We're so glad that we sold our home in end of 2021 and paid off our new home's mortgage as well. 0 debt of any kind in our 30s with maxing out 401ks and Roth IRA is an amazing life!
This assumes even getting a home inspection will catch everything. Had an inspector miss the removal of a load bearing wall. Luckily title insurance covered us for the most part…
I don't view waiving appraisal as being completely nuts if you run comps before making an offer and then purposely make a below market offer in order to get a "good deal". If you only target buying properties for less than market value then your house will always appraise.
@@Wattyb2 as a licensed home remodeling and building contractor, this is why I get so freaking annoyed when homeowners are so arrogant as to do “DIY” remodeling. That arrogance can really harm themselves or somebody else
With crazy inflation, the very abnormal housing market, and the very real threat of a looming recession, it just doesn't make sense to me to a buy a home right now. I was ready to pull the trigger right before Covid hit, and of course I wish I had but I'm not letting FOMO get the best of me. I don't see housing prices going much higher in the coming months or even years, so I see no reason to fight for a house now.
I agree, I can see a scenario where prices stay flat for a few years with increasing rates. Just gives you more time to save and set yourself up for success when the time comes.
@ynwa 96 You don't have a choice BUT to buy? You can ONLY buy you couldn't POSSIBLY rent? You MUST buy a home or else....what? I said it doesn't make sense for ME to buy, not you or anyone else. You're the one making it black and white, saying you DON'T have a choice. Do whatever you want, I'm speaking about how I see it. Nobody is making you do anything, least of all me.
Buyers shouldn't make a home purchase when the market is low. This is the description of "timing" the market. If you did that, you'd live a long life as a renter rather than homeowner. Equity in your house is created in 2 ways: when home prices increase, which is cyclical & when you pay down the principal amount borrowed with every timely payment. So what if you buy a house today when it's 25% higher than 2 years ago? Here's the reality: anyone who bought a house with an apr under 3.5% will never be motivated to refinance their debt. They are married to that rate. You should never be married to that rate. Understand this - marry the house, date the rate! Your affordability budget is the only math that should motivate you to buy a house. Not the emotions of a housing market crash, not fear of missing out, but the logical decision that I can safely pay my mortgage.
@@JayeshKaramchandani Yeah well with housing prices doubling and tripling in some instances vs. in 2019 when I was ready and willing to take on a mortgage I can very honestly say that in TODAY'S market I DO NOT feel at ALL SAFE about being able to pay a mortgage I may be approved for at the top of my top end, just to pay for my bare minimum desires of a "home". Yeah dude, OF COURSE my affordability budget is my only real math in my decision to purchase a home. Same as it is with 90% of people in America. What world do you live in? The only math anyone considers when buying a home, unless they have millions on billions of dollars just sitting around is their OWN PERSONAL BUDGET AND WHAT THEY CAN AFFORD.
@@JayeshKaramchandanithey won’t be motivated to sell due to the ultra low rates but those same People are clients we see at my job. They want HELOc and drowning in debt. A lot of people holding on to these low rates and drowning in debt. It’s either they cash out refi, HELOC or 2nd mortgage, or they sell. That will be the case for air of these people going forward
So lucky I was under contract on my first house in April of 2020 at 3.25%. was a pretty nice sweet spot between almost the lowest interest combined with buying right before the crazy spike in home values
I bought 3 rental properties during that time period. They’re cash flowing really well. The problem is now we wanna buy a big home, but the market is stupid right now… ugh not sure what to do
Following a divorce multiple years ago, I was at 29.6% housing cost since I kept the house and bought my ex out by increasing the mortgage. I didn't have significant supplemental income, but didn't feel deprived. I refinanced to a lower rate plus small increases in pay to date, so now I am paying 27.0% housing cost. I still don't feel like I am beyond my means. Out of the 27.0% housing cost, 6% goes to principal. Also I am in the 24% bracket, so of the 11% that goes to interest and 6% that goes to property taxes, I get 4% of my gross income back from tax deductions (even about 1% more when you include the state tax credit). So net, my 27% of gross income really includes a 6% investment (could be considered the same as a REIT investment) and a 4% rebate on my taxes. 25% maximum that they recommend is far too conservative for my lifestyle (I don't go on multiple thousand dollar vacations 2-3 times per year). 30% was quite doable without a strain.
