Speedrunning buying my first house...

In reply to z31maniac :

We tried to do it that fast last time, the various parties involved were not able to make it happen. That's with a willing seller and a fully paid-off house on our side. It was mostly inertia in the financing IIRC - apprasals etc. We signed the contract on 2/12 and closed on 3/21, I think. Original schedule was for 3/14.

The point was that there is lag in buying a house. You've got at least 3 weeks before you can move in, so if you have to be out of your old place by Oct 31 you need to have a contract in hand by the first week of October. And that's assuming you can manage to pull it off in 3 weeks, the national average (I checked) is six which means mid-September at the latest. That's in two months. The suggestion to find a place to live for a year is not a bad one.

Not directly related to that delay on my last purchase:
We were originally going to do some bridge financing as we knew we'd be able to pay off the bulk of the house loan as soon as the old one sold, but we were unable to arrange that due to (apparently) changes in the regs since 2008. So instead, at the suggestion of the bank, we got approved for 100% of the purchase price of the new place - which was a terrifyingly large loan. Well, maybe not today but it was in 2018. I can see how people get themselves in real trouble asking how much they can borrow, we would have never even considered borrowing that much. We still get letters etc offering to refinance that huge amount.

In reply to AClockworkGarage :

It's mostly good advice here and I appreciate it, but this right here has some serious avocado toast vibes. The assumption that a person is poor because they are stupid, or they deserve it is something that we really need to get over.

I am only a couple years out of college, I'm very early into my career. The past few years have been spent trying to pay down my student loans (I was approved for forgiveness but... well... you know) so most of my money goes there. I recently financed my first car because the market for inexpensive used cars dried up around covid and never came back. I'd been carless since early 2020 when I was hit by an uninsured driver. Financing a 12 year old car was an attempt to build up my credit which so far is working.

I don't live in a decadent mansion, I live in a tiny house that's way too small for us. The rent was cheap, the plan was to stay here until we had enough saved for a down payment. (fun fact, the previous tenant was also the landbastard's child who did meth and trashed the place)

Every single move I've made since I got to this state has been involuntary, resulting from the property being sold and the new owner either raising the rent (from $750 to $1300 for a1 bdr apartment) or just not renewing the lease. Each time the rent has increased and the amount of space we have has decreased.

So while I am aware that I will likely nor be able to buy a house at this time or likely ever, I absolutely resent your assertion that this is because of a moral failing on my behalf.

I'd be able to afford a house if I didn't eat avocado toast.

Who said moral failing? I simply said that you spend all of your money. Was I wrong? Since you didn't share many specifics other than a decent job and good credit, it's not much of a stretch to deduce that you have no money left for savings because it's spent. I said that you need to either increase your income, reduce your spending, or lower your expectations/budget for a house. That is obviously dependent on where your money is going. If it was discretionary spending, then cutting the spending would be the number 1 priority. Since yours sounds like it's not, then you need to boost your income. You also don't sound like you are in the position to skip over an entry level house. Reality is that you likely can address all three. That's what almost everyone does when they are serious about buying their first house. It's a math problem, not a moral judgement. Or you can not do those things, and continue to live at the mercy of the "landbasterds" and "societal leeches." It really makes no difference to me what path you choose, but since you posted I thought you wanted to hear solutions. You are in your 40's with no savings and paying student loans. Not a judgement, but you are behind. A 30 year mortgage would run into your 70's if you don't pay it down faster. You haven't made any mention of retirement plans. Hopefully your new career takes off and you get caught up quickly and then some. I admire that you made that change relatively late, I sometimes wish I had the courage to do that. I hope It pays off.

