Buy a house now or wait?

[goldsummer]

I'm a new attending and have not yet bought a house. I'd like to, but flexible as to when I do. I'm ok in my current situation.

What I like about buying a house now:
- I can finally afford one I like
- interest rate at historic low

What makes me hesitate:
- Price of houses keep elevating, many houses being built and getting bought due to low interest rates driving up house prices further
- Uncertainty of economy, pandemic, new administration, etc


My worry is that I'll buy a house that's currently worth 350k, and if the housing market crashes like it did 2008, it may only be worth 180k. It would obviously be more optimal to buy during a crash... This is hard to predict of course..

What do you think?

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[dpmd]

I'm a new attending and have not yet bought a house. I'd like to, but flexible as to when I do. I'm ok in my current situation.

What I like about buying a house now:
- I can finally afford one I like
- interest rate at historic low

What makes me hesitate:
- Price of houses keep elevating, many houses being built and getting bought due to low interest rates driving up house prices further
- Uncertainty of economy, pandemic, new administration, etc


My worry is that I'll buy a house that's currently worth 350k, and if the housing market crashes like it did 2008, it may only be worth 180k. It would obviously be more optimal to buy during a crash... This is hard to predict of course..

What do you think?

If you buy a house you can afford and don't need to sell it then you don't have to worry as much about prices crashing. So the bigger question is can you afford it and what is your job security like (so you can continue to afford it)

 

[Saddleshoes]

The interest rates are at historically lows right now.
When you consider a house as a 15-20-30 year investment, it is going to be hard to beat these rates at this moment in time.

 

[deleted126335]

The interest rates are at historically lows right now.
When you consider a house as a 15-20-30 year investment, it is going to be hard to beat these rates at this moment in time.

Except....As interest rates rise...Homes become less affordable because mortgage payments go up.

 

[Saddleshoes]

Except....As interest rates rise...Homes become less affordable because mortgage payments go up.

Which is exactly the reason to buy now! When a home IS affordable.
(Wasn't that the point of the OP?)

 

[dpmd]

Except....As interest rates rise...Homes become less affordable because mortgage payments go up.

Not if you get a fixed rate

 

[deleted126335]

Which is exactly the reason to buy now! When a home IS affordable.
(Wasn't that the point of the OP?)

I was referring to in case you want/need to sell in a few years. If you are confident of dropping anchor for a long time, a home purchase with a mortgage is a very solid choice right now.

 

[redfish955]

Tell us more about your background and location.
How much is an apartment with hip young professionals that you would enjoy networking with? Maybe something near a fortune 500 headquarters.
Do you have a close group of friends, siblings, or ect. that you can fill the house with?
Are you in a new city and need to make friends?
Do you need to find a spouse?
Will have have kids in the next five years and need a house?
IMO if you don't have a close group of friends you will have the most fun at wherever the residents are living as long as it has good amenities. Most of the upper end apartments will be filled with couples and the singles will be in the more affordable hip buildings with pools and rooftop lounges, and etc.

Compound Interest Calculator | Investor.gov

Determine how much your money can grow using the power of compound interest.

www.investor.gov

What ever you do make sure you can save enough for retirement. Assume an 8% return annually and you will need about 2.5 million to retire at 60.

 

[EdgeTrimmer]

I'm a new attending and have not yet bought a house. I'd like to, but flexible as to when I do. I'm ok in my current situation.

What I like about buying a house now:
- I can finally afford one I like
- interest rate at historic low

What makes me hesitate:
- Price of houses keep elevating, many houses being built and getting bought due to low interest rates driving up house prices further
- Uncertainty of economy, pandemic, new administration, etc


My worry is that I'll buy a house that's currently worth 350k, and if the housing market crashes like it did 2008, it may only be worth 180k. It would obviously be more optimal to buy during a crash... This is hard to predict of course..

What do you think?

How long have you been in the current job? Do you have partnership or tenure (depending on private practice or academic)? Lot of people including physicians end up changing first job. There will be some price correction in near future but no one knows when and how much. I don't see interest rates changing that much in 2021.

 

[stillpremed]

I'm a new attending and have not yet bought a house. I'd like to, but flexible as to when I do. I'm ok in my current situation.

