Wait For Rates To Come Down Before Buying A House?
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- Опубликовано: 20 май 2024
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For newbies, be aware that this is a grossly oversimplified scenario. For one thing, you can't get a mortgage on an investment property without at least 25% down payment. Two, it's easy to see comps for house purchase prices, but it takes a lot of research to understand the comps on rent prices. The trick is to find a place where renting is more expensive than buying, but those places are less common because of this very type of scenario. Three, you have to remember that rent number he's using is supposed to be net income, not gross. So you have to think about costs for taxes, insurance, maintenance and vacancy when you're researching investments. All that said, real estate investing is a good tool for wealth accumulation. But it isn't foolproof.
Thanks, I just googled Margaret and I'm really impressed with her credentials. I reached out to her since I need all the assistance I can get.
It hasn't been for many years! The ratio of income to average home prices got furthur and further every year!@HarveyMark-gk1om
Wrong, you can do as little as 15% down on an investment property but most people I do loans for do 20% down.
You can get a mortgage on an investment with 15% down, fyi. Rate sucks, but it is available
My family and I moved to the Bay Area a few years ago and I’m thinking of purchasing a single family home, but with real estate prices currently through the roof, is it still a good idea to buy a home or should I invest in stocks for now and just wait for a housing market correction? I heard Nvidia and AMD are strong buys.
it’s a personal decision, but Forbes says housing activities will remain stagnant for the most part of the year, so maybe hold off a little.
Certain Ai companies are rumoured to be overvalued and might cause a market correction, I’d suggest you go with a managed portfolio, but even those don’t perform so well, so it’s best you reach out to a proper fiduciary to guide you, that’s what works for my spouse and I.
this is all new to me, where do I find a fiduciary, can you recommend one?
SONYA LEE MITCHELL is the manager I use. Just research the name. You'd find necessary details to set up an appointment.
It's great you make your own research. and make sure whoever you work with is licensed n verifiable with a repute, this Sonya looks the part but i'd do my due diligence. I set up a call, thanks.
i know a guy whos been waiting 5 years for "the market to crash"
How'd he miss the 2020 dip?? That was what he was waiting for.
Same with friends who said Stocks are "overvalued and about to crash" . They never get in due to fear
I know a guy who thinks home prices doubling in a year is sustainable.
😂😂😂😂
He can keep wasting his money on rent for five years. 😂
I really dislike the fact that Dave just doesn’t talk about how absolutely unaffordable houses are. I think he doesn’t give a number on purpose.
Here are the numbers:
$80k wage is $63.5k take home after taxes
1/4 of monthly take home on that is about $1350
That means the loan they can take is $150,000. That is not a possible home budget in any city in America
Especially when that is "supposed" to be a 15 year loan which is like double the payment of a normal 30
@@chesspwn7457 those numbers were accounting for a 15 year loan
The older crowd just assume if you can’t afford something it’s your fault.
"Unaffordable" or wanting more house than you can afford?
If you really want a shocker, price out real estate in Canada.Where we make less are taxed more and the house prices are at least double that of the US.
For everyone wondering - with $60k down and their income, they can afford a house worth $175,000 on a 15 year fixed at 7.25%
@@wookiee27 zillow shows a bunch of houses at that price range mostly 1300 sqft and up in my city
There is literally nothing that cheap on the state of utah including a mobile home
In my city a descent 1600 square foot house starts at $350k and at 7% interest that is insane
Lol aka no house
Still don’t agree with the 15 year.
What a beautiful time we live in where 2 engineers with $60k in the bank will get to experience the American dream of owning a trailer home 🙂
You're fool for this one lmaooo
Republicans don’t see a problem
😂😂😂
@@jermainebennett7473what do you mean he is a fool? Houses in salt lake city are $550k-$650k and with a 7.8% interest rate and only 60k down their payment would be HUGE. they likely won't qualify
@@renegadezen7841What do people do over there? Here in west texas people can’t even buy a 250k home. 180-200 is somewhat more realistic
The reaction from buyers comes as mortgage rates remained at 23-year highs convincing rate-sensitive folks like me to call it quits on their home purchase plans as rates hover near 8% fueling my thoughts to focus on allocating my $1m liquidity to my stock portfolio but not so definite on additions to make.
Buyers are extra cautious right now. They want to make sure they’re getting a good deal given how much mortgage payments have gone up, and when they don’t feel like they’re getting a good deal, they’re backing out, so definitely looking elsewhere is a necessity
In my opinion, home prices will need to fall by at least 40% before the market normalizes. If you do not know whether to buy a house or not, it is best you seek guidance from a well-experienced advisor for proper portfolio allocation. So far, that’s how I’ve stayed afloat over 5 years now, amassing nearly $1m in return on investments.
I personally have my portfolio overseen by California-based wealth advisor and fixed income strategist at that 'Monica Selena Park' well established and you'd find her professional bio on the net. I suggest
Dave doesn’t understand there are no starter homes anymore lol 😂
My husband has tried several times to explain the whole "equity will allow us to sell and buy a better house." When we bought our home, the downsides were no garage and one bathroom (there are three of us). Oh, and it is across from one end of a shopping center parking lot which is actually great because it is relatively quiet and made the house age-in-place ready. My father in law (rest his soul) constantly talked about "the next house," and I keep wondering "Why move again if the house meets our needs and has perks to outweigh the downsides?"
There is enough open yard to build a narrow garage or carport, and a second bathroom could be considered. Far cheaper and less hassle than moving again. Our house is over 100 years old, and solidly built. I cannot imagine that we would be able to sell it and buy something better in our price range, even with the equity we have.
There never were.
