Who here is a homeowner?
After my lease is up in my current apartment, I am hoping to purchase a home somewhere in the US and am just now in the beginning stages. I'm not too far into my search but am generally looking for 2-3 bedroom with 1.5 bath, a basement, and a decent backyard. My budget is <$250k and I am looking at east Tennessee, North Carolina, Virginia, and maybe Michigan. Fortunately, I work from home and am not terribly dependent on being near a job, but unfortunately it seems like all houses have exploded in price the past 3 years in pretty much every area. It is crazy to look at a house that sold in 2019 for $100k being listed now at the top of my budget at $250k! It kind of makes me want to put in an offer at 65% of the listing price for some of these egregious increases. Especially as the higher interest rates making the house way more expensive than what they originally purchased at when the rates were at all time lows. It seems like the market for a $150k starter home is non-existent for most parts of the country these days.
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Anyways, I was curious who here is a homeowner?
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What is your experience like going from renting to buying, or if you were a homeowner and went back to renting?
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What are some things you wish that you had known to do prior and what advice would you give yourself back then?
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How long did you search and how long are you planning to stay in your home?
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What do you think of the current market dynamics? Is there any hope for prices to come back down to Earth?
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Any other thoughts you want to share?
I'm a homeowner, but in a very expensive real-estate market which sort of changes the game. I relied on a small, zero-interest loan from my parents to actually pull off the down payment on my house. Any home large enough to actually raise a family here starts at $750k and more realistically in the $1M+ range.
You will probably find price growth to slow down a bit because of where interest rates are right now. Nobody can afford mortgages at current rates without significantly downgrading their living situation.
The shift from renting to buying wasn't that big of a distinction. I have a townhouse that is part of a condo, so most of the outside stuff and structural maintenance is done by a condo association which collects no small amounts of dues every month. This covers yard work, insurance on the exterior of the building, any maintenance issues to the shared structural elements of the buildings, maintenance of our parking gate and lights, and security camera systems as well as a small budget for social events. I believe HOAs operate similarly. I don't find this to be that much more onerous than renting from a landlord, but you do have to be more involved in personal interaction and politics with your neighbors, both to get stuff done and to keep things chill and resist capture by the typical HOA busybody types. Otherwise, we contract with a management company that handles most things and I'm mostly handy enough to take care of little repairs in the house.
Get a good handyman on speed-dial and get comfortable just paying them to fix shit, even stuff you can fix yourself. This is more of a "life with kids" than "life as a homeowner" thing really. I was happy to do things like patch drywall and do fiddly plumbing stuff myself before having a kid, but now all that spare time I used to put into doing research to make sure I'll do it right is time I have to watch the baby. And time I used to put into actually doing the home-improvement work is time I can't make any noise because it'll wake the sleeping baby.
But more generally, having a trustworthy handyman is essential. In a new house there is certainly going to be a decent amount of stuff you will want to fix or update (I'd set aside at least $10k for all that work). I would use this opportunity to test out a few handymen on small projects and decide who you want to work with long term based on their responsiveness and how you like working with them.
One of the things that was really important for me was to get ethernet drops in convenient spots all over the house and to have them put some behind-wall cable channels around the entertainment center to make it easier to set up surround sound and other things. This sort of thing makes it much easier to do technology stuff and is a big help whenever you want to do renovations or just rearrange furniture.
Also check the age of the appliances that convey with the house. Most stuff nowadays has pretty short usable lifespans, so you can expect things like your fridge, dishwasher, stove/oven, washing machine, water heater, etc. to need attention after around 8 years. Your HVAC system and water heater, in particular, can be very expensive to repair if replacement parts for them are no longer in production. So you want to make sure that what they have is something that's still supported with replacement parts from the manufacturer. If not, you'll want to budget for replacing them when they break.
We "soft" searched for about 2 years. We were in no hurry to buy, but had feelers out if anything good showed up at a good price. We planned to stay until our family outgrows the space, but at this point that will depend on interest rates coming down to reasonable. Prices will almost certainly stabilize and start coming down in the future. A lot of the log-jams around building new housing have started to clear up, and when interest rates ever come back to reasonable once this stretch of inflationary pressure lapses you can expect to see a lot more housing starts kick in which will bring prices down, but it will be a slow and steady decrease over the next 10-20 years rather than something you can expect to click in anytime in the immediate future. In major metros, like SF, where pent up demand has been stupidly high for years and years now they will probably never be able to build enough housing to bring prices down to Earth unfortunately. (And especially not enough housing that is suitable for a middle class family of 4 to live in comfortably.) But in most of the rest of the country it should be okay.