What I like about buying a house now:
- I can finally afford one I like
- interest rate at historic low

What makes me hesitate:
- Price of houses keep elevating, many houses being built and getting bought due to low interest rates driving up house prices further
- Uncertainty of economy, pandemic, new administration, etc


My worry is that I'll buy a house that's currently worth 350k, and if the housing market crashes like it did 2008, it may only be worth 180k. It would obviously be more optimal to buy during a crash... This is hard to predict of course..

What do you think?

Live like a resident for a couple years and when pandemic uncertainty subsides + you are more established as an attending then you can decide to buy a house vs continue renting. Best decision of my life = live like a resident for five years and counting after finishing fellowship

Asset inflation is real, 10 percent plus a year (stocks, homes) while healthcare/education completely outpaces and laps our salary jumps

Cash is trash, QE infinity continues and everything continues to pump in this new paradigm

 

[CocoMelon0531]

I'm a new attending and have not yet bought a house. I'd like to, but flexible as to when I do. I'm ok in my current situation.

What I like about buying a house now:
- I can finally afford one I like
- interest rate at historic low

What makes me hesitate:
- Price of houses keep elevating, many houses being built and getting bought due to low interest rates driving up house prices further
- Uncertainty of economy, pandemic, new administration, etc


My worry is that I'll buy a house that's currently worth 350k, and if the housing market crashes like it did 2008, it may only be worth 180k. It would obviously be more optimal to buy during a crash... This is hard to predict of course..

What do you think?

Most advices on here and in WCI are very traditional and outdated. I originally worked in finance for a few years so I have a unique perspective that is viewed by others as very radical.

But with worldwide fiat money printing on overdrive and not slowing down, you want to tap that physician mortgage at basement prices and lock in the price for a valuable commodity (housing that you will be using for the next decade) and let the real 4-6% asset inflation work for you against the banks. Rent will go up drastically in the future once demand, consumption, and money velocity are back to baseline with vaccine and worldwide monetary stimulus.

FYI, everyone who bought homes 6-8 months ago has already saw their home prices up by 6-7%, aka free rents if they sell their homes now after commissions and fees.

 

[goldsummer]

How long have you been in the current job? Do you have partnership or tenure (depending on private practice or academic)? Lot of people including physicians end up changing first job. There will be some price correction in near future but no one knows when and how much. I don't see interest rates changing that much in 2021.

Its been about 3 months. I have a 2 year guarantee base salary through october 2022. I'm employed by a hospital chain. So far, I like it. I plan to stay long term, but yeah who knows.
I do wonder how the new billing scheme will affect things...

 

[goldsummer]

Most advices on here and in WCI are very traditional and outdated. I originally worked in finance for a few years so I have a unique perspective that is viewed by others as very radical.

But with worldwide fiat money printing on overdrive and not slowing down, you want to tap that physician mortgage at basement prices and lock in the price for a valuable commodity (housing that you will be using for the next decade) and let the real 4-6% asset inflation work for you against the banks. Rent will go up drastically in the future once demand, consumption, and money velocity are back to baseline with vaccine and worldwide monetary stimulus.

FYI, everyone who bought homes 6-8 months ago has already saw their home prices up by 6-7%, aka free rents if they sell their homes now after commissions and fees.

and you think right now is the time? or will the housing bubble burst similarly to what it did in 2008?

 

[CocoMelon0531]

and you think right now is the time? or will the housing bubble burst similarly to what it did in 2008?

2008 is a once in a lifetime buying opportunity. Will not get such deal with the usd money press backing everything up. I personally expect IS housing to be up 8-10% for this year.

 

[abolt18]

I'm a new attending and have not yet bought a house. I'd like to, but flexible as to when I do. I'm ok in my current situation.

What I like about buying a house now:
- I can finally afford one I like
- interest rate at historic low

What makes me hesitate:
- Price of houses keep elevating, many houses being built and getting bought due to low interest rates driving up house prices further
- Uncertainty of economy, pandemic, new administration, etc


My worry is that I'll buy a house that's currently worth 350k, and if the housing market crashes like it did 2008, it may only be worth 180k. It would obviously be more optimal to buy during a crash... This is hard to predict of course..

What do you think?

While it is obviously more optimal to buy during a crash, you may find yourself waiting around a LONG time.

Are you buying the home to make money on it? Or to live in it? Because if it's to live in it, and you plan on living there a long time, you're not actually out anything if the market crashes after you buy, unless of course you try to sell after the price drops...