Do we all here think housing prices will dramatically drop? Should I put cash towards my first house or dump into mutual index funds instead? With a little to the side for a house.
If you plan to buy a house within the next couple years, at least keep your down payment amount in cash and invest the rest. You don’t want to be in a situation where there is an opportunity to buy a house but you can afford the down payment cause your investments went down
I think prices will stay flat over the coming years, a drop doesnt seem likely as supply will likely stay low. Still feel like cash is king in the short term.
I doubt there will be a major drop in prices. Most Americans own their homes and have locked in low interest rates. They have no incentive to sell or to permit new construction in their neighborhood.
We tried to buy in 2021 in Loudoun county, bids $100k over list price, waving home inspections, finance contingency. And most fun one... 3 month rent back. You let sellers continue living for 3 month in the home you now own for $0 rent. What? I just gave up after about 10 bids. We will wait for all the FOMO homebuyers to try get out of mortgages once this recession puts people out of work for long enough. Might be cruel but a lot of americans budget around monthly payment and they don't have enough to withstand few months without work.
Hi, are you in Northern VA? I'm also looking to buy, and the prices are ridiculous in VA. How long are you planning to wait? I'm not sure what I should do.
@@msm41009 yes NOVA, our rent is going month to month next February so probably around that time or based on market. I already observe listings that are not closing fast and some price cuts on relisting after being under contract. And once again those wavers for inspections is a nonstarter for me especially on older (15-20year old) homes.
I think patience will be rewarded throughout the next year. I would just feel really stupid if I bought right now before interest rates have a chance to be priced into the market
At 23:38 you are demonstrating the tremendous extent to which the psychology of this horrible inflation episode has taken root. Once such psychology has taken root after an uptick in inflation,it becomes more difficult to knock the inflation spiral down. The inflation psychology has indeed taken root. I believe it is for the better if the FED does whatever needs to be done to knock out the inflation. Had raising interest rates began in a timely manner more than a year ago instead of the disingenuous comments about "inflation being transient" we would be in a much better scenario now. Maybe the "soft landing" could have been achieved,instead of the recession that is probably the correction that is now needed. we do have something bad going on now that might be the only thing unpredictable or more dangerous than usual for the kind of economic problems we are having now, that is the horrible situation going on in Ukraine. But the current inflation took root well before the attacks began in Ukraine.
There is a possibility that some of the demand for houses is coming from "investors" who want to be landlords,and some of the "investors" might be corporate and taking advantage of the absurdly destructively low low interest rates hopefully the low low interest rates are finally starting to get remediated I believe that when interest rates are too low or even de facto "negative" debtors get subsidized at the expense of savers and prudent people who avoid debt. also some "small" investors may be trying to "flip" the houses they buy on credit.
@@davidpowell3347 this definitely true. The retail investor in single family housing was a significant player in the June 2020- Dec 2021 real estate market. Retail investors included individuals going in for their first or second house as well as hedge fund money plunging cash of investors into housing for steady monthly rents. Wall Street has learned that a house rent is as good as a monthly interest payment
"God, I have been dreading this episode. The viewer questions are stupid, the topic is boring, and our advice is barely helpful at best and counterproductive at worst. But we gotta do this . . ." Bo then proceeds to slap himself in the face, chug the rest of his coffee and throw the mug hard enough that it shatters on the floor. "Woo! Let's go!"
You know so many are going to regret the home they bought! Paying so much over asking price and waiving inspections just sounds crazy now we are past that time a bit. Hindsight is always 20/20
This show is much better than most of short snackable pieces of conent about real estate investment out there. Thumbs way up!! I just became a huge fan of you guys.
Refinanced about 8 months ago down to a 2.84% rate🙌🏼🙌🏼 cost 0 points due to a special offer that was run for a very short time at my bank. Cost about $350 to do all the paperwork. What a steal.