There are where I live they last about 3 to 5 days on the market. Then you see them on the market again remodeled a year later. Another thing my real estate agent told me was it only appears on Zillow after it has been on MLS for 2 to 3 days. So if you arn't working with an agent that has access to MLS you are starting off at a disadvantage.
What are you talking about? There are still starter homes. They just cost 400k now. lol
Starter homes: 400k, 2 bedrooms, 1400 square feet, on the edge of the city…in 20 years these same homes will give for 1.5M when the population boom hits the edge of the city.
At one point even Hollywood was considered the edge of LA County and as people came the homes prices exploded.
Your just too young to see the game being played.
Dave muted the guy right before he could respond that 25% of an $80k salary towards a 15-year fixed rate mortgage at today’s interest rates and housing prices won’t pay for even your dog’s house let alone yours. 😂
Then don't buy yet. Plus, they'll each be making at least $80k since they are both engineers. That's $160k.
Yeah, if they make $80k, the closest livable house that fits those parameters is in Wyoming. Or a mobile home...
Oh my goodness. Then ignore Dave's advice and go for a 30 year fixed at the lowest rate you can grab. Split the difference by paying extra toward the principal and get the house paid for in twenty years. 🙄
@@emoney9931 Then rent until the money is there. Rent & save.
Well then you should not buy a house AT ALL today. It's not rocket science.
My wife and I were almost in the exact same situation a few years ago. However, we rushed to get a house during low interest rates that was far from our support network as we started to grow our own family. Ended up selling the home recently and renting closer to family and work now, waiting for another house to come up that matches our budget. I’d recommend this caller to really assess where him and his family want to be in the next 5-10 years and keep that in mind as they get ready to purchase. And the Ramsey plan of 15 year fixed is simply absurd when trying to put your family in a safe and healthy home these days. No way will I be at work all day while my wife and daughter live in a shanty with sketchy neighbors. I’d much prefer a tight budget to sketchy living situations.
I have learned over my life, living too far bellow your means isn’t good. Being around poor people tends to pull you down mostly due to theft but also unfair distribution of labor because broke people tend to be lazy (that’s usually why they are broke).
@mylesgray3470 nobody needs to know what you have or don’t have. If you live well below your means and you put a lot of money back that makes the theft issue largely a moot point
@@nicholasselke5214 I thought the same until someone stole my identity. Real pain.
what he said about his education, Civil Engineering ?
What do the neighbors have to do with anything. They gonna punch her?
There was an incredibly big teaching opportunity that was missed here. This couple earned engineering degrees without taking on any debt; including student loan debt, while managing to save $60,000 and they are just finishing school. As much as Dave tells people who are in debt to continue to live as a broke college student to pay it off, how does he not jump on this at least a little bit by asking this man, how he and his wife did it?
well he probably inherited alot of it. an early 20s that paid for school himself and had 60k leftover 100% didnt do that himself. it's very very likely that his parents paid for his schooling and were a large part of that $60k. still, kudos to the guy anyway its still an amazing accomplishment, but by no means was this a self made man moment.
@@titolovely8237 Not true. If you got your college paid for by scholarships ( I was) and interned during the summer break and even during the semester, two people can easily save $60k. I had healthy savings when I graduated.
Dave sounded tired and disinterested. I was shocked that he didn't jump on the opportunity to learn more from this well-spoken and succesful caller. Dindn't even congradualte him on the baby. Was it the last call of the day?
@@hemrajification Wow, no mandatory summer sessions, 18 credit hour/semester (5 classes/3 labs)
AND 1/4 of students completing sophomore years get letters of denial to the Junior class.
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You have 60k down and make 80k a year with a 15 year mortgage, assuming you’re not remote workers and need to live close to a city with employment opportunities, the house you can afford will not pass inspection.
Yeah it will be an absolute dump and will take 10s of thousands to get it up to code to get anyone to lend money towards it. Why does Dave always ignore reality? Houses are skyrocketing beyond most peoples means and the same with rent. He treats alot of callers like they're just lazy ignoring the fact that a house last year was $215k is now over $400k and no ones wages is keeping up with that kind of rise. Rents go up 20+% when its time to renew. How the F can you budget for that.
@@chadmorris946 Not all houses will be dump.
In 2013, my dad told the real-estate agent to leave when he was told to list his $400k house for $240 because the garage was not worth anything to buyers. Today, a similar house with no garage asks at least $600k no garage and ignores "lowballs" meaning they want more than asking
@@chadmorris946exactly, and his puppets sitting next to him will always be yes men and women.
@@chadmorris946 In 2011, I bought an unmarketable Fannie Mae foreclosure ($50K).
Had an FHA pre-inspection done for a loan.
2 days labor and $800 + and an FHA inspection, cleared
$326/mo PITI
$80k salary, 7.5% interest rate on a 15 year fixed, housing bubble that Dave says will never disappear, yeah... He can afford a shack on his parents' lawn. With $60k down that's a $180k home, which there are precisely ZERO of in the area he wants to move too.
When he says take home he means after taxes and only the principle plus interest right?
@@JB-dv7ew I don't know if Dave includes taxes and escrow or not in that figure. But most financial advisors want to see you stay under 40% of your take-home pay for your entire mortgage payment including escrow. In either case, there's nothing you can buy in his area for even 40% of his take-home pay to do a 15-year loan. He could only do it by getting a 30-year loan.
@@XennialGuyI'd just get a 30 year loan and pay extra on it... I'd make sure there are no "pay off early penalty" clauses in the contract or w/e first though. haha.
@@JB-dv7ew property taxes too
@@JB-dv7ewif you go to their mortgage calculator they include Principlal, Interest, Taxes, Insurance, and HOA in their calculation.