In reply to Keith Tanner :

To be fair, both times I purchased, I didn't have a house to sell. Was renting both times. 

i'll throw a few tips out there to consider...

location, location, location; people always fall for the trap of "its only an extra 10, 15, 20 minutes further away" usually end up with regrets, decide what area you want to live in and don't compromise.  

don't fall into the home improvement show trap... on TV they show kitchen renovations that cost $25 to $30k and are done in 20 minutes plus some a sad commercial from the SPCA.  Its the same logic as restoring a car, it's always more expensive, more time consuming, and will contain unknown headaches.  

on the same token be careful of flipper houses, those people often times cut corners use cheap materials and do everything they can to make it look nice and little else.  

be prepared for a very anxious process, things tend to move very much in a hurry up and wait modality.  

We officially called off the search today.

We jumped through all the hoops, filled out tons of paperwork, chased down first time buyers programs and finally got pre approved for $350k.

The requirements were pretty simple. 2-3 bedrooms, garage, single family within 40 minutes of our jobs. We looked at 35 houses over the weekend.

No one of them was suitable for humans to live in. Literally none. 

I'm not being facetious. Every home was either filled with black mold, or all the wiring had been stolen, or it was currently falling off it's foundation. One had been hit by a car during a police chase.

Nothing that a person could move into.

Everything under $500k was just those previous houses flipped as cheaply as possible.

If we didn't have the time crunch we might have been able to wait it out and find something, but as it stands it just wasn't doable.

So instead we will try and find a rental for $700 or so more than we are paying now for virtually the same thing and be in a much worse place when we try again in a few years.

Lookin forward to it.

In reply to AClockworkGarage :

Weird.

"The economy is doing fine" is all I keep hearing on the news . [end sarcasm]

In reply to Indy - Guy :

When 93% of the stock market is owned by the top 10% of the country, and media correlates the market to the economy, it looks fantastic. 

Little link to back that up

I wish I was being sarcastic.

AClockworkGarage said:

We officially called off the search today.

We jumped through all the hoops, filled out tons of paperwork, chased down first time buyers programs and finally got pre approved for $350k.

The requirements were pretty simple. 2-3 bedrooms, garage, single family within 40 minutes of our jobs. We looked at 35 houses over the weekend.

No one of them was suitable for humans to live in. Literally none. 

I'm not being facetious. Every home was either filled with black mold, or all the wiring had been stolen, or it was currently falling off it's foundation. One had been hit by a car during a police chase.

Nothing that a person could move into.

Everything under $500k was just those previous houses flipped as cheaply as possible.

If we didn't have the time crunch we might have been able to wait it out and find something, but as it stands it just wasn't doable.

 

So instead we will try and find a rental for $700 or so more than we are paying now for virtually the same thing and be in a much worse place when we try again in a few years.

Lookin forward to it.

 

I'm sorry to hear this... I do think the market pricing readjusment is gonna happen soon.  you're just now starting to see inventory balloon, but people are still hooked on the post-covid pricing boom.  Once inventory saturates, you'll start to see large market shifts in property values.  This is coupled with a softening economy, as RevRico has very accurately pointed out  (butt-dyno is all you need on this one- not the stock market), and I bet you'll be looking MUCH better in a year or so, in terms of homebuying leverage. 

I know it sucks in the short term, but interest rates are coming down, home inventory is going up, and with more competition on the market, mean home sale prices fall pretty sharply, usually (large metro areas do not apply). 

In reply to AClockworkGarage :

Dude, all the good advice there is to be had is either here or you're already doing it.   That just plain sucks. 

All I can add is that I'm so happy that I'm not looking for housing in the current market.  Everyone know I who is in your same position is literally in the same position.  One of the guys at a shop I was working at for two weeks went to check out 4 houses directly from work, and each of them was sold with a cash offer above asking price from a corp.   He said they didn't look habitable from the outside (he didn't get to go in because it was literally sold while he was driving from work).   It's insanity.  I don't know how a person transitions from renting to buying in the current market without a big old nest egg.   

I guess people skipped the best financial advise:  Be born into a rich family!

AClockworkGarage said:

We officially called off the search today.

We jumped through all the hoops, filled out tons of paperwork, chased down first time buyers programs and finally got pre approved for $350k.