@@JayeshKaramchandani This makes no sense? I have a great house and now an unbeatable rate. It's not an either/or situation. I was in this house either way, but I just also happen to have a great rate now. It was a refinance, not a new purchase. If I only 'dated' the rate then I'd be looking much worse.
I admit it is true that as long as the inflation keeps on rolling it may become impossible to reach 20% downpayment/closing costs funding because the goal line keeps on moving,also the low interest rates allow the mortgage to be paid off with devalued dollars unfortunately good crystal balls are hard to find
We moved states early 2021 negotiated price down 10% and after inspection had them do 15k in work took us a year to find a place that was not extremely overpriced
Hahaha I am not in the least impressed with the gated golf course and I think that if you do a silly thing like that your man card has been revoked hahahaha only douch bags live on golf courses IMHO hahaha he is the type of guys that is okay with the dress codes hahahaha what a 😺.
Inspections might be a good idea. But so many are poorly done. You see so many situations where problems quickly come up that were missed by the inspector. And inspections are expensive... Our last sale was with a "pass/ fail" inspection.
These dudes are actually advocating getting into this market. Insane. Waving appraisal is one thing....people are waiving inspection and making blind offers. I don't care what anybody says....only a fool would enter this market
You seem to be missing a pretty key part of their commentary: know your why. A primary residence isn't only a financial decision; it is also an emotional one. Yes, you shouldn't ignore the financial aspect (which is what this episode largely touches on), but the decision is also just about what is going on in your life and if you are ready to start that 5 year commitment to a location. Also, they made a very strong case with their graph on the price of the houses vs S&P 500; housing is generally not as volatile, and it generally takes much longer to lose value. So, if you are waiting for houses to dip x%, you might be waiting a long time. Life is too short to wait 5 years to begin something as important (to some people) as owning their home, because of a financial inefficiency.
@@Jack-fw4mw sure a house has utility...but if I can wait 40 years to enjoy all the money I worked for..I can wait 3,4,5 more years for a housing market with better metrics. Utility isn't a reason to go against conventional market wisdom when we apply it to.literally every other market.
@@Jack-fw4mw and I'm not even contesting your point ..it's just, that argument isn't an overwhelming case for somebody to jump in the most insane housing market the world has ever witnessed.
@@tothefxckinmoon4540 hopefully your market has shifted where houses only receive 2-4 offers now instead of a dozen. My market is back to 2019 where 1-3 offers are the maximum, where properties are available for 3-5 weeks, and all sorts of buyer contingencies (buyer protection) are being written back into the contracts. Recession DOES NOT equal drop in house prices. Check out Barry Habib, economist of the housing and mortgage market. He'll show you graphs of what happened to houses in the recession of the early 1990s, and the early 2000s. Housing prices went up during the recession quarters! Math doesn't lie.. when you time the market in any financial asset, you are more likely to be wrong & pay more than the moment when you could afford it. I bought a house in April 2022, I know it's not a bad time for me.
We're so glad that we sold our home in end of 2021 and paid off our new home's mortgage as well. 0 debt of any kind in our 30s with maxing out 401ks and Roth IRA is an amazing life!
Nice! You’re on your way to become everyday millionaires!
The waving of inspections, finance contingency, etc is absurd. I'm sure many of the flippers are cutting corners and people are getting burned.
And they deserve to get burned. Nobody needs to buy a house that badly where you should ever do that.
Play stupid games win stupid prizes.
This assumes even getting a home inspection will catch everything. Had an inspector miss the removal of a load bearing wall. Luckily title insurance covered us for the most part…
I don't view waiving appraisal as being completely nuts if you run comps before making an offer and then purposely make a below market offer in order to get a "good deal". If you only target buying properties for less than market value then your house will always appraise.
Burned? More like raped.
