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Would You Buy a House?

I'm looking to buy a house while the interest rates are relatively low. However, I'm concerned that home prices will go down once rates go high.

What are some of you thinking about buying a house in this economy?



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If you have kids at school

If you have kids at school age, then do this only if your mortgage + property-tax + related expenses (in a good public school district) is at or below the same level as your rent + utility bills + private schooling fees.

Also go for full-term fixed interest rate loan rather than floating interest rates.

And the perfect time would be after a bust, when prices are low. Wait for the central bank to re-announce something similar to QE and then jump in early and buy a home. Within 1-1.5 years of QE, the house price can inflate and even more than double.

Personally, I wouldn't buy a home. I may not reside long-term in the US but even back in my home country, I haven't bought a home due to same reasons.
* Housing bubble is a wealth transfer program from the people to the bankers and elites.
* The only way that wealth transfer program works is through people participation.
* Even if we time the market correctly, and personally profit from (the bust and then) the bubble, we're still playing into their wealth transfer program and making that program work as intended.
* The Fed or whichever country's central bank will keep re-doing this bubble-bust cycle as long people participate in it and some people see profit (while majority sees loss).
* The will just re-do the cycle at ever decreasing interest rates during each bubble, to entice and trap even informed people.
* If we want the fiat money system to end, then first we should have the personal conviction to stop playing along. There is no big difference between those people voting for higher taxes and those people accepting easy credit (for personal profit). Both are participating in wealth transfer at someone's cost.

That is my personal opinion. I would buy an house only if I have enough wealth available and would likely need only a short-term loan (of say 5 years) at real interest rates. Anything else would feel like helping the elites, to me.

I buy them all the time! YES buy your house!

I buy them, fix them, sell them/rent them. Yes, there is nothing to it.

Its all about the math. If you need help, just call or email me.

If you are buying to live and own it, make sure your monthly payment is no more than 1/4 your monthly income. To be extra careful, make sure you are buying in very rentable area (usually a house sandwiched between 2 hospitals & a university)

If you want to piggy back with me investing, just say so and we'll do a few together so you can do it yourself.

Step one - Get a HUD list.

Step two - Get a good experience HUD Agent (sold over 20 in the last 2 years)

Step three - Get General Contractor with a team of subs that he can name and list for you. If he can commit to a 21 day rehab turnaround on paper contract with you, he's good. Pay him cost + 25%. All cost itemized for your taxes.

Step four - Get your resale real estate agent. Ask to see all of his marketing campaigns (post cards, door hangers, re advertisements, websites, and most of all, signs on houses. Then call him on those numbers and see if he/she picks up the call and how fast they get back to you, the hypothetical buyer. Soon, you'll know if you have a real RE Pro who can sell your fix n flip.

And if you are not reselling, just stop at step four.

Its simple, fun, and always interesting.

For bigger investments safer returns, try apartment investing. For investments with the largest gains, 100% or better, try land. (more on that, just call).

I have all the free advice for my Ron Paul patriots out there, been doing it since 1987 and survived two downturns and sold over $150 million in real estate. Plenty of experience here for the young wanting to Leap Frog over the pack and get busy making money.

No need for young patriots to be poor as church mice. Get after it! The more volatile the market, the MORE opportunities.

Treg

PS. For those Patriots who want cheap land to live OFF Grid, check this website out for great deals www.landtobuy.com Just $110 down and $60 month or $6,000 for just about 5 acres.

Yes, please BUY this wonderful libertarian BOOK! We all must know the History of Freedom! Buy it today!

"The System of Liberty: Themes in the History of Classical Liberalism" ...by author George Smith --
Buy it Here: http://www.amazon.com/dp/05211820

The Founders understood

A free man owns property and a slave owns none. All rights flow from property rights. The Banksters are giving away free money, only a fool would turn it down. Here in the CA Sierra the battle is joined by the landowners to restore the republic.
Don't be a bedouin..

House is not the only form of

House is not the only form of property. By accepting the free money from Banksters, you become part of the problem (early receivers of free credit) and contribute to wealth destruction of others especially the elderly and fixed-income people.

Libertarianism is not consistent with easy credit, both on a personal level and at a national level.

Care to explain, why the

Care to explain, why the down-vote?

Michael Nystrom's picture

After the deflationary crash I will

Some people don't believe in the 'deflationary crash.'

