move again when they get too old to enjoy winter sports, and being near good medical facilities becomes more of a priority.

 

[mrfeh]

Why are you assuming they'll never sell their home?

I didn't say never.

The OP seems to be concerned about short term valuation changes. If they're gonna be staying there for <5 years, they shouldn't be buying in the first place. If they're gonna stay for 15-20 years, changes in valuations should not be a concern.

 

[travelover]

I recently struggled with this when we bought a house. Prices here in greater Portlandia have been rising rapidly and I'd hoped we'd hit a minor recession while we rented for a year. But it didn't happen. So, do I spend another year of my finite lifetime living in a rental that I don't enjoy or buy a house that DW and I can enjoy as our own?

For me, it all comes down to how much longer you expect to be active (and alive) and how much money you have to spend over that period.

 

[RunningBum]

You want to buy for the best price whether it's an investment or not. Doesn't matter how long you hold it; if you can buy it for $100K less in a year, that's $100K you can invest elsewhere.

The problem, as travelover points out, is that it's really hard to predict the housing market. What seems overpriced to you may not matter, especially if California transplants are still moving in. Prices could continue to soar in the next year, which means you will be paying more, and be even more exposed to a downturn.

 

[pb4uski]

OP may want to look at the NYT rent vs buy tool to see if it is even preferable to buy. If buy is the decision, then view it as buying a place to live rather than an investment.

 

[ExFlyBoy5]

Why would baby boomers retiring drive prices up? I would have thought that retiring baby boomers would downsize creating excess inventory in larger homes.

Not to say that this statement is wrong, but I would like to point out that I know a whole lotta BB's that have done the opposite...they have bought larger, more expensive homes. It makes no sense to me, but to each their own!

 

[Senator]

OP may want to look at the NYT rent vs buy tool to see if it is even preferable to buy. If buy is the decision, then view it as buying a place to live rather than an investment.

These rent vs. buy decisions only account for buying or renting the same house.

Renting is virtually ALWAYS better than renting if you maximize the renting experience. Rent what you need, where you need it, when you need it.

If you rent like a buyer, it is virtually ALWAYS better to buy. Renting for a long time, in a place you cannot minimize your commute, and renting more house than you need.

Renting a home vs. an apartment is a huge difference.

 

[AndyS]

Why would baby boomers retiring drive prices up? I would have thought that retiring baby boomers would downsize creating excess inventory in larger homes.

Anecdotal, I know ... but that's what we did. Went from a gorgeous 3500 sq ft house, 3 acres, pool, etc to a brand spanking new 2100 sq footer in a suburban neighborhood with an easygoing HOA (lets me keep my boat & other toys in the back yard) Also going from the big house in Texas to this house in Florida dropped our property taxes from $7800 to $1650 per year. Insurance didn't change much but it's Flori-duh and that's kind of "a thing" here .... (we're about 20 miles from the Gulf, could have bought closer, but there's issues/expenses involved with living to close to the water too I didn't want to deal with anymore. )

Not to say that this statement is wrong, but I would like to point out that I know a whole lotta BB's that have done the opposite...they have bought larger, more expensive homes. It makes no sense to me, but to each their own!

On the other hand ..... my sister in law & her husband retired from the Federal Govt last year (her & SES & him a GS-14) and, having transferred around ever few years their entire careers never had the opportunity to have a house they just loved. Upon retiring they bought a half-million dollar house north of Dallas somewhere between 4000 and 5000 sq ft. So I guess it just depends.

 

[AndyS]

....
Also there seems to be a building shortage right now that is also holding prices up.

While I know that each local market is unique are there any folks with Real Estate expertise that can share a perspective?

Thanks

Haven't noticed the price of building materials or labor going down any.

IMO, The cost of new construction generally sets the tone for $ per sq ft of all houses in any area. (special local circumstances excepted) If new houses are $110 per sq ft .... you'll probably not find any resale houses you would want for less than the mid 90's per sq ft.

 

[HadEnuff]

EDIT: Wrong quote was placed in this post. I was referencing OP's concern that he might buy a place for 500K, and then the market might drop 20% and he'd have "lost" 100K...



This should only bother you if you are thinking you might want or need to sell in the short term, in which case, you definitely should rent, not buy.

If you are convinced enough that you want to shell out 500K for a home, then do it. How will you feel if you wait for the market to drop and it appreciates 10%, rather than depreciates 10%?

You've won the big game, don't sweat the small battles.

 

[exnavynuke]

These rent vs. buy decisions only account for buying or renting the same house.

Renting is virtually ALWAYS better than renting if you maximize the renting experience. Rent what you need, where you need it, when you need it.

If you rent like a buyer, it is virtually ALWAYS better to buy. Renting for a long time, in a place you cannot minimize your commute, and renting more house than you need.

Renting a home vs. an apartment is a huge difference.

Renting is almost always more expensive than living in a paid off home...

 

[pb4uski]

Renting is almost always more expensive than living in a paid off home...

if you ignore the opportunity cost of money (which many people making such statements do).

 

[exnavynuke]

if you ignore the opportunity cost of money (which many people making such statements do).

Do you know of any market where the rent for a home is cheaper than the taxes and insurance alone? I've yet to see that market myself. In the market where it saves money to not have to pay a mortgage or rent and still have a place to live (everywhere I've ever heard of), the renter is the one losing the opportunity cost of money compared to the person in the paid off home.

Pay off a home in 15 years at a low interest rate, then have 40 years of no rent or mortgage would, in my rough napkin calculations, provide a lot more opportunity for wealth accumulation than that same person paying rent for 55 years in pretty much every market..