According to Dave’s math, they can afford a 200 sq ft 1 bed room half bath junker on a 1/20 acre lot in the middle of rural Kansas. Congrats on your new home!
He’s in luck I’m selling what you suggested:)
As a woman who has four children, my advice is NOT to wait to buy after the baby comes, if you can at all avoid it! About a month before the baby comes, a pregnant woman gets the nesting instinct, which gives her energy to fix the house up before the baby comes. After the baby comes, the wife has to heal and will be occupied with a new baby and all that entails. Don’t add moving to it!
After our first baby came and we bought a house and moved four months later, it took me *months* just to get the contact paper laid onto the shelves because I was always being interrupted by a hungry baby or husband!
Dave sounds like a realtor.
That’s because technically he his
Yea, I think he actually is and has a whole segment of his company dedicated to Ramsey approved realtors.
The point being the realtor always thinks it’s a good time to buy (or sell).
Yep housing stats going up supply slowing rising even in a high rate environment. Utah housing is correcting. People cutting prices like crazy
I’ve never heard a realtor say now is not the time to buy.
Best thing to come out of COViD was that I refinanced from a 3.6 to 2.6 via zoom and in my pajamas.
🤣
American dream 😂
And restarted your amortization table. Congratz
😂😂😂😂 My husband refiananced in person. He wore jean shorts, a t-shirt, and a 2A hat. I found this amusing, and he replied to the effect of "I am not going there to beg for their money. I am going there to ask 'What are you going to do to get my business?'".
The 15 year fixed mortgage is not the move. Get the 30 year which allows you to pay more earlier or pay less if u need to.
Agree. At the lowest fixed rate and with early payment penalty off of the table. Schedule the payments to pay extra towards the principal and get it paid off in twenty years.
If you need to pay less you have no business buying a house. You simply can't afford one.
Well technically I'd agree this would be the least risky way, having the flexibility in your income just incase of whatever
Problem is, how many people do you think really make "extra" payments on anything?
Sure they COULD, before they decide to take that vacation, buy that new camping gear, get new furniture, go out to eat more often.
When people have extra money in their budget, they will always justify a reason they need something they want.
Remember, the basis behind this theory of a 15 yr, is because it doesn't allow people to play stupid games with their money. Now if you think taking a 15 yr mortgage may leave you too exposed to sudden financial emergencies...then it means you can't afford it/arent ready.
Not judging one way or the other, I just mean that's the thought behind the idea.
If you could afford to pay it off in 15 or 20, then why not get that loan to begin with? Because you are afraid of the payment.....that should be your first sign..
Buuuut now they offer 40 yr mortgages to make the payments lower so folks can afford houses in the current market, so let's hope that doesn't wreck most peoples futures. A 40 yr mortgage should be a crime
Do I just keep waiting for a housing crash with my $2 million in liquid assets or shift my attention to the equity market? Mortgage rates are currently at an all-time high since 2000 (23 years), and based on statistics on inflation, we might see that number skyrocket even further.
The stock market is no different, to maintain profit, you need to have some in-depth knowledge on the market.
True, I mostly just buy and hold stocks, those making consistent profit in these times are professionals reason I’ve been using an advisor for the past 5 years to consistently build my portfolio in preparations for retirement.
my partner’s been considering going the same route, could you share more info please on the advisor that guides you.
I’m a Dentist, and my job doesn’t permit me the time to properly analyze my holdings/evaluate stocks myself, so I’ve had a fiduciary " *Monica Selena Park* " actively restructuring my portfolio for the past 5 years now to match the present market condition and that’s how I’ve been able to stay afloat, knowing when to buy and sell…maybe you should do the same.
This reference seems valid.. Just looked up her full name on my browser and found her webpage without sweat, over 15 years of experience is certainly striking! very much appreciate it
As someone who had my 3rd baby 2 weeks ago, I'd rather move 9 months pregnant than with a newborn or an infant 100%.
Yes, definitely
Lol me too and I’ve moved 2 times with a newborn
Low rates for too long is why homes and vehicles are outrageously expensive.
And look what happens to cars. Dumb people continue to stretch payments for 6 and 7 years to buy the car. Same will happen with housing. Someone will come up with a 35 year then 40 year mortgage at some point
The unpopular truth!
Homes are expensive because there's not enough supply to buy, private equity keeps buying everything to rent it out. Vehicles are expensive because the company owners can never make enough profit so they keep raising prices because they can and want to. Nothings stopping either of them.
@@talyahr3302 But if the rates were higher 5 yrs we would have less homes and car sales would've seen less credit approvals thus lower sales. I think our economy will find balance somewhere in the middle, like 5-6%. But I do agree with the lack of homes, but a seller who's not getting any offers will lower most of the time.
@@buckibanker mathematically a 40 year mortgage won’t shift the payment. On a 300k house moving from a 30 to a 40 year May shave off 200 a month. And shaves off less and less payment as you go. Not to mention if that financing option becomes available the prices would rise offsetting any change.
Love the high mortgage rates, less competition to buy a home!!!!!!!!!!
Yes, though "investors" and cash will always be king. 😂
@@user-mv9tt4st9kinvestors are buying at the lowest rates in our lifetimes
People focus on the interest rates way to much. The problem is the price of the houses. If interest rates shot back down to low 3s what do you think will happen to home prices ?
If the interest rates shoot down to 3% in the near term future, it would likely be due to another housing market collapse, in which case you would have dirt cheap housing with low rates.
Interest rates just compound the housing affordability problem. For a $250K principle, a 3% APR payment would be about $1,727. A 6% APR would be about $2,110. That's a $383 difference.