Additional feedback regarding finding a handyperson, or other home service providers:
Ask your realtor for recommendations. They work with these people all the time to fix up homes that need some TLC to sell well. They know that their name is on the line when they recommend you someone, so your odds of success are quite high.
In my area, service people will flake out 3 out of 4 times. I've had multiple people come to the house to give me quotes, they say they'll email me a quote after they write everything up, and then just never get back to me. I don't understand why they would waste their own time like that...
Also had an experience where getting quotes from multiple roofing companies was resulting in outrageous price proposals. (I had the same job done on a previous home, and also looked up current material costs, so I knew what an appropriate price range would be.) Asked my realtor for a recommendation and the price was right, so I ended up going with them.
This, 100% for a buyer. I got burned by that the first time (my full post to come later). For a seller there's a chance they'll be with you, because the incentive is reversed. But even then there's a chance they'll push for a quick sale or insist on you spending money to increase sale price that will be a wash for you but a net win for them.
Lots of great stuff from other people here. I'll add two things that were very helpful for me.
One was this thread: What are some big mistakes that first-time home buyers can make?
(meta sidenote: this was one of the first posts I made on Tildes and it gave me a great first impression of the site)
(another meta sidenote: I noticed that @mycketforvirrad updated the tags on that almost five-year-old post just fourteen hours ago -- you are an absolute LEGEND and tagging GOD and we are lucky to have you)
The other:
Initially, I was super intimidated by home-buying. The prospect was so big and so daunting that I was hesitant to even start looking up information because I'd immediately get overwhelmed. There is so much advice out there, and all of the decisions regarding homebuying have such incredible gravity to them, that my anxiety spiked something fierce.
I say this not to scare you, but actually to reassure you. Once my husband and I started on the homebuying process, I realized that it's actually very linear. We started at step 1, and then I'd dive into learning about step 2. Then we'd do step 2, and I'd learn about the upcoming step 3.
If you're finding yourself overwhelmed, focus your energies on what you need to know for your next step only. Filter out advice and information that isn't applicable to that particular step, and then come back to those later when you're ready for them.
It was kind of gradual. Rented apartments for quite awhile in various places, then rented a house for a few years, then bought a house.
Generally I'm pretty happy with my decision, but if I do it over again I would put a lot more thought into what I want and don't want. I'm generally a pretty laid-back person and can just "deal with it", but more recently I've made an effort to advocate for myself more. So next time around I would put more thought into what my personal preferences are (NOT just what my SO's preferences were) such as: how the rooms are arranged, how large the kitchen is, is there enough room for a craft/maker space, is there enough storage for existing things (and future things! there's yard equipment now!), etc.
I think it was about a year of casual browsing, and a few months of active looking/touring. I've been in the house 5 years now, and plan to stay here indefinitely. I'd move if I needed to for some reason, but I currently have no plans to do so.
Utter insanity. The only hope for prices to come down is for more houses to get built. Not only built, but built rapidly enough that the price drops. Which is directly counter to the profit motives of both the builders and all the existing homeowners. I don't know how much influence current homeowners have on the market as a whole, but I feel pretty confident saying that nobody wants to watch the value of their house go down after the spike in value of the last couple of years, even if that's what needs to happen.
Good luck! Try looking in towns and areas adjacent to where you want to go. For instance, the housing prices where I work (Ann Arbor, MI) are utterly insane. However the town where I live is ~10 miles away (Ypsilanti) and significantly cheaper (though still kind crazy).
I went from renting an apartment to renting rooms some friends had available to moving back in with my parents while finishing college. Then getting a solid job for 2 years to be approved for a mortgage. I spent my money those 2 years paying off my car loan and paying down my student loans so I did not have very much money saved up, less than $10k. I bought my house with no money down payment and I'm extremely fortunate that I was able to. At that time with a 30y mortgage my payments close to the same as renting a 1 bedroom apt in the area, the biggest added cost over renting was paying for propane heating through the winter months, which over the last 7 years has been between $800-1200 for the whole cold season.
The down side of no money down was having to fork over a "Mortgage Insurance" fee. This is not anything more than a poor people tax for being poor, it doesn't insure anything on any party's behalf. It came around to the amount of about $1200/year and was part of the escrow already collected from my payments. It goes away automatically after you've paid a certain percentage of the principal loan amount (20% for me but can but up to 30%). It also went away when I refinanced 2 years ago.
