Housing Appreciation and Inflation: Future Outlook?

[TOGIE]

Is a larger down payment better or worse in this case? Less interest being paid... but does that really matter when your on 15/30 yr for 5 years?

for me, the larger down payment came solely down to monthly budgets.

all my friends who are no more experienced in the housing market than than today's 18 year olds in practical terms kept repeating the tiring crap of "dude lower down payment and put the difference in the market"

i dunno, i just see so much value in minimizing my monthly expenses everywhere i can in life. if we have the cash to do so with our mortgage then that's my priority.

i was way less interested in the whole debate about "returns in the market versus your interest" and more interested in what my monthly budget is gonna look like. so we opted for a larger down payment to reduce the monthly cost of the mortgage as much as possible.

right? wrong? maximizing my long term returns? hell if i care. but i'm less concerned about one of us losing a job and less concerned about trying to be a single income family if we have to because our mortage is like 500-600 dollars less a month than most of my friiends with similarly priced houses bought on similar inerest rates. i wonder how all that money they supposedly put in the market instead of a down payment is doing lol

 

[SAJ-99]

That's where I landed as well, maybe better than renting... definitely in terms of the intangibles I guess? My wife isn't going to love this strategy, but given it's Michigan and not a desirable market (comparatively) I'm kinda leaning towards playing hard ball with sellers and walking away and renting if I can't get them to shave off ~15-20%.

Aside from opportunity cost, which is real and I understand.

Is a larger down payment better or worse in this case? Less interest being paid... but does that really matter when your on 15/30 yr for 5 years?

Regarding down payment, It's a bet on if you can make more on the money some place else that exceeds the interest rate (tax adjusted). Lower down payment might make sense if you itemize and can deduct the interest from taxes.

 

[Deleted member 28227]

right? wrong? maximizing my long term returns? hell if i care. but i'm less concerned about one of us losing a job and less concerned about trying to be a single income family if we have to because our mortgage is like 500-600 dollars less a month than most of my friends with similarly priced houses bought on similar interest rates. i wonder how all that money they supposedly put in the market instead of a down payment is doing lol

Definitely something I weigh heavily as well.

i was way less interested in the whole debate about "returns in the market versus your interest" and more interested in what my monthly budget is gonna look like. so we opted for a larger down payment to reduce the monthly cost of the mortgage as much as possible.

I prefer dollar cost averaging and adding to investments with each paycheck rather than dropping it all in at once. Lotta "gurus" out there that say otherwise, but IMHO you can be dropping it in on Dec 23, 2021 or on March 20, 2020 and there hard to guess which is which. I'm not that smart.

Lots of people made a lot of money last 10 years and have lots of opinions... I'm personally more interested in the opinions of folks who didn't lose that much money in 87,89,00,08, etc.

 

[TOGIE]

I prefer dollar cost averaging and adding to investments with each paycheck rather than dropping it all in at once. Lotta "gurus" out there that say otherwise, but IMHO you can be dropping it in on Dec 23, 2021 or on March 20, 2020 and there hard to guess which is which. I'm not that smart.

i do too. and i prefer having a budget that just from the beginning allows me to put money into IRAs, savings, and brokerage accounts each month. and now, into college investment accounts. and i prefer to have more room in the budget for date nights, vacations, and, of course, hunting. house poor people are a very real thing. so, my wife and I, were very very lucky, blessed, etc in this regard but also frankly extremely dilligent in our own savings over the years to be able to do 20% down and still have an ample emergency fund. obviously that's not very possible for everyone.

Lots of people made a lot of money last 10 years and have lots of opinions... I'm personally more interested in the opinions of folks who didn't lose that much money in 87,89,00,08, etc.

that's part of the problem, in the last ten years, if you bought on 5% down and threw the remaining 15% in the market and rode it all out for 4-7 years and refinanced once you're practically a millionaire. now everyone thinks that's just how it works, especially people in and around my age range.

 

[Sytes]

That's what I'm looking for. Many thanks, @SAJ-99 and everyone who's tossed their worth into the thread.

But the government will never stop manipulating interest rates, so the premise might be flawed

Manipulate = intended as a manual means to regulate housing sales. Raise rates, less incentive to buy. Less incentive to buy holds possibility of the "Supply/Demand" basis. if less incentive to buy, lower price until the incentive overcomes the rate detriment.
That's what I'm considering. By manipulating interest rates, I have some concern this may soften the $ paid for my property thus lower its value. If that occurs, keeping my LQA $ more liquid, rather than place it in a TSP/401, keep it more liquid. Maybe a brokerage account - place in ETF's. If the home value softens by the time my Temp Assignment concludes/I retire and need to sell, use the Gov't $ to offset loss and pay tax only on any gains from the Brokerage account. If it doesn't soften, then my ETF's continue + my house sale is complete w/o spending a penny on Mortgage /rent for six years.
Trying to make use of the $ especially considering the tax free value it holds.

