Buying a home in the time of coronavirus

[wildrice]

Has anyone heard any predictions on what will happen with the housing market in the coming months/years? I know it's hard to know for certain. I keep hearing of a recession but I'm not sure that that necessarily means dropping home values (obviously it did in 2009).

H and I are hoping to buy a condo in the next 3 months. We are in the Baltimore/DC area and planning to move to a popular suburb. Our budget is 210-260k so we're not talking about really high priced places to begin with (at least for this area). Our target mortgage/insurance/tax/HOA fee would be no more than what we're currently paying for rent and we're hoping to find something on the lower end so that our payment would actually be less. We would plan to live there at least 5 years but likely no more than 10 - we do not plan to ever upgrade to a SFH but we are targeting moving out of the area by the 10 year mark. Which could obviously change depending on job opportunity (we both just want to live on or near the west coast eventually). 

Is there any reason we should be scared of buying right now? I don't want to make a dumb mistake and rush into it if it's not the right time. The only downside to waiting is that our apartment least is up on July 1 and I really am not sure it is good for my mental health to live in our current place for another year. We do have the option of moving and renting, I just hate having to pack everything up and move it every couple of years and feel anxious to settle down a bit for a while. 

[Pom]

pandce.proboards.com/thread/617609/offer-on-house-week-dumb

Depending on where you are, if inventory is on the low side, I'd buy while rates are low.

[wanderingback]

Interest rates are low. Seems like a good time to buy if you're in the right financial situation.

[carmenere]

Disclaimer: I am not an expert of any kind. I think we'll see a recession, but I don't expect the housing market to crash again, since we don't have the same issues with subprime lending and mortgage-backed securities that we did in 2008. Depending on the market your home may lose some value, but I think it's highly unlikely you'd end up underwater. If you plan to stay 5+ years and don't foresee a need to borrow against your house in the future, you can ride out whatever happens with the market.

I think anyone deciding whether to buy anytime should consider:
How secure is your household's employment?
Could you comfortably afford the home if one of you loses a job?
Do you have emergency savings to cover 3+ months of bills?
Worst-case scenario, are you allowed to rent out the condo while you move someplace cheaper?

[shaynaatl]

In your situation, I wouldn't hesitate at all.
We are also house hunting, and as of now we aren't slowing down our search. We want to take advantage of these low rates.

[boiler717]

We are under contract on a new house and for the sale of our current. We have closings a couple of days apart with a bridge loan and that makes me a little nervous if something catastrophic happens.

[ESF]

I'm going to make the opposite suggestion. It seems like when the housing market tanks, condos always seem to be the spots that lose the most value the quickest and the slowest to rise back up. I don't see how we avoid a major recession as a result of this virus, and I can't imagine interest rates are going to go up. I think you should get your ducks in a row to be ready to buy, but I probably wouldn't be making offers on condos in April. I'd let the dust settle from this disaster. You may be able to get more for your money in the summer.

If your lease is up, check your local laws, because any place I've ever lived, the law says that after 1 year, the lease rolls over to month to month. Landlord may be willing to make a deal with you if not, particularly if economy is awful.

Full disclosure: We want to look to buy as soon as my H gets a job, but that's probably going to take longer now, so these things could be lies I'm telling myself to make myself feel better about being in our apartment for longer than I wanted.

[scottcool]

Mar 11, 2020 16:05:21 GMT -5 shaynaatl said:

In your situation, I wouldn't hesitate at all.
We are also house hunting, and as of now we aren't slowing down our search. We want to take advantage of these low rates.

I would think it would be a buyer's market. Im interested in how this goes, please keep us updated. The housing market never once crossed my mind about how it could be impacted.

[macmars45]

We are in the Seattle area.
H and I (and DS) are/were all set to move to my hometown and move in with my parents in 2 weeks. Then we'd put our TH on the market in roughly a month after we got some repairs done and new flooring in. Once our TH sold we'd buy.

We are reconsidering because my parents are late 60s/early 70s and I have a hard time knowingly letting people wander my TH, touching things & possibly spreading COVID19 to each other while house hunting. Also, will we be quarantined? Will anyone be willing to help us move due to business closures (uhaul rental) and social distancing? Nothing is for certain. It sucks.

We are leaning towards riding this out here and trying again in a few months.

[wildrice]

Mar 15, 2020 10:52:00 GMT -5 ESF said:

I'm going to make the opposite suggestion. It seems like when the housing market tanks, condos always seem to be the spots that lose the most value the quickest and the slowest to rise back up. I don't see how we avoid a major recession as a result of this virus, and I can't imagine interest rates are going to go up. I think you should get your ducks in a row to be ready to buy, but I probably wouldn't be making offers on condos in April. I'd let the dust settle from this disaster. You may be able to get more for your money in the summer.