@@Wattyb2 as a licensed home remodeling and building contractor, this is why I get so freaking annoyed when homeowners are so arrogant as to do “DIY” remodeling. That arrogance can really harm themselves or somebody else
With crazy inflation, the very abnormal housing market, and the very real threat of a looming recession, it just doesn't make sense to me to a buy a home right now. I was ready to pull the trigger right before Covid hit, and of course I wish I had but I'm not letting FOMO get the best of me. I don't see housing prices going much higher in the coming months or even years, so I see no reason to fight for a house now.
I agree, I can see a scenario where prices stay flat for a few years with increasing rates. Just gives you more time to save and set yourself up for success when the time comes.
@ynwa 96 You don't have a choice BUT to buy? You can ONLY buy you couldn't POSSIBLY rent? You MUST buy a home or else....what? I said it doesn't make sense for ME to buy, not you or anyone else. You're the one making it black and white, saying you DON'T have a choice. Do whatever you want, I'm speaking about how I see it. Nobody is making you do anything, least of all me.
Buyers shouldn't make a home purchase when the market is low. This is the description of "timing" the market. If you did that, you'd live a long life as a renter rather than homeowner. Equity in your house is created in 2 ways: when home prices increase, which is cyclical & when you pay down the principal amount borrowed with every timely payment.
So what if you buy a house today when it's 25% higher than 2 years ago? Here's the reality: anyone who bought a house with an apr under 3.5% will never be motivated to refinance their debt. They are married to that rate. You should never be married to that rate. Understand this - marry the house, date the rate!
Your affordability budget is the only math that should motivate you to buy a house. Not the emotions of a housing market crash, not fear of missing out, but the logical decision that I can safely pay my mortgage.
@@JayeshKaramchandani Yeah well with housing prices doubling and tripling in some instances vs. in 2019 when I was ready and willing to take on a mortgage I can very honestly say that in TODAY'S market I DO NOT feel at ALL SAFE about being able to pay a mortgage I may be approved for at the top of my top end, just to pay for my bare minimum desires of a "home".
Yeah dude, OF COURSE my affordability budget is my only real math in my decision to purchase a home. Same as it is with 90% of people in America.
What world do you live in? The only math anyone considers when buying a home, unless they have millions on billions of dollars just sitting around is their OWN PERSONAL BUDGET AND WHAT THEY CAN AFFORD.
@@JayeshKaramchandanithey won’t be motivated to sell due to the ultra low rates but those same
People are clients we see at my job. They want HELOc and drowning in debt. A lot of people holding on to these low rates and drowning in debt. It’s either they cash out refi, HELOC or 2nd mortgage, or they sell. That will be the case for air of these people going forward
Not a first time buyer, but 20% down is still a problem in like the biggest 5 cities in Cali.
So lucky I was under contract on my first house in April of 2020 at 3.25%. was a pretty nice sweet spot between almost the lowest interest combined with buying right before the crazy spike in home values
I bought 3 rental properties during that time period. They’re cash flowing really well. The problem is now we wanna buy a big home, but the market is stupid right now… ugh not sure what to do
Following a divorce multiple years ago, I was at 29.6% housing cost since I kept the house and bought my ex out by increasing the mortgage. I didn't have significant supplemental income, but didn't feel deprived. I refinanced to a lower rate plus small increases in pay to date, so now I am paying 27.0% housing cost. I still don't feel like I am beyond my means.
Out of the 27.0% housing cost, 6% goes to principal. Also I am in the 24% bracket, so of the 11% that goes to interest and 6% that goes to property taxes, I get 4% of my gross income back from tax deductions (even about 1% more when you include the state tax credit). So net, my 27% of gross income really includes a 6% investment (could be considered the same as a REIT investment) and a 4% rebate on my taxes.
25% maximum that they recommend is far too conservative for my lifestyle (I don't go on multiple thousand dollar vacations 2-3 times per year). 30% was quite doable without a strain.
Do we all here think housing prices will dramatically drop? Should I put cash towards my first house or dump into mutual index funds instead? With a little to the side for a house.
If you plan to buy a house within the next couple years, at least keep your down payment amount in cash and invest the rest. You don’t want to be in a situation where there is an opportunity to buy a house but you can afford the down payment cause your investments went down
I think prices will stay flat over the coming years, a drop doesnt seem likely as supply will likely stay low. Still feel like cash is king in the short term.
