Worried | Imamother

amother

Clear

Mon, May 23 2022, 1:19 pm

amother [ Ballota ] wrote:

I’ve changed my opinion on this. I used to think that it was silly to stretch yourself so tight but I’ve seen how homes that no one dreamed would go up in value have doubled. Jewish real estate does not follow the rest of the country bec the supply is what it is and the demand just grows. If you can do it please take a leap of faith and trust hashem will help you. If there’s one thing lakewood real estate has taught me , it’s just buy something! Renting is the saddest waste of money. Another point, just the fact that you’re posting here your concern shows that you’re a financially responsible person. I’m sure your and your dh will figure it out.

Totally agree.

amother

Clear

Mon, May 23 2022, 1:21 pm

amother [ Hyssop ] wrote:

Was the frum residential real estate market as saturated with cash buyers and investors 10-15 years ago as it is now? Maybe I am completely wrong, but I feel like that is where a significant amount of competition comes from these days. That, and parents who are trying to buy homes for their children. It's no longer just families looking to purchase homes. It seems to be investors and extended family members, too, who are making cash purchases, all competing for a much tinier supply... Hard to imagine the frum market tanking with such a wide, expanded range of buyers in this decade? What kind of metrics would contribute to a similar decline?

Very true. I’ve also been told they are all cash buyers these days. And that averts having to pay the higher mortgage interest rates.

amother

Mon, May 23 2022, 1:22 pm

amother [ Clear ] wrote:

I’m seeing the opposite. A close friend of mine is a realtor in the Lkwd, Jackson, etc areas, The houses for the most part are flying off the market, even with bidding wars. The frum areas don’t godown in price.

This is what I've seen in the last couple of months of house hunting, and this is what I have heard from realtors as well. I can't speak for ALL areas, but definitely the few areas we were looking into have not started going down yet, and perhaps they never will. In fact, as of last week, all homes in the areas I was looking at were just getting higher and higher, bidding wars more dramatic, and there is a feeling for franticness more than ever, and gets more each day. In order to get into contract we needed to pay WAY more than asking.
My concerns are if I will regret my purchase if housing costs go down, and if our incoming money we are currently bringing in each month might suffer due to the economy and inflation, which could potentially lead us into a situation of not being able to fulfill our mortgage obligations, even though right now we can afford the down payment and monthly payments. (although its a tight squeeze as I mentioned earlier).
Thanks everyone for their responses, I am enjoying reading them and its calming me down a bit.

amother

Junglegreen

Mon, May 23 2022, 1:24 pm

amother [ Clear ] wrote:

Very true. I’ve also been told they are all cash buyers these days. And that averts having to pay the higher mortgage interest rates.

A lot of their plans are to get mortgages not keep with cash only long term. But for a higher cash amount and take a higher mortgage. Like maybe paint or do floors. But eventually take a mortgage. Or just flip for way more.
Both are happening.

It drives up home prices. They buy a house. Paint. Sand the floors. Put in some cheap light fixtures and a very cheap modern kitchen that is garbage and flip for huge $$$. One realtor said it like putting lipstick on a pig. But ppl are buying.

amother

Hyssop

Mon, May 23 2022, 1:25 pm

amother [ Freesia ] wrote:

The parallels that I see are simple.
Mortgages being committed to that are affordable NOW but with both inflation and a possible recession, they may not be affordable in a year from now.
Parental help that's being common to now to cover mortgages that may not be affordable in a year.

Is inflation going to get worse? How so?

How will a recession impact homeowners, are there specific ones who are more at risk?

Are there some who might not be impacted? Why?

amother

Clear

Mon, May 23 2022, 1:27 pm

amother [ OP ] wrote:

What you hear in the news about possible crashes, etc., please remember two things: one, a Hashem decides, statistics don’t exist in His world, and two, the frum areas are not affected at all in the same way the others are. Have faith. I say,go through with it, and please ask for a bracha from a Rebbe, and rely on Hashem.

amother

Freesia

Mon, May 23 2022, 1:29 pm

amother [ Clear ] wrote:

Do frum people not default on their mortgage and get forced into foreclosure and bankruptcy?