@@edd06001no they’re going to be cut due to the government debt that can’t be sustained at current rates. They’re going to have to be cut so the government doesn’t go bankrupt
@@edd06001 I don’t think so. The consumer is different now. They is a reverse brain wash to buy the dip on any market and let’s not forget the corporations who will just buy up everything like they did during Covid.
@@aboutwhat1930 I know that’s why i agree with Dave to go for 15. Yes you pay more up front but the interest you would save in the back end is insane.
Utahs market has basically crashed. I’m Utah county I’ve seen listings cutting prices like mad. 70-200K price cuts
Where in Ut county
@@nv4900 EM
Wow
My thought is Yes we have seen higher interests rates before. However the house prices are soo much higher today. So paying 6-8% interest with a starter home average starting at 400k or more is extremely difficult for a young family to afford. A $2,500 monthly payment for a newly Wed or anyone really is EXTREMELY difficult and near impossible. 😢
Buying a house in Utah on a 1/4 of his pay on a 15 year mortgage will allow him to buy a tough shed for a house.
25% of his pay, would make the mortgage 5k. You can get a good house for less then that.
the guy is making $20k/month?@@jimmymcgill6778
@@jimmymcgill6778what math are you working with? 1/4 of his monthly take home would be around 1600 dollars if his net take home pay is 80K a year.
@@macedaking Yeah, I don't know. Even if it a little more then 25%, so what.
@@macedaking also worth pointing out he said his salary was 80k. More than likely that’s his gross pay so net pay is probably 60-65k in which now his allowance for mortgage is 1300-1400 per month on a 15 year loan at 7-8%.
Look I think Dave has great ideas but as smart as he is it’s like he doesn’t see what we are facing.
30 year mortgage is the way to go. I can pay more per month to pay in 20 with way less stress. Dave’s advice doesn’t work in this market
If you can't afford a 15 you can't afford a house AT ALL
99% of Americans cannot buy a house in this market. The market itself doesn't work.
It works if one's income to house ratio allows it. The choices are 15 or 30 year mortgages. If rates are reasonable and early payment penalty is off the table, one could pay extra toward the principal and pay off the house in 20 years.
@@amireallythatgrumpy6508 this is terrible advice. Just got a 30 year 2 years ago at 3.25% my wife and I pay more into mortgage each month and we are on pace to do 20ish years. All this with a 25k emergency fund and no debt. We definitely can afford this house
The market has changed so much that your experience 2 years ago is irrelevant today.
The reality is it's simply asinine to buy a house today in America. End of story. @@dansteuer1411
Real estate agents are a big reason why these house/land prices keep surging. Conflict of interest.....
??
"When the equity reaches $100,000, we can talk about your next house." What if the first house I buy is the only house I buy? It meets my needs and budget. I loathe moving house and NEVER want to move again. Besides, where would I get wonderful lemons?
@@user-mv9tt4st9k are you trying to answer for Swalley?
Buy what Dave? A shack? I understand it’s hard for you to see that, because you’re loaded but for a typical homebuyer there’s nothing out there the caller can afford for his family!
Based off average household income, the only way to beat this housing market is to be patient and put a down payment of 30%. Sorry, but its true
How tf is Dave so sure that house prices will continue to increase? Lots of prospective buyers is one thing, their lack of money and/or willingness to pay for an overpriced shitbox is another.
Actual history and data. In general, houses have always been going up. The rate it goes up fluctuates but it's always appreciating. My old house used to be $97k in 2010, now it's $175k. My current house was $205k in 2010, now it's $350k. It's the same house that is only getting older.
@@LittleMopeHeadhousing prices aren’t going up. Not really. It’s just inflation.
@@LittleMopeHead
If you're a realtor, which Dave is, then houses are always going up. No they don't. They crash too. As they're about to do and have started doing already.
In San Diego you can already see price drops of 10%, and this is just the start...
Everyone worries about interest rates yet they're not even putting down 10k on 350k homes and wonder why they can't afford it 😑
I think that's Dave's secret sauce with the 15yr 25% income rule. Getting that huge down payment is the key to meeting the rule. The problem is that not many people can save that much in short time, they just want to buy now.
Thank you Dave! We got one paid off house and another paying it fast before I retire 😊
The housing market in Utah is insanely expensive. Good luck to them in finding something in their price range.
But home prices don’t go up every year, some years they go down, true ?
In the Dallas Fort Worth area home prices have been going down. All I’ve been seeing for 6 months is price decrease in all of the listings. Not a single price increase in that time. 800k houses are around 650 now, 600k houses are low 500 now. 500k are down to 425-450. Don’t buy just to buy. Patience will save you 100k dollars or more in the next year or two. The higher interest rates go, the smaller the loan people can afford, the more housing prices will come down. It’s basic math. Dave Ramsey is wrong again. What a suprise.
Thank you. I live in FW and want to buy a house in the next couple years. I've been seeing the prices drop but he made me think I was crazy.
Actually it will save way more than 100k once you take in consideration interest. It will save 100's of thousands.
This makes me feel bad about closing on a house soon in Dallas area. $250k house, 20% down, 6.4% interest rate (buydown), 15yr mortgage, $2100/month payment. It's a good home I plan to live in. Afraid the market will be better next year (spring or summer). 😔
It probably will be, they’re talking about raising interest rates again next month. We’ll see but next summer is when I plan on looking for homes too. At the way prices are dropping it’s going to be looking pretty good by then I’m hoping @@LittleMopeHead
@@LittleMopeHead
That 250k would be an impossible to find home in Southern California. Come to San Diego, where you can have the privilege of paying $1M to $1.5M for a starter home. I've been living in one since 2005!