I doubt there will be a major drop in prices. Most Americans own their homes and have locked in low interest rates. They have no incentive to sell or to permit new construction in their neighborhood.
We tried to buy in 2021 in Loudoun county, bids $100k over list price, waving home inspections, finance contingency. And most fun one... 3 month rent back. You let sellers continue living for 3 month in the home you now own for $0 rent. What?
I just gave up after about 10 bids.
We will wait for all the FOMO homebuyers to try get out of mortgages once this recession puts people out of work for long enough. Might be cruel but a lot of americans budget around monthly payment and they don't have enough to withstand few months without work.
Hi, are you in Northern VA? I'm also looking to buy, and the prices are ridiculous in VA. How long are you planning to wait? I'm not sure what I should do.
@@msm41009 yes NOVA, our rent is going month to month next February so probably around that time or based on market. I already observe listings that are not closing fast and some price cuts on relisting after being under contract. And once again those wavers for inspections is a nonstarter for me especially on older (15-20year old) homes.
I think patience will be rewarded throughout the next year. I would just feel really stupid if I bought right now before interest rates have a chance to be priced into the market
Amazing amazing video.
Thank you so much.
At 23:38 you are demonstrating the tremendous extent to which the psychology of this horrible inflation episode has taken root. Once such psychology has taken root after an uptick in inflation,it becomes more difficult to knock the inflation spiral down. The inflation psychology has indeed taken root. I believe it is for the better if the FED does whatever needs to be done to knock out the inflation. Had raising interest rates began in a timely manner more than a year ago instead of the disingenuous comments about "inflation being transient" we would be in a much better scenario now. Maybe the "soft landing" could have been achieved,instead of the recession that is probably the correction that is now needed.
we do have something bad going on now that might be the only thing unpredictable or more dangerous than usual for the kind of economic problems we are having now, that is the horrible situation going on in Ukraine. But the current inflation took root well before the attacks began in Ukraine.
I AM SO EXCITED!
Waving of inspection and appraisal is sooo 2021.
Ultimately, who’s making (the most) money from all of this? Is there something illegal going on?
There is a possibility that some of the demand for houses is coming from "investors" who want to be landlords,and some of the "investors" might be corporate and taking advantage of the absurdly destructively low low interest rates
hopefully the low low interest rates are finally starting to get remediated
I believe that when interest rates are too low or even de facto "negative" debtors get subsidized at the expense of savers and prudent people who avoid debt.
also some "small" investors may be trying to "flip" the houses they buy on credit.
@@davidpowell3347 this definitely true. The retail investor in single family housing was a significant player in the June 2020- Dec 2021 real estate market. Retail investors included individuals going in for their first or second house as well as hedge fund money plunging cash of investors into housing for steady monthly rents. Wall Street has learned that a house rent is as good as a monthly interest payment
People who already own homes are very comfortable with this situation.
What if someone plans on winning the lotto in the next 5 years? If it works for retirement planning then why not home buying :)
Plan on winning the lottery? What are you smoking? 😂😂😂
@@Yugiboii --- Its my backup plan to finding a Picasso painting at a garage sale.
What would I do if Bo ever wasn't excited about the episode
"God, I have been dreading this episode. The viewer questions are stupid, the topic is boring, and our advice is barely helpful at best and counterproductive at worst. But we gotta do this . . ." Bo then proceeds to slap himself in the face, chug the rest of his coffee and throw the mug hard enough that it shatters on the floor. "Woo! Let's go!"
Be an "all-terrain vehicle with your personal finances!" I love that idea.
Haha, we put down 58% on our first (starter) home. Then again, the mortgage interest rates were at 12.5%.
Zoomers will tell you a 6-7% mortgage is astronomical.
You know so many are going to regret the home they bought! Paying so much over asking price and waiving inspections just sounds crazy now we are past that time a bit. Hindsight is always 20/20
You are 1000% better to just rent than to waive your home inspection. Wait for the market to calm down.