If your lease is up, check your local laws, because any place I've ever lived, the law says that after 1 year, the lease rolls over to month to month. Landlord may be willing to make a deal with you if not, particularly if economy is awful.

Full disclosure: We want to look to buy as soon as my H gets a job, but that's probably going to take longer now, so these things could be lies I'm telling myself to make myself feel better about being in our apartment for longer than I wanted.

I am afraid of this for sure. Ugh. I really want to move but I don't know what to do now. I did ask my landlord about doing month to month last year when our lease was up, and they said they wouldn't. I'm not sure if anything has changed since then though. They were like "you can always break the lease if needed!" but they require 2 months notice AND 2 months rent as penalty, so I don't want to do that. 

I honestly am not sure if we can buy now anyway. My parents were going to loan us a little money to help with the down payment, but I asked my mom yesterday if their money was in the stock market and she said it was. She was like "it's ok, you can still use it!" but I cannot in good conscience do that right now when values have tanked. Perhaps we should just look at rentals for now.

I'm sorry you're in a similar boat. 

[wildrice]

Mar 15, 2020 10:58:18 GMT -5 scottcool said:

Mar 11, 2020 16:05:21 GMT -5 shaynaatl said:

In your situation, I wouldn't hesitate at all.
We are also house hunting, and as of now we aren't slowing down our search. We want to take advantage of these low rates.

I would think it would be a buyer's market. Im interested in how this goes, please keep us updated. The housing market never once crossed my mind about how it could be impacted.

This is true too. I bet a lot of people are hesitant to buy, although up until now it seems like our local market is pretty hot - things being listed and taken down within days, so I think they must be moving quickly. I do feel like our local area, due to its proximity to DC and a lot of southern Maryland organizations, is unlikely to be unable to rebound. On the other hand, I haven't lived here long enough to really know that for sure, either.

Does anyone know of a good website to look at historical data for real estate? I'm now curious how hard this particular suburb was hit in 2009. 

[mccallister84]

Mar 16, 2020 10:54:29 GMT -5 wildrice said:

Mar 15, 2020 10:58:18 GMT -5 scottcool said:

I would think it would be a buyer's market. Im interested in how this goes, please keep us updated. The housing market never once crossed my mind about how it could be impacted.

This is true too. I bet a lot of people are hesitant to buy, although up until now it seems like our local market is pretty hot - things being listed and taken down within days, so I think they must be moving quickly. I do feel like our local area, due to its proximity to DC and a lot of southern Maryland organizations, is unlikely to be unable to rebound. On the other hand, I haven't lived here long enough to really know that for sure, either.

Does anyone know of a good website to look at historical data for real estate? I'm now curious how hard this particular suburb was hit in 2009. 

Not to be a total Debbie Downer but I would run far far away from a condo right now. I bought a condo in the summer of 2019 (rather important type-o we bought in 2009!) right outside Baltimore City (PM me if you want more specifics) and it’s still worth twenty grand less than what I paid. And this was after the real estate market crashed.

[wildrice]

Mar 16, 2020 11:44:13 GMT -5 mccallister84 said:

Mar 16, 2020 10:54:29 GMT -5 wildrice said:

This is true too. I bet a lot of people are hesitant to buy, although up until now it seems like our local market is pretty hot - things being listed and taken down within days, so I think they must be moving quickly. I do feel like our local area, due to its proximity to DC and a lot of southern Maryland organizations, is unlikely to be unable to rebound. On the other hand, I haven't lived here long enough to really know that for sure, either.

Does anyone know of a good website to look at historical data for real estate? I'm now curious how hard this particular suburb was hit in 2009. 

Not to be a total Debbie Downer but I would run far far away from a condo right now. I bought a condo in the summer of 2019 right outside Baltimore City (PM me if you want more specifics) and it’s still worth twenty grand less than what I paid. And this was after the real estate market crashed.

We are specifically looking at Columbia. Does that change your opinion any? 

Honestly if we don't buy a condo we don't buy anything. Houses there are in the 400k+ range and that's simply unaffordable for us now or any time in the future. We are looking there specifically because it's the only location that would split commute times for me and my H. We could probably find a house for a similar price in parts of the city, but he has a 1.5 hour commute each way right now so we really need to move a little closer. 

[mccallister84]

I would assume places that are closer to DC would hold value better, which Columbia is, but honestly this condo has been a huge albatross around my neck. Could you do a townhome there (disclaimer I have no idea how expensive they are but they definitely bounced back better than my condo is). One of the problems I have found with a condo is that unless you are in a small complex there are always a few for sale at any given time so how do you distinguish yours?

[mccallister84]

wildrice I just realized my initial post had a type-o in it. We bought in summer 2009.

