Should I buy now or wait a couple of years?

Question

What do you think? Interest rates are very low right now. However, the newspapers are saying that it's almost guaranteed the Fed is going to raise rates next year. That could cause a decline in prices.

If you buy now, you might get a decline in value in the short to medium term. You might not be able to do a decent cashout-refi for awhile. A couple years in the line, you might be in the red. That means you're subsisting on rental profits, which probably aren't great right now due to a run up in prices in many areas.

Just curious to hear everyone's thoughts.

Forrest Williams · Answer

People lose a lot of money trying to time the market. I'll give you an example: In 2017 I was flipping my second house and asked a friend if he was ever going to get in on it. He told me his brother-in-law works for a financial firm, and their projection was a market crash in 2019, so he'll wait until then. 4 years and one pandemic later, he still doesn't have a place. I did four in that time.

Sure, maybe you'll get a decline in value. But for all you know that property could skyrocket. Real estate is a risk, just like every other investment. I'm not waiting.

Sure, maybe you'll get a decline in value. But for all you know that property could skyrocket. Real estate is a risk, just like every other investment. I'm not waiting.

Travis Frenchak · Answer

It’s always a good time to buy if the deal is right.

Account Closed · Answer

If you plan on flipping, it's a great time to get into the right market with the right property or if you plan on buying & holding, it's a great time to get into the right market with the right property. If you plan on speculating tho', well, then it's a coin toss as to whether it's a good time ot not.

Tim Stuart · Answer

Alex, that's an Interesting perspective about raising interest rates. Just understand the macroeconomic picture of what happens when the fed begins Quantitative Tightening. Ray Dalio has some really good perspective about what the current state of affairs is regarding our debt to GDP ratio. I think we are more likely to see the US Treasury yield curve become fixed before we see interest rates rise significantly. This occurred in Japan 25 years ago and they still don't have high interest rates.

Analyzing the fundamentals of the real estate market reveal a significant shortage to current demand.

In my humble opinion, real estate market fundamentals are looking strong (low supply, high demand), foreclosures are no longer forecasted to be as significant as expected in early 2020, and low probability that interest rates will rise any time soon.

Invest in cash flowing real estate and it won't matter what the value of the property is.

I hope this helps, good luck.

Tim

Bruce Woodruff · Answer

My opinion only, based on years of participating in this crazy industry....we have to have a correction soon, and the interest rate rise will only exacerbate that scenario. I have people tell me that the supply/demand thing will make that impossible but I wouldn't bet on it. We've seen it before where buyers just say "no, Im not going to pay $__X_ for that house". And then it starts.

Still if you find the right property now, buy it even at these inflated prices...it will only be worth more someday. Someday....

Having said all that, I personally would wait at least a year to see how this shakes out.

Steve K. · Answer

Don't wait to buy real estate, buy real estate and wait.

John Teachout · Answer

Three years from now someone will read this thread and then they'll know if waiting two years was the right thing to do. Housing bubbles are typically only visible in the rear view mirror. You can find threads on Bigger Pockets going back literally 10 years predicting a downturn "soon". Of course there are cycles but it's nearly impossible to predict or observe them prior to their taking place.

Mike B. · Answer

Bruce I meant no disrespect, only to point out downturns are dependent on specific factors not perceived timelines or expectations of what a house "should" cost.  Presently, most evidence available suggests a continued rise in house prices in the near term for most markets.  That's all

Bruce Woodruff · Answer

So what you're saying is that home prices can rise forever with no downside? What is the rationale in this?

Your questions above are just not well thought out (to be kind)....kinda shows you don't get it....

Mike B. · Answer

@Alex Silang

For those stating:  “we have to have a correction soon” or “we’re overdue for a correction” I would ask: Why?  Is it written somewhere that the US housing market MUST have a correction every X years?  And a correction by what measure? Home values dropping X percent? There’s no reason home prices cannot continue to rise for another X years 😂! In a sense I think it’s the wrong way to look at the problem, and it would make more sense to say:  “Is downward pressure on my local housing market likely in the foreseeable future?” And for most markets the answer is surely “No”

Should I buy now or wait a couple of years?

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