This show is much better than most of short snackable pieces of conent about real estate investment out there. Thumbs way up!! I just became a huge fan of you guys.
Refinanced about 8 months ago down to a 2.84% rate🙌🏼🙌🏼 cost 0 points due to a special offer that was run for a very short time at my bank. Cost about $350 to do all the paperwork. What a steal.
Yeah that sounds wonderful. Sounds like you've married the rate.
In house financing, it's said we should be marrying the house, date the rate
@@JayeshKaramchandani This makes no sense? I have a great house and now an unbeatable rate. It's not an either/or situation. I was in this house either way, but I just also happen to have a great rate now. It was a refinance, not a new purchase.
If I only 'dated' the rate then I'd be looking much worse.
Tax %, retirement %, student loan %, baseline life costs, and now house %...i am all out of %s
Definitely get an inspection. We have been saved from HUGE potential mistakes.
it's not 33 percent on a dollar candy bar, it's 33 percent on 100 of thousands of dollars house.
That 25% has been out of whack for a while...especially state's with high home taxes
I admit it is true that as long as the inflation keeps on rolling it may become impossible to reach 20% downpayment/closing costs funding because the goal line keeps on moving,also the low interest rates allow the mortgage to be paid off with devalued dollars
unfortunately good crystal balls are hard to find
We moved states early 2021 negotiated price down 10% and after inspection had them do 15k in work took us a year to find a place that was not extremely overpriced
we are not going to see a 2008 level crash but they will level out or go down a little bit.
Brian and Bo.
Name a more iconic couple.
We are headed into a taco shaped recovery
Gated golf course community a real mans man you are
that hoa payment tho
Hahaha I am not in the least impressed with the gated golf course and I think that if you do a silly thing like that your man card has been revoked hahahaha only douch bags live on golf courses IMHO hahaha he is the type of guys that is okay with the dress codes hahahaha what a 😺.
Inspections might be a good idea. But so many are poorly done. You see so many situations where problems quickly come up that were missed by the inspector. And inspections are expensive... Our last sale was with a "pass/ fail" inspection.
These dudes are actually advocating getting into this market. Insane. Waving appraisal is one thing....people are waiving inspection and making blind offers. I don't care what anybody says....only a fool would enter this market
Kinda depends where you live though. Some markets will be desirable to move to regardless.
You seem to be missing a pretty key part of their commentary: know your why. A primary residence isn't only a financial decision; it is also an emotional one. Yes, you shouldn't ignore the financial aspect (which is what this episode largely touches on), but the decision is also just about what is going on in your life and if you are ready to start that 5 year commitment to a location.
Also, they made a very strong case with their graph on the price of the houses vs S&P 500; housing is generally not as volatile, and it generally takes much longer to lose value. So, if you are waiting for houses to dip x%, you might be waiting a long time. Life is too short to wait 5 years to begin something as important (to some people) as owning their home, because of a financial inefficiency.
@@Jack-fw4mw sure a house has utility...but if I can wait 40 years to enjoy all the money I worked for..I can wait 3,4,5 more years for a housing market with better metrics. Utility isn't a reason to go against conventional market wisdom when we apply it to.literally every other market.
@@Jack-fw4mw and I'm not even contesting your point ..it's just, that argument isn't an overwhelming case for somebody to jump in the most insane housing market the world has ever witnessed.
@@tothefxckinmoon4540 hopefully your market has shifted where houses only receive 2-4 offers now instead of a dozen. My market is back to 2019 where 1-3 offers are the maximum, where properties are available for 3-5 weeks, and all sorts of buyer contingencies (buyer protection) are being written back into the contracts.
Recession DOES NOT equal drop in house prices. Check out Barry Habib, economist of the housing and mortgage market. He'll show you graphs of what happened to houses in the recession of the early 1990s, and the early 2000s. Housing prices went up during the recession quarters! Math doesn't lie.. when you time the market in any financial asset, you are more likely to be wrong & pay more than the moment when you could afford it. I bought a house in April 2022, I know it's not a bad time for me.