I do.

I ain't buyin' no house until after it happen. An' that's a fact.

- - -

Seriously. Either after the deflationary crash, or after I move out of Boston. A half a million for a half a duplex with two bedrooms and 995 square feet. Can't do it. No way, no how. No can do. Not now.

If I were in Detroit, that would be a different story. Buy a house for fifty bucks, or even five thousand. That is what I call a bargain.

But the winters in Detroit are colder than here, so I'm left waiting for the deflationary crash.

Good luck to all.

Michael, are you predicting this in the next 6 months?

If you are following Mish, he is saying that it will be an up and down roller coaster for many more years to come.

In the meantime, you could be buying and selling and making money on every trade.

If you are leasing, when the deflationary crash happens, you might/will get lower rents, but it will hurt just the same.

Treg

Yes, please BUY this wonderful libertarian BOOK! We all must know the History of Freedom! Buy it today!

"The System of Liberty: Themes in the History of Classical Liberalism" ...by author George Smith --
Buy it Here: http://www.amazon.com/dp/05211820

I guess both of our coasts

I guess both of our coasts are very high priced.... I have dealt with property in Florida (east coast) and for the most part it isn't near that expensive. I wouldn't buy unless you could get in way under market value leaving plenty of room for error.

Last Home I had in Florida was in ST. Lucie county. I purchased it for 55k. Held it for 2 years put 10k into it and asked 159k it bid up to 169k. I sold around 2005. No taxes zero... The only other way I know to make that kind of profit tax free will land you in jail! :)

If you can get in right (well under market) and can predict the event you mention within two years you may be able to make it work.

18.5 million empty houses in the USA

Everybody is living somewhere, but there are 18.5 million empty houses.
High supply and low demand will lower prices, but government easy loans at cheap rates work against that.

The Fed monetizing the dollar would make a long term home loan look better, especially with a fixed rate lower than the true inflation rate.

BUT!

Deflationary forces like the internet, automation, offshore manufacturing, lower fuel costs, etc., can really stomp on the value of your real estate investment.

The scary part of buying a house is the ease of which property taxes are collected, as the Federal and State governments reduce the amount they send to local governments. There are Chicago suburbs with property taxes higher than the mortgages.

"Timid men prefer the calm of despotism to the tempestuous sea of liberty" TJ

And if you rent in those

And if you rent in those suburbs you are paying those taxes. Either way you are going to pay. Owning is the way to go... I didn't say borrowing or taking on a mortgage... I said owning...

Many look at mortgages the wrong way. The concern is to make the payment as small as it can be when the true concern should be how to pay it off the fastest with the least amount of interest.

Start with a very small fixer upper you can pay for with a few years savings... Many make the mistake of trying to buy a turn key castle... In fact my favorite homes to buy are the ones the banks wouldn't let you barrow against (other than construction loans). They always have the highest profits.

If I were in my early

If I were in my early twenties starting all over with no wife and kids...I'd buy this trailer...

http://www.youtube.com/watch?v=va0ZvpyORLM

(you can buy this model Jayflight as low as 15-16K new - sleeps 9)

and put it on this piece of land...

http://www.landwatch.com/Grainger-County-Tennessee-Land-for-...

that's about 35-40K right there. The book below will tell you all the details of setting up your trailer on a piece of land and living small and off grid...

www.amazon.com/Dirt-Cheap-Survival-Retreat-Mans-Solution/dp/...

I'd dig a well, install a septic tank, and set up solar for off grid living. I'd plant a large garden on about 1/4 acre...and put black walnuts or other profitable trees/plants on the other acres. I'd sell plants for easy cash...

http://www.freeplants.com/wanted.htm

Full grown 80 foot black walnuts can bring in over $10,000 each. It used to take them 40-50 years to mature, but there are some new varieties that get there in 25-30 years. Here are some sources that describe how much can be made with the right trees and plants...

http://www.outsiderclub.com/money-does-grow-on-trees
http://www.profitableplantsdigest.com/profitable-trees/
http://www.profitableplantsdigest.com/how-to-make-40000-or-m...
http://www.freeplants.com/wanted.htm

So that's a pretty specific plan right there. East Tennessee mountains is a beautiful area. That realtor in the landwatch listing, Ron Mann, is one of the 'go to' realtors for buying land in Middle/East Tennessee. Also, this area is the best rated area east of the Miss River for a 'strategic relocation (Joel Skousen).