I think if you feel confident that you like your job and you're planning to stick around, buying a house makes perfect sense when you find the house you want. I wouldn't wait around for prices to crash.

Good luck!

 

[goldsummer]

While it is obviously more optimal to buy during a crash, you may find yourself waiting around a LONG time.

Are you buying the home to make money on it? Or to live in it? Because if it's to live in it, and you plan on living there a long time, you're not actually out anything if the market crashes after you buy, unless of course you try to sell after the price drops...

I think if you feel confident that you like your job and you're planning to stick around, buying a house makes perfect sense when you find the house you want. I wouldn't wait around for prices to crash.

Good luck!

You're right.

I do feel like i like my job currently. I think ill be with this group for a long while. and in this town. But with covid and all this billing changes to come, wasnt sure what to expect.

Good advice, thanks

 

[NITRAS]

Which is exactly the reason to buy now! When a home IS affordable.
(Wasn't that the point of the OP?)

I know this is old to reply.

Low interest rates have inflated house prices. A rise in interest rates would probably cause some drop in home prices. Lots of people buy based on “how much a month?”.

 

[BorntobeDO?]

I don’t think interest rates are going up again any time soon

 

[NITRAS]

Low interest rates encourage house appreciation. I’m not saying rates are going up or anything, but if rates do go up, likely housing appreciation rates will slow, too.

 

[Splenda88]

I am gonna look to buy in the next couple of months. Luckily I can find something decent for 300k where I am (eg., 2100-2200 sqft in an ok school district). However, I would prefer to spend 250k max for something smaller (1700 sqft).

What I am struggling with now is: Should I use physician or conventional loan?

 

[dpmd]

I am gonna look to buy in the next couple of months. Luckily I can find something decent for 300k where I am (eg., 2100-2200 sqft in an ok school district). However, I would prefer to spend 250k max for something smaller (1700 sqft).

What I am struggling with now is: Should I use physician or conventional loan?

Check rates for both and use that to help you decide. When I was buying, the physician loan had worse terms and I had the down payment available so I did a regular (though I should have calculated what I could have had if I did physician loan and invested my down payment). But I have heard of people having similar terms for the physician loan so then it is an easy decision for you.

 

[cincincyreds]

I'm a new attending and have not yet bought a house. I'd like to, but flexible as to when I do. I'm ok in my current situation.

What I like about buying a house now:
- I can finally afford one I like
- interest rate at historic low

What makes me hesitate:
- Price of houses keep elevating, many houses being built and getting bought due to low interest rates driving up house prices further
- Uncertainty of economy, pandemic, new administration, etc


My worry is that I'll buy a house that's currently worth 350k, and if the housing market crashes like it did 2008, it may only be worth 180k. It would obviously be more optimal to buy during a crash... This is hard to predict of course..

What do you think?

If your job is truly stable and it's a house you like go for it and get a 30 year mortgage since it is a 350k house. A house is for living anyway and even if it goes down to 175k it is not going to break the bank being a physician. Now if you wanted to get a 1.5 million dollar house that would be a different discussion.

 

[clubdeac]

wanted to resurrect this thread. buy now or wait 6 months to see if prices continue to drop some? thoughts?

 

[Splenda88]

wanted to resurrect this thread. buy now or wait 6 months to see if prices continue to drop some? thoughts?

I would wait for the whole year.

 

[CerebroDad]

Does anyone recommend buying sooner? I’ve been looking at houses in the midwest. Highly desire a house asap but otherwise not under pressure to buy right away.

 

[forchinet121]

Houses are almost certainly going to drop this year only question is how much I would wait

 

[finalpsychyear]

wanted to resurrect this thread. buy now or wait 6 months to see if prices continue to drop some? thoughts?

Who knows what will happen. These rates suck. Even at a 800+ credit score for the house I would want I'd be on the hook for 6000-6500 (6.5 interest on 30 yr) ball park which is double my rent. This is in the midwest in a suburb of a top 10-15 city. Median house price is 500k for the area but the house i want is 850-900 range. 18 months ago you were paying 4700/mo for the same price range. Not easy to mentally be ok with this but its also equally bad to have a house you don't really love as long as you are being reasonable.

 

[EdgeTrimmer]

General consensus is home prices will decline thru 2025. However real estate is location, location, location.