[wildrice]

Mar 16, 2020 14:16:05 GMT -5 mccallister84 said:

I would assume places that are closer to DC would hold value better, which Columbia is, but honestly this condo has been a huge albatross around my neck. Could you do a townhome there (disclaimer I have no idea how expensive they are but they definitely bounced back better than my condo is). One of the problems I have found with a condo is that unless you are in a small complex there are always a few for sale at any given time so how do you distinguish yours?

There have been a few townhouses within budget! The only problem is that they are generally at the top of our budget, and then have HOA fees on top of that. I've seen a couple that were low, but others are like $400 a month which is too much if we're already at the top of our budget. There also just isn't a lot of inventory. Right now there are exactly 7 places listed in our price range (up to 260k) and one is a 55+ community.

IDK. We probably could increase our price a bit, but I just really don't want to be spending more than we are right now on rent (2k, so not low at all!). We don't have a great down payment, which is probably our main issue - not only will we have to be paying on the bulk of our principle balance, but also mortgage insurance.

All this probably means it's not a great financial choice to buy I just don't know how we're ever going to retire if we don't start building some equity at some point. We are spending so much on rent and student loans that I don't know how we could ever save up 20%. If we saved fairly aggressively to do that, we'd be buying our first home around age 45.

[wanderingback]

I'm somewhat familiar with that area and yeah I agree that I don't think a condo would be the best option. A townhouse would likely be a better value.
It really is unknown how things are going to shake out after this is over though.
But overall I'd recommend you don't want to be house poor. You don't have to be MM perfect with a year in savings, but having a good cushion is definitely a REALLY good idea.
I live in a VHCOL so buying a house is often not obtainable, so don't beat yourself up over it if you can't buy this year.

[nsl]

We are under contract and set to close on a house in a HCOL area next week. I am... nervous, but we need housing and can’t afford to wait much longer since we don’t have alternate housing set up.

FWIW, I talked to our agent tonight and he said that he’s been run ragged for the last week. People who think the market is peaking are racing to list. People who think mortgage rates won’t ever get better are racing to buy. It’s a toss-up between buyer’s/seller’s market. Next week might look different, but there isn’t very clear path ahead either way.

[audry80]

We put in offer today. Not sure if it was dumb..,

[boiler717]

I have no idea what’s going to happen with us. The appraisal on our current home came in $10k under purchase price because of “economic uncertainty.” I have no idea what is going to happen because the inspection on our new home revealed $25k worth of essential, safety items and our sellers are already taking a loss on the house. I don’t know if they can afford to fix it.
On top of this, we were closing 5 days apart with a bridge loan. Other states have had title companies shut down overnight as they are “non essential.” I am extremely nervous about the gap now and want it to go away.
On top of this, I am very nervous about having people in our home for repairs, moving our stuff, being at closing, etc. We do not HAVE to move right now. We really want to move, but I don’t want to risk my family’s life to move.

[scout8]

boiler717, that's interesting that "economic uncertainty" was mentioned in your appraisal.

I've been a broker for 20 years now. I've seen two downturns. The first was immediately after 9/11. It was slow for a few months and then everything returned to normal. Obviously, the housing crash lasted much longer. Right now, this feels more like 9/11 to me, but the longer this lasts, the more likely I see a recession coming.

I don't know if I would want to buy right now. It would depend on my long term plans. If it was a house I planned to be in for the next 20 years, I'd do it. (On the other hand, I sold two buildings last year that we'd owned for 14 years and they were still 20% down from purchase price in 2005). For someone who is planning on something closer to 5 years, I'd probably hold off and see what happens first.

[thebulldog]

we bought our townhouse in DC burbs 2007 and will likely never be able to sell for near what we paid OR for any of the improvements - instead of helping us build equity and plan for the future it is like the bane of my existence. I like my house and we have made a home out of it but we have been here for MUCH MUCH longer than we thought. so if you want to buy something, buy something but dont' rush into it as a long term WE MUST OWN A HOME TO BE ADULTS idea. there are ways to save for retirement or make investments and renting gives you a place to live. LIving in a HCOL is not like other places. i would not rush to buy anything.

[wildrice]

Update: We went ahead and are under contract to buy a townhouse. I still have no idea if this is a good financial choice or not, but our monthly payment is going to be about $400 less than we are paying right now for rent so I feel like it's absolutely affordable. We did end up raising our price range a bit but with a low HOA vs what we would have paid in HOA fees in a condo, it ended up being about the same monthly payment for a townhouse vs a condo.

I hope we aren't stuck in the house forever, but it's a nice community with good access to 2 major cities, so I guess there could be worse things if that happens. Now hopefully the seller agrees to our repair request and it appraises ok, and we'll be all set.