The requirements were pretty simple. 2-3 bedrooms, garage, single family within 40 minutes of our jobs. We looked at 35 houses over the weekend.

No one of them was suitable for humans to live in. Literally none. 

I'm not being facetious. Every home was either filled with black mold, or all the wiring had been stolen, or it was currently falling off it's foundation. One had been hit by a car during a police chase.

Nothing that a person could move into.

Everything under $500k was just those previous houses flipped as cheaply as possible.

If we didn't have the time crunch we might have been able to wait it out and find something, but as it stands it just wasn't doable.

 

So instead we will try and find a rental for $700 or so more than we are paying now for virtually the same thing and be in a much worse place when we try again in a few years.

Lookin forward to it.

 

Would you be willing to compromise to a townhouse with a garage? Or a single-family without a garage? Maybe a townhouse without a garage?

If you can't find anything that meets your wants in your budget, you gotta either give up the chase or give up some wants.

I had to look at your location.  My local reality is also a housing shortage, prices have doubled since 2018.  Just down the street in a not as desirable school district, an 1800Sqft brick ranch on 2.5 acres sold for $350 in a week, same house on a city lot in the other direction $400.  These are fully remodeled ready to move in homes.

I don't get it Michigan has population decline yet in my area houses can't be built fast enough for demand.   

The whole marry the house, date the mortgage/int rate only goes so far when housing prices are out of control.   You are not the only one out there who is frustrated and in your situation.

We're also looking and realizing there's a lot more cost than we thought.

If you refinance, you have to pay closing costs again. Also closing costs seem insane, and the fact that you don't know what it is until you're about to finalize the contract is absurd to me. It's just a surprise bill 3 days before you close.
 

If you can get navy federal look at their homebuyers choice loan. As little as $0 down, but 3% waives fees and allows you to refinance every 6 months for $250, no extra closing costs or anything. And currently there is no cap on how often, so if rates fall you can refi every 6 months to eternity.

akylekoz said:

I don't get it Michigan has population decline yet in my area houses can't be built fast enough for demand.   

I feel compelled to comment on this because, SAME.  My wife and I have been in the same small "starter" home in the Detroit suburbs for almost twenty years and were thinking it was time to upgrade a couple years back.  I saved up a decent wad of cash and started shopping.  It was frustrating to see that doubling our costs would often not secure any kind of housing upgrade.  In many cases it would be a significant downgrade.  So, we stopped looking this year.  We don't really need a bigger/better house.  Something seems seriously out of alignment and I am expecting something to change in the future.

FWIW, it does look like inventory has been increasing and asking prices have started dropping in the last month or two.

This thread is full of very good advice and really E36 M3ty attitudes. 

In reply to WilD :

My older kids are sitting pretty, purchased two properties 2016-2019, refinanced in 2020.  So low prices (one was a steal) and now low interest rate, but now they want to move soon for a school district.  Moving from Boston Edison district (Detroit midtown) to Farmington or similar, that will be a hit in this market.

I'm in the Gen X dilemma, should have moved prior to 2020, now I'm stuck where I am.  Low interest rate and a house that I couldn't afford to buy if I had to today.   Not complaining, it's just that progress is happening all around me and I am ready for a more quiet area.

In reply to akylekoz :

My older kids are sitting pretty, purchased two properties 2016-2019, refinanced in 2020.  So low prices (one was a steal) and now low interest rate, but now they want to move soon for a school district.  Moving from Boston Edison district (Detroit midtown) to Farmington or similar, that will be a hit in this market.
 

To provide some perspective, many people in this thread likely did not see it that way in 2016-2019. To them houses were just as expensive and unattainable then. The lesson being it's unlikely the market will change to suit you, you need to change to suit the market. 

In reply to RevRico :

When 93% of the stock market is owned by the top 10% of the country, and media correlates the market to the economy, it looks fantastic. 