 

[abolt18]

Who knows what will happen. These rates suck. Even at a 800+ credit score for the house I would want I'd be on the hook for 6000-6500 (6.5 interest on 30 yr) ball park which is double my rent. This is in the midwest in a suburb of a top 10-15 city. Median house price is 500k for the area but the house i want is 850-900 range. 18 months ago you were paying 4700/mo for the same price range. Not easy to mentally be ok with this but its also equally bad to have a house you don't really love as long as you are being reasonable.

You need to call around more for rates. Some lenders were telling me rates in the 6s but I was approved for 0%down $1M, 7/6 ARM, at a rate of 5.375%. going up to a 10/6 ARM only brought rates up to 5.5. Wife and I both have 800+ credit scores and no debt outside my current mortgage and $400K of federal student loans.

If I put 10% down, the rate on the 7/6 drops by 0.41% down to 4.965%.

I called a lot of lenders and I'd say >50% were offering rates in the 5% range.

Edit: because I'm bad at math apparently.

 

[clubdeac]

You need to call around more for rates. Some lenders were telling me rates in the 6s but I was approved for 0%down $1M, 7/6 ARM, at a rate of 5.375%. going up to a 10/6 ARM only brought rates up to 5.5. Wife and I both have 800+ credit scores and no debt outside my current mortgage and $400K of federal student loans.

If I put 10% down, the rate on the 7/6 drops by 0.41% down to 4.965%.

I called a lot of lenders and I'd say >50% were offering rates in the 5% range.

Edit: because I'm bad at math apparently.

no debt except 400k in student loans and a mortgage? that seems like a decent amount of debt to me

 

[abolt18]

no debt except 400k in student loans and a mortgage? that seems like a decent amount of debt to me

I wasn't saying it was a small amount, but when getting a physician loan, they don't look at student loans the same way as other debts. I have no car loans, credit card debt, etc.

 

[thesauce]

General consensus is home prices will decline thru 2025. However real estate is location, location, location.

I don’t think that really matters too much unless you’re buying with cash.

Housing prices will decline because interest rates are increasing - and the 2 are not proportional. Interest rates more than doubled and houses did not drop by half - more like 10%.

The monthly payment will continue to increase as interest rates do, so if you find something you like I’d pull the trigger and refinance later.

 

[EdgeTrimmer]

I don’t think that really matters too much unless you’re buying with cash.

Housing prices will decline because interest rates are increasing - and the 2 are not proportional. Interest rates more than doubled and houses did not drop by half - more like 10%.

The monthly payment will continue to increase as interest rates do, so if you find something you like I’d pull the trigger and refinance later.

There is always a lag between interest rate increase and price correction.

 

[thesauce]

There is always a lag between interest rate increase and price correction.

Of course…not sure which part you’re responding to

 

[EdgeTrimmer]

Of course…not sure which part you’re responding to

“Interest rates more than doubled and houses did not drop by half - more like 10%.”

 

[thesauce]

“Interest rates more than doubled and houses did not drop by half - more like 10%.”

I was wondering if that’s what you meant, but didn’t think you actually believed that houses were going to drop by 50%

 

[EdgeTrimmer]

I was wondering if that’s what you meant, but didn’t think you actually believed that houses were going to drop by 50%

I believe they will drop at least 25% in the markers which had steep gains during pandemic. I have some experience in real estate.

 

[thesauce]

I believe they will drop at least 25% in the markers which had steep gains during pandemic. I have some experience in real estate.

25% I can see. I highly doubt 50%.

 

[EdgeTrimmer]

25% I can see. I highly doubt 50%.

Some markets went up 50%, 25% correction means giving up 37.5% gains.

 

[finalpsychyear]

There is always a lag between interest rate increase and price correction.

I have 4 months before my lease ends. Is the correction likely going to happen over next 12 months?

 

[EdgeTrimmer]

I have 4 months before my lease ends. Is the correction likely going to happen over next 12 months?

No, June-August is buying season. Start tracking prices.

 

[TTChopper]

Any good website for getting a list of banks offering physician loans for each state?

 

[abolt18]

Any good website for getting a list of banks offering physician loans for each state?

Doctor Mortgage Loan [Complete Guide] | The White Coat Investor

Mortgage lenders like having physicians as clients, so they offer special mortgages to physicians, dentists, and similar high income professionals. You can put down less than 20% and still avoid Private Mortgage Insurance.

www.whitecoatinvestor.com

This is, however, not comprehensive. These are just people who paid for advertising. There are many more.