House as an investment has made many rich people, in retirement and other means. If its a family home intended to remain for life, even that historically rises at valued rates for retirement interest, IMO. Multiple houses, rentals, AirB&B, to primary or flip with hands on equity return.
Property is a commodity that rises... For myself, I'm not sure if time is on my side.

Appreciate your time and others. It's been very informative!

 

[SAJ-99]

I have some concern this may soften the $ paid for my property thus lower its value.

Yeah, if all goes as planned. You should probably count on it. I bought my house in Jan 2022. I'm sure I'm underwater, but time is on my side.

House as an investment has made many rich people, in retirement and other means.

LOL. The only people I have ever met that said their house made them rich either 1) found oil under the house, or 2) were very bad at math.

 

[Sytes]

LOL. The only people I have ever met that said their house made them rich either 1) found oil under the house, or 2) were very bad at math.

Haha! Well, I can tell you first hand we owed 230 on our house, sold @ 725. Owned our house for six years. The house my wife owned pre marriage, we sold once we moved to previously mentioned house. She bought @ 210, sold for 260. Sweat equity over two years.

Edit: had a 3.75 acre parcel, bought for a great price of 22.5k. sold it four years later for 55k. Didn't do a darn thing to the land other than make plans to build, however, found another great deal for the house & 12 acres noted above.

There's $ made on houses and land. AND, in my case, may lose a bit on this house.

A friend flips houses with a team and they made a healthy chunk.

Not to say some lose their shorts though to say properties are not present to profit, I disagree.

 

[Deleted member 28227]

A friend flips houses with a team and they made a healthy chunk.

Lol investment.

It’s not really an investment if you’re working.

Take your down payment put it in the market for 5 years then get a second job, add that income in with the investment and then compare it the money made on the house.

 

[Sytes]

Lol investment.

It’s not really an investment if you’re working.

Take your down payment put it in the market for 5 years then get a second job, add that income in with the investment and then compare it the money made on the house.

It's not an investment if you're working to see the investment pay off? I believe we have differing opinions on the point of investments.

 

[Deleted member 28227]

It's not an investment if you're working to see the investment pay off? I believe we have differing opinions on the point of investments.

Working two jobs is not the same as making your money work for you, that’s all I’m saying.

 

[SAJ-99]

Haha! Well, I can tell you first hand we owed 230 on our house, sold @ 725. Owned our house for six years. The house my wife owned pre marriage, we sold once we moved to previously mentioned house. She bought @ 210, sold for 260. Sweat equity over two years.

Edit: had a 3.75 acre parcel, bought for a great price of 22.5k. sold it four years later for 55k. Didn't do a darn thing to the land other than make plans to build, however, found another great deal for the house & 12 acres noted above.

There's $ made on houses and land. AND, in my case, may lose a bit on this house.

A friend flips houses with a team and they made a healthy chunk.

Not to say some lose their shorts though to say properties are not present to profit, I disagree.

My point was with a house you live in. Plenty of people get wealthy in real estate. It typically involves taking on a lot of debt and getting out at the right time. Sometimes they go bankrupt. Often Multiple times. The system is set up to allow you to do that.

Millennials get a bad rap, but they had it figured out, for a while at least. They avoided the rent-buy decision, lived in the parents’ basement, and invested it all in the market or Bitcoin or something. Now they want to move out of the basement and buy. We need to see how that works out.

 

[SAJ-99]

It's not an investment if you're working to see the investment pay off? I believe we have differing opinions on the point of investments.

I guess, but you have to subtract that from the payoff. Your time has value. If you flip a house over a 12 month period and net $200,000, but you could have earned $180,000 at some other regular job, then you only made $20k

Also should clarify, your home is a great store of value. It’s like a bank account where you work to pay off the mortgage and at the sale date it feels like found money. But was it?

 

[Sytes]

Huh? Not being smart with you. I think somewhere we're not following each other's comments.

I work one job and invest $ and my time improving my house. I sell the house and make a profit. Or for sale of land, buy at a great price, sell for a profit.