This couple literally can not buy ANYTHING in the salt lake area following Dave's advice. They could only afford around a $175k house, even with the 60k down payment.
Dave seems to think in multimillionaire terms. Why does he not run those number in reality?
I agree with dave… im young but look back at hostory to the 80s and 90s. However I have been seeing a lot of houses prices being decreased and slow sales soooo… yea
If rates fall, you can always refinance later. I’m not waiting for the good ol days of 3% interest rates to come back.
Not if the house price decreases
Rates would fall when home prices go down. If home prices go down you can't refinance
@@grod805Unlikely that house prices will go down for most of the country.
I would buy with an adjustable rate. First years low mortgage payment until rates adjust. You can always add to monthly payment as you can
@@zhaw4821adjustable rates should only be used by people that can pay off the principal in cash before the next adjustment.
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In my area there isn't a shortage of houses... there is an overinflated price on houses and people aren't buying them. I live in Northwest Florida.
You left out the skyrocketing homeowners insurance
@@CarolCityCane305That's true also. Insurance in this area is going crazy high also. People are rending more than buying houses.
Here in Colorado Springs, you see sellers cutting prices 10k, 20k, 30k, 40k, and 50k. The houses are also on the market for a lot longer. I'm not saying there will be a crash, but there is a definite decline in prices in this region.
If they are pocketing 200-150k, dropping 10-30k is not going to break their sleep.
It's because they listed them above their value to begin with. Keep in mind, home prices are still adjusting to actual values due to the home buying frenzy we just had.
Those cuts are likely in response to the increasing interest rates, a lack of movement or interest in the property, and a price set to be decreased or negotiated. 😂
They over price it 90k and just cut there profit and still pocket a lot
I don't agree that prices will just automatically keep increasing. Land generally appreciates in a growing economy and with a growing population, and market prices are tied inversely to rates... but the one important thing from this conversation is that in the historical context interest rates are not all that high right now.
Whens the last time prices didn't increase? 😂 It's not a wild prediction. They definitely will increase.
@@talyahr3302 The primary reason they have generally always increased is because there is a target inflation rate that makes the value of money decrease continuously over time under the monetary policy of most countries. Relative to average incomes, house prices have remained static (in the long term) and only fluctuate regionally from time to time and with changing borrowing rates.
Hell, not just the rates but the inflated prices. Prices have already started to correct all over the place so I would hold off on buying a house for another year or 2 at least. Rates are going to continue to go up after Powell raises the rate again after the CPI report now showed inflation is up. It's the first time in history that it is actually cheaper these days to rent then buy. About 2 years from now rates will be down and prices will be significantly as well..
I agree 100%. Dave is actually giving bad advice to this poor young couple.
@@TPayne-fm8ie He surely only looks at Zillow or the like for info. He should educate himself on a lot more stats and indicators going on right now. He is very late to the "party"
But you can refinance.
you might not be able to refinance if the house goes down in value.
@@2jcwardi find it strange that people always bring up refinancing. refinancing can only happen when the asset appreciates significantly, in all likelihood no one is going to see significant appreciation over the next 3-7 years or more. So realistically speaking, you’re looking at 15 years before a refi is even in the cards, if it is ever.
This is hilarious advice. Wait for the foreclosures to really start hitting the market and then get into the market when prices drop due to oversupply.
Good luck waiting. The opportunity changes each time. A lot of houses were bought up for cheap after 2008 and for a low interest rate.
Hate to break it to you, but there’s a shortage of about 4 million homes right now. This won’t catch up for many many years if ever.
@@TaylorTV5 Interesting idea but if you right yeah housing is going to be impossible for some people....
@@donaldlyons17 so many programs seek to create homeownership opportunities through the demand side, but I’d love to see a supply stimulus. Zoning & permitting is so difficult right now, reduce those barriers. Not to mention housing is an engine for the economy, when you build houses that means the tradesmen have work, the drivers have work, the engineers have work. Unfortunately that would require smart government so we’ll probably be stuck.
@@TaylorTV5 you do know the more houses and cheaper the less money existing houses are “worth” Remember zoning has an impact too but let’s be honest how many people don’t care about their net work and only care about outpacing cost. I only care about income and buying power so a house that can’t be sold is still ok because it can still act as a place to live!
Reading everyone's comments is fascinating. There are so many different opinions on this question with so many unknowns about the future. My family and I are in a similar situation to the caller. I am beginning to think renting might be the best option for the next 12 months to see how things shake out. We may end up getting a bargain if things do go down the pan.
7-8% yearly appreciation on a home?! That is ridicilous and unsustainable. Thats double every 10 years. Dave is pulling this data out of a hat? Average appreciation of real estate for the last 100 years has been 3.5 %.
Believe it or not what happened in the last century doesn't have anything to do with the current situation.
@@FortuneSeek3rzhistory is the best teacher. You would have to be ignorant not to believe that. Some things will never change... sun is going to rise in the east and set in the west... even in a thousand years. A healthy inflation of 2% is needed for the economy to prosper. Real estate will outperform ehst by a bit... not by 4x. "a generation that forgets history has no past nor future" or "if you want to understand today, you have to search yesterday".
New york
Detached homes are still under priced. There is another 20% or so left to run over the next 18 months before falling to 3% per year.
Double every 10 years has been the norm for most appreciating markets
Chances are just as strong that prices will go down. Affordability is terrible and the market is tapering off right now.