Little link to back that up

I wish I was being sarcastic
 

It's not as "bad" as you think it is. Pretty much anything about the "top percent" is grossly misleading. It implies that the top 10% is all rich people, with a huge gap between them and those in the middle. That's just plan not true. There is a much bigger gap between those at the edge of the top 10% and those in the top five percent, and especially 1%. The bottom of that top 10% have a lot more in common with those in the top 50-10% range than they do with the top 5-1%. It takes less than a million dollars in net worth to be in the top 10%. Just over a million puts you at the edge of the top 5%. It's not a big jump to go from top 40% to top 10% in actual net worth. 
 

So of course the top 10% own most of the stock. They didn't buy up the stock because they are in the top 10%, they are in the top 10% because they invested their money instead of spending it.

It's also true that the majority of Americans own some form of stocks.  Aren't statistics fun? 🤪

In reply to Boost_Crazy :

 Ok first of all we are way off topic again but it's a good tangent.   Net worth?   So my 1958 home that is paid for and worth $400 nets me a net worth of $400, plus other assets including my and SWMBO retirement investments.   If this is over $1 Million, then I'm in the top 10%!   Yet, I can't seem to pay for food, clothes, kids sports, one decent vacation a year and save much at all.  Either I'm doing well for my income level, or I need to invest less and spend more.

Just to be clear this is not my current situation but It will be some day.

This also makes it clear that the top 1% must be off the charts wealthy and the middle class is shrinking.   Lowest 10% has zero net worth, just debt or living week to week.  Bottom 50% of Americans share 2% of wealth, no wonder this country is struggling, we clearly have an imbalance.  

How do these percentages compare to other countries?  I'm guessing fairly similar.  

In reply to akylekoz :

 Ok first of all we are way off topic again but it's a good tangent.   Net worth?   So my 1958 home that is paid for and worth $400 nets me a net worth of $400, plus other assets including my and SWMBO retirement investments.   If this is over $1 Million, then I'm in the top 10%!   Yet, I can't seem to pay for food, clothes, kids sports, one decent vacation a year and save much at all.  Either I'm doing well for my income level, or I need to invest less and spend more.

Just to be clear this is not my current situation but It will be some day.

This also makes it clear that the top 1% must be off the charts wealthy and the middle class is shrinking.   Lowest 10% has zero net worth, just debt or living week to week.  Bottom 50% of Americans share 2% of wealth, no wonder this country is struggling, we clearly have an imbalance.  

How do these percentages compare to other countries?  I'm guessing fairly similar.  
 

Without going too far off- 

The top 10% is alluded to as the rich, lucky, privileged, - someone said "born rich." The greedy bastards are taking all the stock and not leaving any for the rest of us. 
I show that it's not a stretch to get into the top 10%, and now that's not good enough? 

I'd say the person in the above scenario is in pretty good shape. Paid for house and a solid amount in their retirement account while they still have school age children. If they were able to accomplish that, yet now are struggling with food and clothing, something changed. They need to go back to the income/expense ratio they were at when they were able to pay off their house and save for their retirement, or reassess their priorities. 
 

Of course we have an imbalance. How else is it supposed to work? Does everyone just start on second base? Most of those in the bottom 50% are there because they haven't earned it yet. Most of those at the top are there because they have. Almost everyone started near the bottom. Many of the people in the top 10% today were on the bottom 20-30 years ago. Many on the bottom now will be in to top 10% in 20-30 years. Don't want to wait that long? Then develop a valuable skill, work harder, or manage what money you do have. 

In reply to Boost_Crazy :

 Don't want to wait that long? Then develop a valuable skill, work harder, or manage what money you do have.

But this is the hard way, I know that's what I did.  It just seems different now.  Back in 1995 I bought a house for $60 while working through an apprenticeship, I wasn't making that much.  House was a duplex and I had a roommate to help pay for it.  You are so right, it was hard work combined with good decisions, still I don't see how a kid could do that today, I was 19.

In reply to akylekoz :

My kid did. He was 22.