“Let it not be said that no one cared, that no one objected once it’s realized that our liberties and wealth are in jeopardy.”
― Ron Paul

If you do, make sure you get

If you do, make sure you get a fixed interest rate. Better 6% for 30 years than 4% for 2 years than 25% for the next 28.

Very good point...

Very good point...

crietmann's picture

Everyone's situation is different, thus no correct answer.

I can't speak to anyone's situation but my own. My girlfriend and I bought our house 12 years ago, and it's worth somewhat more than when we bought (our area wasn't really out of whack with where our housing prices have been historically) so when we unload it we'll get a bit out of it. We've had the ability to deduct interest, though considering the local taxes if may or may not have been worth it there. In short, I don't care. We're downsizing and getting out from under any mortgage.

This isn't for everyone, and honestly I don't know if it will turn out to be the right thing, but I'm almost 50 and I'm taking out a chunk of my 401(k)/pension money and buying 15 acres with a livable house that needs some work in a very rural part of NH. The benefit to me is to divorce myself from the big banks in a mortgage, to live a simpler life and to make the move as part of my activism through the Free State Project.

We will continue to owe and pay property taxes, but we will not have a mortgage. The property has a small stream so I'll determine if I can get a micro-hydro solution going. I'm looking into what can be done with packet data/ham radio to provide Internet access. I have a well and septic, and plenty of room for gardens, crops, chickens, etc. to sell or live on. I want to learn how to can and preserve more food. I will continue to run my home-based business from there. We'll by necessity have to unload a ton of crap that's cluttered the house and basement - stuff we own but don't need. That can go towards improvements and driving self-sufficiency.

I'm not what I'd consider to be a doomsday prepper, but I see a collapse of our financial system coming and I suspect it will be at least, messy. I'd like to see how self-sufficient we can become to minimize impact, and be away from the segments of the population that will be least prepared to deal with the possibility of hyperinflation.

Again, not for everyone - but if you've got some assets I think the idea of cash purchases and immediately owning are worth exploring.

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Wife and I bought first house last summer (2012)

30 year, 3.375 interest (after we bought 0.375% off of the interest rate with builder compensated closing costs).

I think the most important factor to consider is how long you plan on living in the house. I wouldn't buy now solely to "catch good interest rates" nor would I buy as an investment expecting the price to rise...but if you plan to live in the house for quite a few years (I'd say 5 years guaranteed and probably closer to minimum of 10), I would recommend it.

All total, our monthly COST (interest, property tax, insurance, and utilities) is about exactly what our rent+utilities was before...but we have more than double the space, a big yard, nicer finishings, and I've really enjoyed landscaping and property improvement projects. Plus, the interest portion of mortgage keeps falling, while the rent we would be paying keeps rising.

I did

I bought one this past summer. 3.5% interest rate locked in.

I have no idea what the economy will do but my wife and son (and daughter on the way) need a place to live and grow and renting is expensive right now.

"Once you become knowledgeable, you have an obligation to do something about it."- Ron Paul

I just bought a house

After renting a house for almost two years, taking care of it as if it were my own (mowing lawn, doing small repairs, taking care of general upkeep) my landlady decided to kick me out with 30 days notice so she could let her deadbeat daughter move into it.

I'm done with renting. All I did for two years was pay her mortgage and put money in her pocket. And she kept part of my security deposit. B..ch.

My wife and I scrambled, lined up financing, and put out an all-out search for living quarters, closed, and moved in in less than 30 days. The house we bought is much newer, in wonderful condition, and on a larger lot (big enough for a good garden...something I've never had since leaving home 29 years ago...and we will pay about the same in mortgage/taxes/utilities as we did for the older, less insulated, and less well appointed rental.

If you have to live somewhere, own it. Buy carefully, be smart. Do not think of a house as your piggy bank (though it may very well turn out that way). It's a place to lay your head at the end of a day. Find ways to pay off the mortgage as quickly as you can.

No one knows what tomorrow may bring. If hyper-inflation hits, you'll find wages lag behind prices and affording housing (whether mortgage or rent) will be tough. If deflation hits, you'll find yourself with a mortgage larger than the value of the home. Sucks, but you have to live somewhere so you may find that renting is more expensive than just making payments on that depreciated house you bought. That's what I found out.