I called many from the website to compare rates, but I also just googled banks in the area I am moving to, then searched each one individually with "____ bank physician loan" to figure out which ones offered them. Most did, and there was usually a link to a local loan officer that handles physician loans. Also consider asking your realtor or coworkers.

 

[finalpsychyear]

Doctor Mortgage Loan [Complete Guide] | The White Coat Investor

Mortgage lenders like having physicians as clients, so they offer special mortgages to physicians, dentists, and similar high income professionals. You can put down less than 20% and still avoid Private Mortgage Insurance.

www.whitecoatinvestor.com

This is, however, not comprehensive. These are just people who paid for advertising. There are many more.

I called many from the website to compare rates, but I also just googled banks in the area I am moving to, then searched each one individually with "____ bank physician loan" to figure out which ones offered them. Most did, and there was usually a link to a local loan officer that handles physician loans. Also consider asking your realtor or coworkers.

Im a total noob to this. Are you able to get rates just by calling and giving some basic info i.e. income xyz, 500k loan with 20 percent down whats ur best price for 30 year vs ARM etc or are you applying each time? Although I know rate isn't everything i found out you need to know APR and fees which can be a way you get low rates but actually pay more in the end if you don't see the breakdown.

 

[abolt18]

Im a total noob to this. Are you able to get rates just by calling and giving some basic info i.e. income xyz, 500k loan with 20 percent down whats ur best price for 30 year vs ARM etc or are you applying each time? Although I know rate isn't everything i found out you need to know APR and fees which can be a way you get low rates but actually pay more in the end if you don't see the breakdown.

This is exactly what I did. I never gave my personal info like social security number, dob, or anything like that.

Generalities like base salary, expected salary, start date, credit score range, no debt outside of student loans and mortgage.

Asked them to give me comparables on 30yr fixed, 15yr fixed, and different ARM options with 0%, 5%, and 10% down. Asked for all their additional origination fees, closing fees, loan fees, application fees, etc (they all have a different name for it) and entirety of projected costs out the door so I would have zero surprises.

Anyone who is not 100% forthcoming and willing to answer those questions is someone I do not want to work with and they will not get my business.

 

[FlowRate]

This is exactly what I did. I never gave my personal info like social security number, dob, or anything like that.

Generalities like base salary, expected salary, start date, credit score range, no debt outside of student loans and mortgage.

Asked them to give me comparables on 30yr fixed, 15yr fixed, and different ARM options with 0%, 5%, and 10% down. Asked for all their additional origination fees, closing fees, loan fees, application fees, etc (they all have a different name for it) and entirety of projected costs out the door so I would have zero surprises.

Anyone who is not 100% forthcoming and willing to answer those questions is someone I do not want to work with and they will not get my business.

I did basically the same and agreed. Maybe 2/3 wanted to be a bigger hassle than I was interested in (only do preapprovals, no quotes, wanting to schedule meetings rather than just taking info through a portal or email) or didn't reply. The other 1/3 promptly replied with quotes.

 

[Splenda88]

What do you guys think about buying an investment property for 150k cash? with potential cash flow 10-12k/yr.

 

[EdgeTrimmer]

What do you guys think about buying an investment property for 150k cash? with potential cash flow 10-12k/yr.

That’s a good return Which state? Who will manage it?

 

[Splenda88]

That’s a good return Which state? Who will manage it?

South FL (Palm Beach County). Rent is out of control there while one can get 2/2 condo (~900 sqft) for 150-175k if willing to pay cash. I already have a property management company managing 2 other properties there for me.

Basically, I can rent the condo for $1900-2000/month.

Expenses:
HOA: $300
Tax: $200
Property management fee: $152 (8% of rent proceed)
Estimated repair: $200/month

 

[EdgeTrimmer]

South FL (Palm Beach County). Rent is out of control there while one can get 2/2 condo (~900 sqft) for 150-175k if willing to pay cash. I already have a property management company managing 2 other properties there for me.

Basically, I can rent the condo for $1900-2000/month.

Expenses:
HOA: $300
Tax: $200
Property management fee: $152 (8% of rent proceed)
Estimated repair: $200/month

I lived in same county in mid 90s ☺️ are the rents sustainable in a recession?