In reply to akylekoz :

When you were doing it in 1995, there were plenty of people saying the old days were better because "it's different now". Notice you bought a starter duplex and had a roommate? That's the way it can be done still. I know a few people in their low 20s that own houses. They're starter houses in edgy areas, but it can be done. My Son did it 10 years ago, and had a roommate paying rent as well. The funny part was some of his friends couldn't understand why he wouldn't just rent a new apartment instead of living "close to the hood". He's 30 and on his 3rd house, those same people are still renters and saying it can't be done....

Here is "close to the hood" according to them. 

Jumping in here to agree with some other opinions and to highlight something that's different from when I went through this.

First, I'll agree with others that this has never been easy and most who have done it have a story of what they had to do to stretch to make it happen.  I've mentioned here before that I left a job as an engineer to enter an apprenticeship program for HVAC at 26.  The first year rate was a fraction of what I'd made as and engineer so I moved back in with my parents as I couldn't afford otherwise.  I paid room and board, mowed the lawn, etc.  Any overtime, annual increases, etc. went into the bank.  It helped a lot that I could my roll my savings into CDs and make 7 - 9% interest but that also meant that mortgage rates were equally high.  I did this for 4 years and had a decent down payment in the bank all while making car payments and paying off my student loans.

It helped that there was a pretty significant correction in real estate prices in the early 1990's.  The house I eventually bought had been vacant for 6 months and I was able to offer about 10% below the asking price and have my offer accepted.   Once I had gone through the closing I remember having about $800.00 left in the bank with a $1,200.00 mortgage payment.  The price correction was also due to a fairly deep recession, half my apprenticeship class was unemployed when we graduated but I was lucky to be working for a larger service company that kept us busy. So I never got hurt, sick, etc.  and it all worked out.  That's the good news; hard work and focus (and some luck) can get you places and I believe that's still the case.

What's different now is first a lack of adequate inventory as a lot of people are (justifiably) sitting on low interest mortgages rather than moving.  People my age (OK late Boomer) aren't selling and moving to retirement areas in the same way as in the past either because even small properties are very expensive.  Second to that is something that didn't exist when I was in the market.  We now have corporate entities buying up single family homes as investments on a large scale.  We've seen a few smaller homes in our town go up for sale and then several months later come back on the market as rentals.  I'm not sure how widespread the corporate investment is in my area but I've read that it's a big thing in many regions. The market is stupidly hot here (roughly 35 miles from Boston), 1,200 square foot ranches that haven't been updated since the mid-70's are going for the mid-$500's, a 1 bedroom condo is closing in on $400K.   

Both of my kids are caught up in this, they work hard and save their money but are skeptical on being able to have their own homes.  They're saving what they can and neither has any student debt which will hopefully help, time will tell.   Again, hard work and focus is still a thing but it does seem to be different than my experiences 30 odd years ago.

In reply to 11GTCS :

From my research, the amount of homes purchased by large investors is vastly overstated. The percentage of homes occupied by the owner has changed little over the past 50+ years. The makeup of the owners of rental properties has changed a bit, but the vast majority of rental properties are still purchased by small mom and pop investors. Large investors (100+ homes per year) buy less than 3% of the homes and very large investors (1000+) buy around .5%. Now, that's still significant, and on an upward trend, but I argue that they are mostly competitors of the small investors, not of people buying homes to live in. They aren't in the business of paying top dollar and outbidding regular buyers, they want the best deal possible to maximize their return. People sell their homes to them because they are often easier to deal with. They could sell for more to regular buyer, but have to deal with all sorts of demands and contingencies. Look at the post above from the OP that resurrected this thread. They found all kinds of homes, but they didn't want any of them. They were unlivable. They went on to say that that those types of houses were bought, fixed up by investors, and sold at a higher price. In that case, wouldn't the investors be doing a valuable service? Taking an unlivable house that regular buyer wouldn't/couldn't buy and putting it back on the market (at a higher price.)