The Expert Podcast

The question comes up quite a bit is it a good time to buy a house with the prices having gone up or is it a bubble is it a spike and it's a legitimate question um just an opinion but it seems like even though the prices are up this is not a bubble like it was in 2008 there's many many sources that are pointing to the fact that this is a new reality for this investor publication investor place their headline is welcome to the first inning of a 10 year housing boom remember this is true this housing boom only started within the last year housing booms in many cases last a decade even the housing boom that crashed in 2008 really started about the turn of the millennium right it started in about 2000 even the late 90s it started so that was a 10-year boom and there was a lot of differences where that was done with a lot of financing and with liar loans and all kind of different mortgage problems that don't exist today so that may be a reason why it lasts more um the stats that go into this article were that the u.s home prices rose 20 in one year that means if you bought a house for five hundred thousand it went up a hundred thousand in one year um have now risen ten percent for ten straight months again it's it's a year into this housing market the housing market is hot almost too hot the last time it was this hot was in 2004 2005. it was 27 straight months before the bubble burst but this article says we aren't in a bubble we're in the first inning of a 10-year bull market here's why tells very specifically why uh mortgage rates are low it was seven percent back in the 2000s now it's in three percent today's housing market couldn't be more different it's not driven by greedy banks giving out bad loans it's driven by the way that people are using real estate demographic related surge in home buying demand millennials are big part of this we'll talk about this article here in the wall street journal momentarily millennials are super charging the housing market ultra low financing very tight housing supply meaning that housing supply has a lead time it takes seven eight years for supply to pick up demand.

After 2008 in the housing market crash a lot of builders contractors went out of business or stopped building one of our subsidiaries of our company is a licensed general contractor we see this industry inside and out home builders were hesitant to build a lot of new homes not just in 2008 but for the next five six seven years even into 2012 or 13. and there really wasn't that much demand for it now that there's a demand it takes a while to get that in process according to some building experts the industry would need to sustain a two million starts for a decade to bring the industry out of its underbuilt situation right now it's not even building a million houses per year so it's saying that there's an enormous supply constrained market that will not resolve itself quickly this is a good reason to buy a house even if you're in an apartment you're in a rental and you don't think you want to buy a house buy the house even if it's not what you want to have in the long run because you're going to catch that wave of increase and we'll do another video about how to do the math on that momentarily.

The biggest reason is a revitalized view of the importance of a home right obviously we have corona and all the other things that go into that a revitalized view of the importance of a home since is where most people work and watch movies and do everything else consumers do these things and we believe we'll do so for a long time according to this investment article it's not a bubble i agree with this wall street journal says the same thing this article came out today millennials are super charging the housing market this is a group of demographics that up until recently were out of the market this generation supposedly didn't want to buy things now accounts for over half of all home purchases so they're diving in one anecdotal story is a couple mr mrs anger works at a healthcare tech company started house hunting they were trying to find a 400 dollar house after struggling around for a while they ended up buying a six hundred thousand dollar house that's more than fifty percent increase i would have all these regrets if i didn't travel but it feels like the right time to settle down and put down some roots millennials have spent a lot of time experiencing life doing a lot of things now they want a house that's not going to change anytime soon we'll dive more to this article at a later date.

Do the math even if you buy a house that's 200 000 like we we find many of them on our website you put down a very small down payment most uh people that qualify for a mortgage you could do a five percent down payment that would be about ten grand your mortgage payment is going to be right around a thousand bucks even by the time you add taxes and insurance and any other accruals or escrows you're going to be 14 1500 for your payment it's probably going to be less than your current rent even if that house isn't the place you want to live long term you're better off living there for three four years let the market increase and then buy your forever house because if that house goes from 200 to 250 now you have 50 000 equity that you can put towards a bigger house and in three years that fifty thousand dollars could be your ten percent down payment on a five hundred thousand dollar house if you don't get into that housing market now that five hundred thousand dollar house you're gonna have to come up with the cash out of your pocket and it's gonna be more house than than you can imagine so think about these options i know it's a tough time to think about getting into a house but if you're going to buy a house anyways getting into something anything right now might be a way to lock yourself in to the wave of the housing market.

And look on most houses if you buy it cheap enough 200 grand 250 you're probably not going to get hurt on a house the people who really had problems with depreciation on homes in the housing crash were the ones who bought them the mcmansions they were four or five hundred thousand dollars at the time and they were very cheaply built low quality and they got jammed up with no equity you buy a 200 000 house there's always going to be a market for 200 000 house and be easy enough to sell but you have a lot of upside if the market goes up at least you're latched on to that that you know that train of appreciation so when you do want to buy your forever house you have some equity that you've played with for the last few years you