Buying A House: C or D?

Is that good or bad? Mortgages make no sense to me, which is probably why I’ll rent for the rest of my life.

whether it's good or bad depends on who you are. people wanting to buy houses will have higher interest rates than the near rock bottom lows last year. real estate people who make money selling houses might not sell as many houses. underwriters and other middlepeople in the mortgage industry might make less money because they are handling fewer loans (they get points on the package), because the super low rates inspired many people to refinance existing mortgages. The higher rates logically imply fewer re-fis to take advantage of lower rates.

Higher interest rates are good for banks because they receive the interest, and potentially good for things like pension funds and other investors that can generate better rates of return on relatively low-risk investments.

idk, maybe i'm totally not-otm ... this is a good Yerac question

it could potentially be good for renters, as if it costs more to get a mortgage, there might be fewer sales, as in, depending on tenant protections or lack thereof, the sale of a property can lead to evictions/large rent increases

Yeah you don’t have to tell me that part, we had to move last year bc the owner of our townhouse decided to sell it. Don’t think it was on the market for long.

just sayin' some places have laws where it is super cost prohibitive for new owners to evict existing tenants ...

like, if the tenant has been there for a long time and they are elderly and/or disabled -- if a new owner wants to evict them, the new owner is going to (rightfully in so many cases) have to pay a lot of money, such that it is a disincentive to evict the tenants or buy the property

I don't know a lot about fixed income, but only have been trying to keep up with it recently because the equities market keeps talking about US treasuries (mainly the 10 year) and rising yields and how that may finally burst several bubbles that have been going on (like stonks and bitcoin and real estate). I am not really on twitter but one or two people I read sometimes have been warning about the bond market and that we are finally going to see stock and real estate prices pull back sharply soon. I mean timing is always hard and people endlessly speculate so who knows.

Oh I guess I should say I definitely see a correlation in the last two weeks that I am adjusting my own timeline about buying something right now. So I am not saying that people are wrongly speculating and warning.

Aren't there two economist-y people on ilx?

oh ya flopson to thread

people/companies have definitely over-leveraged themselves to death everywhere. buy high/sell low.

👀

Notwithstanding that i think we're buying at a peak, tbh we sat out the last boom and the bust and reboom passed before we could get into any position to buy again.

We're able to buy now, we're buying to stay there for life, we can afford the monthly payments comfortably, we wont get through another, you gotta jump sometime.

oh yeah, i wanted to put in that disclaimer above about no one really knowing because people still need to make the decisions they need to make; you will never be able to perfectly time doing something like that and there are so many variables involved. I am hoping to just wait out March for my own situation and see where things end up.

Our market timing was decent the last time round (2007). But that was going from apartment to first house.

If we end up both selling and buying this year, whatever market conditions there are will cancel one another out. The current low inventory and high demand are good for us as sellers, but will bite us in the ass because we also need to live somewhere.

I theoretically should care more about interest rates than I do. But ultimately the right time to buy is the time that makes sense for our life. The difference between 2.x% and 3.x% is big, but it is spread over 30 years.

Or, what Yerac said

I’m out of my depth on the macro stuff, but I will say if you’re thinking of refinancing you should do it ASAP imo (or ideally last year)

Yeah thats key for us, to draw down now before end april if at all possible

I am really glad I was able to sell my place relatively quickly and was done with it at the end of Dec. I could not foresee that apt going for much more in the short to medium term.

I looked at refinancing like two months ago and got lazy about it and now it feels like it might not be worth it. We were going to cash out some equity and redo our kitchen but is it better to pay that out of savings to save several $k in closing costs for a not dramatically smaller rate? Goal is also to pay off sooner as we dropped daycare and car payments but we don’t need to refi to just pay more each month on the principle.

I really hate this kind of stuff hence getting lazy about going through with it

signed contract yesterday; got a 120 day rate lock at 2.825 - not sure we can do much better than that, ever. staying in the neighborhood too!

We bought in summer 2019 at 3.625 and refinanced in December at 2.75. It reduces our monthly payment by 10% for the next 30 years and we cover the costs of refinancing in like 12 months. If you’re currently paying anything approaching 4% and you don’t have specific plans to move soon it’s probably still worth doing.

Our letter of offer is at 2.5% fixed for 5 years which hopefully they honour come drawdown

the first place i bought was 6%. that shit seems hilarious now.

My first (and current) house had a 12.25% mortgage, which is even more ridiculous, but it's the best leap I ever made. A better leap would have been selling and getting something nicer in 1993, when I considered it, but was too chicken to do.

We looked into refinancing, and then we couldn't cover the costs of refinancing, so we just said fuck it. But rates were pretty low when we bought, too, and I don't really see us leaving this dump.

have you considered letting a friend park their RV or truck in your yard and pay you like $100/month?