It is a neutral market. 😕
Maybe they could find a $200k condo but at that point you'll be paying so much to HOAs and interest rates I'm not even sure that makes sense given their situation. Might be better to just rent until their income goes up higher
When they go to talk financing, they will likely discover that their situation gives them more buying power than they think. The house might be a fixer upper, though. 😂
My HOA is $385 and covers everything except electric. Lets do some math. Monthly costs for me would be, roof is $70, water is $80, trash $30, sewer $15. insurance $40, internet/cable $100, lawn $50, etc. That's $385. Pick the right HOA and you're not really getting ripped off.
Taxes and HOA out the azz
I closed on a house the day before going into labor with my 3rd child. It was crazy and hard but I survived because I had a great support system. My MIL and SIL moved me in.
And where was your husband, the presumptive dad? Slacking off?
I also don't believe what Dave says that house prices are rising, just from what I see in estate agents windows, Zoopla etc. and by neighbours selling their flats. So why are there all these stories everywhere about falling house prices?
I just bought my place a month ago and I understand the dilemma perfectly. But Dave is spot on here. As usual lol😅
Great advice! !!
Great advice, lock into a 15 year fixed with the highest rates in years.
Ummmm, me personally. I wouldn’t take Dave advice today. Terrible, if you think that buying right now is a good idea due to fear that the market will continue to go up.
With interest rates this high, market will come down sooner or later. There are a lot of people right now struggling on a 30yr fix mortgage payment due to job changes, inflation and cost of living rising.
Buying a house isn’t an investment if this is your primary resident. These tax laws won’t allow you to use your property tax as tax deduction.
I would say, if you don’t have families that you can live with. Find a spot that affordable, suffer and hold out for a bit. Especially, if you have a new born coming but that’s just me.
Dave does NOT know that home prices will rise in the future. It’s a probability. But there is a possibility that he is wrong and right after you buy home prices will plummet. Go ask some one that asked him that same question in 2007.
Those same houses in 2007 are now 3x the price.
7-8%? What world is he living in? The average annual appreciation is usually around 3-4%. If the housing market keeps going up 7-8%, thehousing market will crash. Wages cannot keep up with housing inflation.
@@Lumpia_In_Texas yeah now. But they weren’t for years later when the person that asked Dave if they should buy now (2007) or wait for home prices to come down was in the market to buy.
@@edd06001 dave is a boomer. He thinks the world works for everyone else the way it did for his generation and he is out of touch with the reality with a average person trying to buy a home in todays market.
@@edd06001 Nor have they the last 40 years
I'm a single person, making $130,000 a year, 820 credit score, DTI less than 10%, $30,000 liquid cash saved, $130,000 in 401K & I "only" got pre-approved for a mortgage of $500,000. I live in the Washington DC area in Northern Virginia where the cost of living is HIGH. Most of the houses in my price point aren't that great. The fact that my rent is less than $1,900 a month & a $500,000 house at these high prices & interest rates will be $4000 a month! I'm frustrated and kicking myself for not buying a house sooner. This is the absolute worst & I don't see prices or rates getting better anytime soon.
I feel you. LA area person. It’s awful …you need a dual income to afford anything
Refinancing isn't free.
Both are just graduating with engineering degrees, have 0 debt, and have managed to save $60k for a home.
That’s an incredible accomplishment alone today. Congrats to them.
I’m more surprised that their combined salary is 80k as engineers.
Two things one. Dave is a real estate guy so he's never going to say it's not a good time to buy. And two. I am glad that he mentioned the election and how that might drive down interest rates. That happens just about every election year
So supply can never go up, and home prices go up 7-8% a year no matter what? Bad assumptions. I'm not saying he's wrong; buy when you can afford it and will stay put for a while. But saying house prices will ONLY go up is not correct. Nobody knows what they will do.
Hmm the guy involved in real estate says to buy now, while rates are at 8% and home prices are $700k on average in Southern California.
I moved two days before my due date. Moved in on February 25th and my son was born on February 27th. It worked somehow.
The fact you don't put the risk of house prices going down on the table even if it's a small risk is scary. Pretty sure people thought that in 2008-2009 etc.
They aren’t coming down.
Lol dude if you won’t analyze the info don’t tell others what to do.
@@carson911You don’t know that. NOBODY knows what’s going to happen.
@@carson911it's the same with cars. Prices are coming down because the interest rates are too high.
2008-2009 lenders let anyone with a pulse buy, even if they weren't really qualified. It's so different now. We won't crash, but when rates drop....get ready for another feeding frenzy. Not enough inventory with an over abundance of buyers...no crash.
The problem is that house prices and incomes are not aligned. It's fair to say that house prices will go up with inflation, and because of inflation rates might not go down. However it doesn't change the fact that he is competing with people who can't afford these house prices and we could see a massive wave of defaults/bankruptcies like 2008 because we obviously forgot what that was like already
This is way different than 08. The average LTV in 08 was 90+% the average LTV now is closer to 70% with 45% of homes having no mortgage at all. Inflation is subsiding, rate may go up another 50 basis points, but we are close to peak.