The answers to this question

are interesting and baffling.

Buying a house now seems absurd to me. And the posts are suggesting which kind of absurdity you
want.

This is probably the worst time EVER to buy a house.

Buying a house seems to go hand in hand with "owning" a house. It's not true. It's an illusion. The
so called american dream is dead and has been for a while.

Whether you pay for it outright, owner finance it, get a mortgage from a bank or whatever you do - it's NOT your house. It belongs to the state. You are just renting.

Ron Paul is My President

"This is probably the worst

"This is probably the worst time EVER to buy a house."

Care to elaborate?

So let's see my last home I

So let's see my last home I purchased 10 years ago (cash) it has cost me a of 100K total over the 10 years.

Let's see if I rented for 10 years at a grand a month that would have totaled $120K in rent paid. Money out the window!

I had a nice place to live for the last ten years.. I got all the money it cost me to live there plus a profit back in my pocket.

Did I imagine that?

Even if I would have sold that house for one dollar I would have won... Renting in this case gets you exactly nothing.... A dollar would be better than nothing!

In some situations a person may be better off renting. Long term not!

Do you have heirs? are you solvent?

The thing we must always remember is that if you have heirs or debt your investment is only half or less than what you think it is. If you pass away the government gets half of your assets after your debts are paid off. Your heirs will only have 90-120 days to produce half the value of the home or lose the whole thing to a tax lien. You actually only own half of it now. Sunny is right about this one.

Unconstitutional War - "The story you are about to hear is true; the names and places are being changed to protect the guilty."

Not exactly correct but, who

Not exactly correct but, who cares... Not sure what point you are making... Don't build wealth so you don't have to deal with it in death?

I'm talking about living expenses.I had a place to live for the last ten years... and I have money in hand to hopefully live the next ten. Renting you would have zero.

Not even close to true

The federal estate tax exclusion is over five million dollars now. And just in case your net worth is greater than that, you can avoid the estate tax on even more than that with some good estate planning. And the tax rate wouldn't be 50%. And you wouldn't have just 90-120 days to come up with the money. Sheesh.

I stand corrected

I was reading a bad resource and was mistaken. I will have to study it more. I apologize.

Unconstitutional War - "The story you are about to hear is true; the names and places are being changed to protect the guilty."

If one has a $10 mill estate and $5 Mill deduction..

Where does heir come up with even a Million?

Not exactly chump change, it's a crook deal, no doubt.

Instead of heirs using it to grow the economy the government will take it to pay interest due to the creditors.

Bottom line Congress is $17 trillion in debt which they have turned into a trillion in assets. The other $16 trillion was wasted.

The trillion in assets may be an exaggeration.

Free includes debt-free!

Thanks Paul

Thanks for helping me up after that fall. The source I was using handed me the wrong box of ammo. I was reading something about 30-40% or higher in some states with combined Estate and Inheritance taxes. I will have to study it deeper because I will need to know this in the next few years I'm afraid.

Unconstitutional War - "The story you are about to hear is true; the names and places are being changed to protect the guilty."

I sent email to three of your addresses.

If you follow my suggestions it is possible that a few years could be a few decades, God willing.

Free includes debt-free!

"If you pass away the

"If you pass away the government gets half of your assets after your debts are paid off."

Um, what? Let's see the proof here. The only thing I can think that you could be referring to is the estate tax, which doesn't apply to first like $5 million is assets, and even then isn't equal to half the value.

I stand corrected

I was reading a bad resource and was mistaken. I will have to study it more. I apologize.

Unconstitutional War - "The story you are about to hear is true; the names and places are being changed to protect the guilty."

All great advice

One more tip to add which piggy backs off the buying a hotel concept but is much more affordable and less complicated: buy a nice double or multifamily home in a good or up and coming location. Only rent to who you want, preferably friends, family, co-workers or like minded tenants with clean background checks. Often times the income from rent will cover you mortgage and put a few hundred extra bucks in your pocket a month. If you want to move, don't sell the property, just rent the whole house out and let the rent cover your new nicer homes mortgage.

Plus there is an abundance in fixer upper multifamily properties around the country, buy one that has foreclosed and you've made a smart economic decision.

Good luck !