Do I buy now or save for later?

Question

I’m a recent college grad and I’m looking at buying my first house, but in the economies current state I have concerns on whether it is a good idea to buy now or live cheap and rent until the economy heals. Let me know your thoughts?

Theresa Harris · Answer

If you can buy a place where the numbers make sense, do it.  If you don't have your own place, why not look at a duplex or a place with a suite where you can live in one unit and rent the other?

Eliott Elias · Answer

Be fearful when others are greedy, be greedy when others are fearful

Kevin McGuire · Answer

To add to the comments above, you first need to determine whether the economics meet your criteria and comfort level. Can you afford to buy and can continue to pay the mortgage if you have an employment gap, can you fund repairs, etc? Beyond that, you're really asking a market timing question. Is this a better or worse time to buy than in say a year or two? Who knows! There are too many different forces at play: rising interest rates push prices down, low inventory pushes prices up. Certainly renting has the lower economic risk versus buying so it may come down to your risk tolerance.

For the general rent vs. buy pros/cons, this video nicely lays out the factors.

Markus Shobe · Answer

If the numbers make sense do it. If I were looking to buy now I would be looking to house hack as long as the numbers make sense.

Luther Wilson III · Answer

If you find the right deal for yourself then I’d say go for it.  If your plan is to buy as an owner-occupant then that’ll give you the best odds of the lowest possible interest rate and down payment. How’s that saying go?  “Don’t wait to buy real estate - buy it and then wait”?  I’m sure I botched it but you get the idea. 😉

If you got the money to do it and the opportunity is there - you might be kicking yourself later if you don’t seize it.  Are you familiar with “dollar cost averaging”?   That might be another way to look at real estate investing too.

Mike D'Arrigo · Answer

@James Thomas the main question to ask is where you'll put your money if you wait. Personally I think that real estate is one of the safest investments and less volatile than stocks. There is such a shortage of inventory that I don't see prices declining. What will most likely happen is a gradual reduction in the rate of appreciation until we get back to a more balanced market.

Andrew Garcia · Answer

Hi @James Thomas, one of the biggest issues with today's economy is inflation.

Therefore, even if the economy heals, home prices will still be higher.

House hacking is a great strategy as others say. If you plan to stay in the home for 5+ years, it is almost always a good idea to buy rather than rent.

You can still live cheaply while owning a home. You simply have to do it in the right way.

Anissa Olivares · Answer

THIS. Real estate in general is a risk. There are so many options like house hacking to still gain properties and live safe. However if you do some research we see a trend of dips and highs. Will we see a dip in the market? absolutely but people still need to live and rentals in my area for example are at all time high. And who owns those rentals? People like you and I.

Right now is still a great time to invest especially if the numbers make sense. You will definitely have deals that don't make sense but great deals are still out there. And as more investors become fearful the strong willed and persistent ones are still going to buy.  Find an off market deal for better numbers as well.

Also don't count out a short term rental business. People are doing AirBNB on other peoples rental properties. I follow people on IG that show how to do this. If short term is not something you are fully in too research different strategies. Don't think buying a property is the only way to get started.

GOOD LUCK IN THE GAME OF RISK. "WILLINGNESS TO TAKE RISKS IS THE PATH TO SUCCESS"

Nicholas L. · Answer

@James Thomas

Where are you located?

How long are you likely to be in your current job?

Do you like the area you're in?

Are there small multifamily properties you can house hack, as @Theresa Harris suggested?  Not every market has these.

This is a very personal decision that only you can make, but there's nothing wrong with renting in the short term if you don't have answers to these questions.

Real estate has high transaction costs - it's not free to buy or sell!  Conversely, when a lease is up, you move out - no closing costs, no realtors fees, no points, no nothing.  And, at your age you will not miss out on real estate forever if you rent.

Post more details if you want more random thoughts =-)

Do I buy now or save for later?

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