@buckibanker where is the stat on the 45% of houses are mortgage free? I have a hard time believing that. I'm personally not getting into the current market because it's flat out unaffordable for us, even though I make above the average income. Although we are an acception since we have a reason to stay out that is not "the market will crash". It won't, but I also think that we are at a peak of how much houses can be worth compared to the value of currency, and inflation
You will never see a 2008 housing market crash again. The gov cannot allow it. With the national gov debt they would default on the national debt and the US economy would implode the likes of nobody has ever seen, not even the 1930s Depression would compare. The Fed will print money and drop from airplanes again before they allow a crash like that again. Inflation is coming big big Inflation double digit Inflation. That will balloon housing prices and they will roll out gov giveaways to pay for it, to avoid defaulting the Feds debts, the borrowing and money printing is here to stay
Fyi, we are currently running 1/30th to 1/40th of the rate of foreclosures vs the 2008 to 2010 period. And with current shortages, the banks are quickly taking possession of all of the current and easily selling then. Vs 2008 crash banks refuses to even take possession of many for years. Thousands of stories from 2008 crash when people lived in their foreclosures for free for years and banks never came for the keys
@BadBrad119 multiple studies show between 37% to 45%. im in the industry, and those are the numbers most economists use. You can hang out, and I do think prices may come down 5 to 10% over the next 2 year, but that is only in certain markets and only if inventory lifts. I doubt inventory will increase substantially unless we go into a deep recession, which isn't looking likely.
We bought our first house at 3% in 2015 it was a “starter home” now fast forward to 2023 we just bought our second home due to a move at 8% and it’s basically the same exact house but over double the cost 😵💫
Also, he won’t be able to afford much of a house in Utah. Utah wages are low. He would make the same in the south and have so much more
Our starter home was $700k… yeah, the application of these principles might be frozen in time that doesn’t not exist anymore. Maybe some principles should be created for people who are stuck in high cost of living areas. He’s not talking about house… he’s talking about condos (at least where I live).😊
Thats the problem with people, they think we live in a communist nation where the government tells you where to live. If your area is 700k for a starter home, and you cant afford that, then move man!
It would be one thing if people were expecting to live in the rich part of town (500k plus), but finding a sub 300k house (assuming 100k income) in any major metro area that isn’t infested with crime is impossible. Unless you want to have a 1.5 hour commute each way, maybe you can find remote work but just about every company is going hybrid.
@@ludwigvonsowell5347 , Life is all about sacrafice. At the end of the day, adults just need to "figure it out". Take a pay cut to move, find a different industry, look for remote work, etc etc. I took a paycut to move to a cheaper red state, and with the cost of living adjustment, I still came out way ahead. Plus, my salary caught up in 2 years.
Uh oh the 15 year fixed only 25% of your take home pay for the house shenanigans
He needs to get a mortgage for 30 years with a lower payment because who knows what could happen that would force his wife to not be able to work. If all is well and the wife is able to work pay the house off early. He has to be able to afford the house payment on one income.
Dave is completely out of touch with reality of a 15 year loan on 1/4 salary.
He's in touch with the reality that NOBODY CAN AFFORD A HOME. You aren't. You think it's better to buy a home that you would have to foreclose on within a couple of years
Buy a house in Huntsville, AL
More Engineering jobs than any city in the USA.
Ranked #1 city year after year.
Can buy a house twice as nice for cheaper.
Been thru Alabama. Birmingham, specifically, complete shit hole. Don't remember Huntsville.
@@TheChazzReinhold Odd, Huntsville is the largest city in the state. Birmingham is a cess pool, very few people live inside the city limits. Just like Nashville, they live in Belle Meade. People who are smart reside in Mountain Brook.
Do people not understand the dollar is losing value? That means everything will only become more costly as time goes on.
Inflation numbers just went up a bit again...interest rate will be upped by another .25 point soon...so wait if you want...
So are we buying because it won’t get better? What happened to buying because it was affordable?
So they went back to where they were 6 months ago?
I agree now is a good time to buy, but getting qualified for a mortgage isn’t as easy as it used to be because of the high rates
you're delusional. Open your damn eyes
We’ve hardly seen the effects of higher rates on housing. Housing stats are picking up (more supply) I’d give it a year. People still have way too much recency bias.
Correct! Prices have started to correct already in the West. Already I'm seeing price reductions of 10% all around in Southern California, and this is just the start.
Real estate crashes happen in super slow motion, so people have trouble seeing it as it is happening. 2025 will be a good year to buy.
But 2023? Absolute foolishness to buy now. And people know it, that's why they're sitting out this crash.
I ran the numbers on this callers mortgage payments. 25% of take home, 180 months he can only buy a house of $190,000 with an income of $80,000. That ain’t gonna happen.
Buy now.. with a high interest rate. Then the economy tanks, rates drop, you're under water and stuck with a high mortgage payment and unable to refi. Don't buy now, hold until there is more inventory and prices correct
Does a 1/4 of take home toward the mortgage taken from my total take home after contributing to my 401k and healthcare or before?
I feel 401k should be flexible, as you can always adjust or stop contributing
Not sure if you can opt out insurance , but I wouldn’t regardless
I moved a week before giving birth into 1st house we built. He can do it!! Built the next house and was dealing with contractors 3 hours after giving birth.
Women are amazing. I am glad I am one of them. 😂
I did it 2 weeks before my due date. So definitely doable. I'd prefer to move at that time than wait another year knwoiwng that it's coming and there will be a lot more to move. Amd it'll be a lot harder woth toddler running around
@@LanaKalmann100%!! Way easier than moving with small people
One time at work I had to take a huge dump after lunch and immediately got back to work so I know exactly what you went through
Politicians don’t control interest rates, Dave.
They control everything silly goose.
And nor do you, it does not matter.
you cant buy anything with 80k on a 30yr note let alone a 15yr note..
Next the wife will call in a few years saying she doesn't want to go back to work. Or they'll be getting a divorce after year 7. Or he'll be burned out by shouldering everything. Don't expect it to all work out.
50/50 shot, he is gambling with his life at least for 18 years.
If you’re going to be there for a long time, it’ll be okay.
My wife and I were going to buy in El Paso at 7%, but we backed out it at the last minute.
We are only going to be here 2.5 years, so decided it wasn’t worth it.