Amarante

Mon, May 23 2022, 1:44 pm

There is no comparison between now and 2008

Most people did NOT lose their homes.

The people who lost their homes bought on interest only mortgages with balloon payments coming due in a short period of time. They could NEVER have afforded the home but could afford the artificially low payments for the first two or three years before the loan re-set. They were counting on the value of their property escalating so much that they could sell and never have to pay the mortgage at the "real" rate.

Also properties didn't decline in value to the same extent all over. Properties in desirable areas might have lost a bit of their value but in general they didn't drop precipitously and people stayed in their homes. They just didn't sell because they didn't have to sell.

There are no longer these types of crazy loans that are given so while a family might have to "stretch" they can afford to make the payments unless they have really lied on their loan documents which is a criminal act so hopefully no one is doing that.

amother

Freesia

Mon, May 23 2022, 1:44 pm

amother [ Hyssop ] wrote:

Is inflation going to get worse? How so?

How will a recession impact homeowners, are there specific ones who are more at risk?

Are there some who might not be impacted? Why?

I'm not a navi. I have no idea if inflation is going to get worse
But gas prices are going up and that's going to start affecting everything. Food and shipping and materials. Everything is going to go up

The worst off will be homeowners who bought in this inflated market and rely on these higher rental prices to cover the mortgage. If you're charging $2000 for a basement apartment but no one is moved in, you'll be 2k down from the mortgage.

The next worst off are homeowners who charge regular rental prices and depend on those for income.

The next worst off are those who are "house rich but money poor" and get lower tuition and such based on that. If the schools stop caring because they can't stay afloat anymore those people will be in trouble.

If the market tanks, a renter can always downsize without financial penalty - squeeze into a one bedroom. An owner has a house that he has to pay mortgage and taxes on and no one wants to pay his purchase price let alone adding inflation.

Btw, I was here in 2008. Schools stopped counting mortgage payments for tuition. If your income is X, tuition is Y, regardless of how much you have to pay the bank each month.

And I watched people move into their parents basements to save money. Move into 1 and 2 bedrooms to save money.
And the prices came down.

amother

Mon, May 23 2022, 1:53 pm

amother [ Freesia ] wrote:

Yikes this is scary. I don't personally remember anyone's house foreclosing (I do know someone whose house foreclosed 3 years ago but nothing to do with the market). Maybe people in my community were in trouble but were quietly were bailed out by friends or family. All I saw back then was that people who bought in 2005-2007, found their houses were valued much less, from 200/ until aboutil 1-2 years ago, and BH now their houses are worth more than what they paid, finally. This current market/economy+predictions are making me feel queasy. I know I am under contract but I can still back out with no penalty, we haven't done inspection yet. Not ready to give up this house though, since I don't have anywhere else to live and it's very difficult to find a house in this area, which is important to me.

amother

Freesia

Mon, May 23 2022, 1:55 pm

amother [ OP ] wrote:

Can you afford your mortgage?
Can you look for additional ways to make money and ways to save money to create an emergency fund that iyh won't need to be used but just in case?

amother

Chambray

Mon, May 23 2022, 2:01 pm

amother [ Ballota ] wrote:

1. Past performance is not indicative of future results. Many frum people bought crypto currency because "all it did was go higher".... and now are down 50% or more. Dogecoin is down 80%.

2. This is waaaay beyond me but I'm not sure I agree with the "trust hashem will help" approach. There are people who trust hashem who have all types o tzoros from health, financial, fertility, and anything you could imagine.

That being said I think the OP has to realize that nobody knows forsure what will happen to the housing market and whether prices will continue higher or come down. Also, even if prices come down a little, if mortgage rates go higher, you'll be making the same monthly payment anyway. I think if I was in your shoes I would go for it and buy the house. Hatslacha!