I have to say that seven months in, on one hand, I love home ownership, but on the other hand, I can't fathom why anyone would want to own more than one house.

I mean unless you have the kind of fuck you money that you can just pay a property manager to take care of literally everything.

A property manager takes what 10% of rent? Even with that expense it’s easy to set things up such that renting is extremely profitable because our housing markets are messed up. No fuck you money required, beyond the fuck you of being able to afford a second downpayment, especially if you bought the house in the past.

because if the second house is a rental, as caek implied, you could conceivably not have to work but instead live off your passive landlord income

there are different arrangements re property management -- you could pay a company, which takes either a % of rent, or a flat fee, or, depending on the property, you could have a person who manages your property in exchange for free/discounted rent

yeah either way a using property manager does not involve any more fuck you money than being a landlord in the first place.

I guess it depends how much capital you have in that second house and what rents are like in your area.

It looks like Zillow is estimating rent for houses in my area at about 22% over the monthly payment (mortgage, escrow, property tax). Which would give you a lot of leeway if you were renting an apartment or condo in an expensive area for a few thousand and had low maintenance overheard, but it’s just a few hundred bucks here.

i want to be a renter again tbqh, but it's financial insanity if not to own if you have the option :(

Obviously the bulk of uncompensated domestic labor is done by women but there’s a whole economic and ideological apparatus devoted to convincing men that their inefficient and uncompensated household labor is fun and identity affirming https://t.co/lGYDkW2sIk

— Matthew Zeitlin (@MattZeitlin) April 4, 2021

I think women who own homes are expected to have that competence be part of their identity now as well, I also experience a cold wave of dread when I think about my experiences with the people my contractor sent out to remodel my bathroom that I had to spend hours with one-on-one in my own house, and what that would have been like as a woman

I have definitely wondered before if there would be a viable way to offer people inexpensive property management-like services for their own homes. We got really lucky and found these awesome guys through friends who are like handyman++ and know tons about houses and construction, so they can pretty much always either do what we need cheap or advise us on it. Like an on-call service that could (1) send a handyman when you need it for simple stuff, (2) advise you on all home repair and renovation decisions and (3) help you find contractors for more serious stuff. I guess there could be some messed up incentives and you'd probably need some kind of way to avoid contractors being selected via kickbacks.

I'm the point person for my condo complex dealing with our property management company, and it's a constant issue... there's a powerful incentive for relationships to form between the property managers and service providers that aren't in the best interest of the homeowners. A lot of the investor owners have zero patience with that reality, instead choosing to blame me for being naive about something like how much it should cost to replace the roof on a 3-story building. As if I'm going to have any fucking idea about that! And most of the time they're bluffing and have no idea themselves either.

I have definitely wondered before if there would be a viable way to offer people inexpensive property management-like services for their own homes.

A home warranty company is sort of this, on the repair side. Definitely makes homeownership less D for me. I don't think they would go find me a contractor if I wanted to I dunno redo the kitchen or something.

Seems like word of mouth is the only way that can be done successfully.

I don't understand that tweet above, who is making a joke, or if there is a joke? Or is he making fun of M Yglesias like many people seem to do.

there is not a joke. owning a house is a terrible job. yglesias is bad. both are true.

i don't feel any of the gendered pressure to enjoy the "male" aspects of it the zeitlin tweet refers to.

but i do hate every aspect of it.

he appears to think wiping his own ass is "doing the job of ass manager"

Idk I do as little as possible for myself that I can afford to pay for, why should I fix shit

if you don't want to do it but want it done, hire somebody and pretend they're your "property manager". don't take mitch hedberg's words too seriously.

i'm sure he is talking about spackling the holes left by his framed reservoir dogs poster and not foundation repair anyway

I wouldn’t mind learning more home repair and maintenance if my primary job was like 20 hrs/wk. impossible to keep up with my current life. Any manly fantasy I had quickly got dispelled when I realized it’s not just a matter of knowing how to do stuff but having the time and attention to do it constantly.

I am feeling this. There's a lot of things that I know how to do and enjoy doing. I like painting, drywall, carpentry, gardening, yardwork - but can't set aside the time to do them well.

For me the major timesucks seem to be preparation and cleanup. And the major hassle is having normal life go on while the job is being done.

We've spent weeks that are completely janked up by having to live out of boxes and temporary arrangements while much of the house is undergoing repairs and remodeling.

The painting (or whatever) isn't all that hard, it's a week and a half of plaster dust everywhere and constant "where the fuck is the corkscrew" / "oh, it's in box 17 on the porch, the one labeled 'miscellaneous kitchen shiznit.'"

...or wanting to paint just one thing or do just a bit of yardwork but needing a half-hour of getting ready and another half-hour to clean up and shower afterwards. If there weren't six mammals trying to live here, do work and school and relax, it would be way easier.