Theres a shortage...until theres not.
Going to need to at least double that down payment to find a house with Dave's advice.
Could maybe get a lower end condo though. Probably a good first step in their situation anyway. Do a 30 year fixed and raise your payment as your incomes go up or you refinance into a 15 year if rates go down. The key is to get in asap. No debt and a strong down payment should put them in a good position.
Yes.
With Dave’s advice I’m limited to a 5-year mortgage of 1200-1300 a month.
@@nathananthony7517buy a condo? You might as well rent. Would be cheaper
Dave Ramsey's 25% take home 15-year mortgage is a dream for everyone. The only problem is I am living in NYC where house prices are easily 700-800k+ minimum. I waited 10 years for the interest rate and house prices to come down. Just 2 years ago I bought my house 60% down 2.75% rate 30 years. Only with all that my mortgage is around 30% of my take home.
so move from NYC then. No rule says you must stay in a certain state.
If you look into it, it makes better sense for a 30 year, most average middle class are not going to pay off their home in 15
@@cnh7262A thirty year fixed might be doable if the interest rate is right and the early payment penalty is off the table. A buy can split the difference and pay extra on the principal to get the home paid off in twenty years.
Buying a house in general is a dream for everyone
I moved out of NYC to not be in your position. I'm looking at a upstate area 350k or less hope to have my down payment, closing, and 25k emergency fund ready in 6 years to buy something and hopefully I can get a good deal and low ball offers.
Are rates coming down? I don't know. I try to look for patterns. So I pulled up 60years of interest rates. It seems to me it takes 2 years for rates to rise. Then they hold for 8 to 10years.
Wait for interest rates to go down, you’ll probably be waiting a long time. Just refinance if and when it happens.
I wouldn’t personally rush to buy in this exact life situation though.
80k a year quarter of income monthly on a 15 year? He's got a 200 Sq ft Porta potty 😂
Also something that you need to think about is if rates come down, prices will go up. It may not be instantaneous but what is going to happen is the house that has a $2,000 a month mortgage now, when rates come down more people can afford it more people bid and then you wind up paying $2,000 a month anyway because the price is higher but the interest is lower.
Of course that's not an absolute, but the fact that we do not buy homes outright or with very significant down payments means the payment size will drive buying decisions
Both just went up at the same time. I feel like no one can predict anything at this point
60k down payment!? They’re going to have the nicest fixer upper in a bad part of town ever! 🎉
😂 I mean you ain't wrong
I would just wait to see past this winter first....
1/4 of his income after taxes is probably what, 1400 a month?..on a 15 year fixed? With 7% interest rates?… unless he’s buying a 100k house (which doesn’t exists), he can’t meet those numbers. Buying an average house in the current market on a 15year fixed will easily put you at 3000 a month.
Which tells you NOBODY can buy a house anymore.
We purchased our first home in 1978 with a 10% 30 year mortgage, and rates went up after that. But so did the value of the house. What was this guy's question?
😂😂😂 We bought ten years ago with a 30-year fixed mortgage. My husband has been paying extra from day one, and he refinanced during the lockdown dip in rates. Our house has nearly doubled in value and should be paid for for in another eight to ten years.
Dave needs to update the 1/4th of your take home pay on a 15 year. It’s nearly impossible unless you make crazy money
where do you find a 20000 per year, 15 year mortgage in California while 7.5% interest rate? That's 180 000 home. What is it? broken down 1 bedroom condo?
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$1700 house payment. Where do you find that at.
You don’t… following Dave’s rules, they won’t get a house. Yeah you can buy a cheap “first home” but the only way it will be anywhere decent is if you’re living 3 hours or more away from any major city. Closer to a city where jobs are?It won’t pass inspection. Lol
Maybe Alabama
@@lombardo141 All day long!
1/4 of take home pay after taxes, 401K, expenses etc or before taxes (on 15 year loan)? Can you please expand on that?
Take home pay is after taxes, 401k, etc. The cash you received from checks or deposited to your bank account.
No....take it from somebody who recently, as in a few months ago left Salt Lake Utah area. 1/4 take home pay on 88k is like 65k after taxes, 1/4 of that is about $1,400 bucks a month. There is ZERO options at that price in the Salt Lake Utah County areas. Zero. None. That won't even buy a town house. It won't even buy a condo unit. $1400 a month will get you possibly a decent 2 bedroom apartment to rent. A 3 bedroom 1700sqft townhouse in Utah is around $450-515k as of just a few months ago. In one of those town house communities. The math doesn't work.
The 1/4 income to mortgage ratio doesn't exist anymore, at least in Utah is doesn't. Ever since covid, the $350k home went up to over 500k. At 8% intrest right now that's a monthly payment of $3500. Which means you need an income of $168k a year. The average family income is 60k
Dave's mortgage advice just doesn't work mathematically anymore. It just doesn't. I used to listen to him religiously. Don't get me wrong, I still like a lot of what he teaches. But the mortgage stuff, mathematically for 90% of the nation, doesn't work right now.
His advice was to move and find a better location. So I looked around at other states. Sure there were homes cheaper elsewhere, but my salary/pay was also going down 20-30% just like the homes were. So the math on buying the "cheaper home" was the same cuz my buying power was less.
Now 1/3 of your income, or even up to 40% of your take home to buy a place, is the more realistic thing right now. Which makes you home poor. Welcome to the current reality.
They can't afford the house. This is the issue. If they don't buy now they'll never be able to buy because prices will be totally unaffordable. However, if they buy now they'll be in massive debt forever and will have no money left for anything else
Why not buy with friends so collectively the number work out?