A friend works his flip company with two partners. One, a realtor and the other financial partner.
They buy, improve, sell and profit from their work.

My intent is to present $ can be made on real estate, short term or simply buying for rental, AirB&B, or long term over the course of appreciation.

Edit: @SAJ-99 , I just saw your post as I placed mine.

I understand the concept of working a job to profit $20k. My buddy was a framer moving from contractor to contractor. Far from a $180k salary. Now? Yes, a $180k salary though that is a guess. I know he makes very good money. I suspect much more though don't know.

Point is, the purpose of investing $ is to make $.

 

[brymoore]

I’ve made more wealth in the last 10 years in my house than my stock investments. I haven’t sold my house to realize it. Wife and I talk and don’t want to leave our house so my kids might be the ones to enjoy the investment.

 

[Deleted member 28227]

Huh? Not being smart with you. I think somewhere we're not following each other's comments.

I work one job and invest $ and my time improving my house. I sell the house and make a profit. Or for sale of land, buy at a great price, sell for a profit.

A friend works his flip company with two partners. One, a realtor and the other financial partner.
They buy, improve, sell and profit from their work.

My intent is to present $ can be made on real estate, short term or simply buying for rental, AirB&B, or long term over the course of appreciation.

Edit: @SAJ-99 , I just saw your post as I placed mine.

I understand the concept of working a job to profit $20k. My buddy was a framer moving from contractor to contractor. Far from a $180k salary. Now? Yes, a $180k salary though that is a guess. I know he makes very good money. I suspect much more though don't know.

Point is, the purpose of investing $ is to make $.

Don’t disagree mostly.

But here’s my point.

I don’t know shit about remodeling, and I like to hunt.

I’d take 200k in a Roth IRA over 300k in equity in a 850k house any day of the week.

So given that I’m trying to be real careful with my housing choices.

 

[elkduds]

I'm aware of many who relocated from area w high RE values to area w lower values. They were able to keep the house they owned in the expensive market as a rental, and rent or buy in the cheaper market. Rent received covers cost of mortgage and maintenance, and possibly contributes to income to cover housing costs in the new location. Retaining ownership of the now-rental maintains that equity, nets an attractive set of tax benefits (depreciation chief among them, followed by mortgage interest paid even if one doesn't itemize), and can be borrowed against.

Spring 2021 I had half the proceeds of marital home to reinvest, my share was about $150K. I live the summer half of each year at a mountain property, so I bought a house in dinky Florence CO . I live in it during winters, rent it out during summers. If I decide to rent a winter escape in Mexico or on some coast, the rental income helps w that cost. Along the front range of CO, rental housing will be at a premium in the foreseeable future.

Don't ignore renting as an option to selling, in a buyer's market like we have now.

 

[Sytes]

Don't ignore renting as an option to selling, in a buyer's market like we have now.

Do you use a managing company, VRBO/AirB&B, or other methods for rental?
How does that operate? Based on a set monthly price, %, or set listing fee?

 

[Sytes]

Was looking at 5-10 year home sale predictions.

Came across this article. As I know little in this field, thoughts?

Will The Housing Market Crash in 2024? Experts Give 5-Year Predictions

Thanks to average mortgage rates remaining at more than double what they were in 2020 and 2021, and home prices staying sky-high, housing activity remains stagnant. Existing home sales are at their lowest levels since the height of the foreclosure crisis in 2010 and mortgage demand has dropped to

www.forbes.com

 

[elkduds]

Do you use a managing company, VRBO/AirB&B, or other methods for rental?
How does that operate? Based on a set monthly price, %, or set listing fee?

It varies, property management is easier and well worth the typical cost if you are not where your property is. And it is a tax deductible expense against rental income, as are taxes, mortgage interest, repairs, supplies, some travel related to the rental. If one had a rental property in Hawaii one could tax deduct the cost of traveling there for rental business 8 times a year.

The average property management fee ranges from 7-10% of collected rent. This fee covers activities such as communication with existing tenants, housing inspections, collecting rent and late rent fees, and emergency maintenance and repairs.

 

[elkduds]

Do you use a managing company, VRBO/AirB&B, or other methods for rental?
How does that operate? Based on a set monthly price, %, or set listing fee?

I've been a landlord @ various times over the last 20 years, never did short term/AirBB so no knowledge of that.Just leases. Having mortgaged rentals during my working/earning years reduced my income tax liability significantly. Now I own my rental outright, haven't seen the tax impact yet. As it is my residence for 6 months/year, I may not have to claim it. My accountant will guide me.