Refinancing, easily the best thing I have done to save money over the life of my mortgage. I got an estimated cost of $5k to refinance and it ended up being only $4.5k (this is basically closing costs, fees and taxes for refinancing). But I went from my 30y to a 15y and dropped my interest rate from 3.5% to 2.4%. Over the life of these loans if I was paying minimum amounts that saves me over $75k and my monthly payment only increased by less than $200. I've paid off more principal in the last 2 years than I did in the first 5 years. So if the interest rates ever start coming down by a whole percentage or more I would definitely advise you to refinance. The other added benefit as I mentioned before was as I refinanced my property value went up significantly enough that I owned more than 20% of that value and no longer needed to pay "Mortgage Insurance". I hope this helps you feel a little better about buying when rates are currently bad, you can even roll the new closing costs into your new mortgage so you don't need to have money on hand just so long as the savings far outweigh the costs.
I only searched for about 4 months and looked at a little over a dozen places in my price range but didn't like any of them. Bad foundations, really old builds, terrible siding choices (stucco, wood/cedar), very small rooms, small kitchens, one was a top/bottom duplex, foreclosed/abandoned care. I was actually at the point of seriously considering buying land and building something new myself. I drew plans and had my mom draft them and started pricing it all out to see where I'd be and that included me doing a lot of the building, siding, roofing, wiring, plumbing, sheetrock, taping, painting, flooring and finishing. I came out $20k over budget without even having a garage yet. Septic, well and foundation were the heavy costs that I couldn't do on my own. I also did not think up a cost for utilities to be added. Luckily one of my friends from high school was moving and I jumped on that a day before it was going on the market.
I'm an electrician and have worked construction and carpentry through most of my childhood, so it's fairly easy for me to go in and spot things that are concerning and also know a bit about what it might take to fix issues I see, whether I would have to hire someone or if I can do it myself cheaply and timely. Having someone like that with you when you look at places might be worth your time. As someone else mentioned, having a trusty handyman around, it might not be a bad idea to hire one for an hour to look at a place you are seriously considering, more so than the typical "home inspectors" who are looking for code violations more than real signs of problems. I've been to one of these where they wanted a GFI in the laundry room and a new C/O detector, but made no mention of the A/C disconnect hanging off the house by the cable it was fed from or the water damage on a wall under a window.
As for the market, I would not expect the prices to drop ever. Even in a recession event I would expect their value to hold steady and the interest rates to drop. Even if the boomers that have 2+ homes start dying off most of those properties will be inherited and some might get sold at high values but a lot will stay in that generation's possession. I live in an area where half the houses are vacant most of the year and just used as vacation homes for a couple weeks. Or elderly people that live here in the summer and go south in the winter. Those are all family properties that are going to stay in the family for some time. A lot of the new homes I've built in the last 4 years have been for people building their 2nd, 3rd or 4th home that they call their "lake home". We aren't building for very many young people who actually need a place to live or are getting out of a renting situation.
I bought a home in East TN in 2019. You are definitely right about the crazy explosion. We bought an 80s 1900 sq ft home in an old neighborhood for a little under 300k, and it's now valued close to 550k. I couldn't afford to live in this area if I was buying now.
Keep in mind the most important thing you are buying with a home isn't the home itself, it's the location. IMO most inspectors are crap. If you have someone who is knowledgeable that you trust, take them with you during the home inspection (and DEFINITELY walk through with them, don't let them go at their own pace).
I have no idea what will happen with home prices. I expect them to fall at some point but it may be more gradual and mostly as boomers fade away.
We made the transition during 2019 (closed in August), so it was really fortuitous timing. Overall, the experience was pretty smooth.
I absolutely recommend making the splurge by hiring movers. Have everything packed up, furniture disassembled so it's ready to be picked up and loaded onto the truck, and have all of the boxes and furniture marked for where in the new house it needs to be brought. The pre-work is really important because you don't want to be paying them to be standing around waiting for someone to do, or for them to be taking apart a bed frame so they can move it, or having to ask you questions instead of loading stuff.
Two professionals with a moving truck are at least 500% more effective and efficient than a half dozen friends with a rented U-Haul. (Plus, the movers will have insurance in case anything happens to anything they're moving.)
Everything else about moving is stressful enough as it is, so not having to do all of the physical labor of loading and unloading and/or coordinating volunteers/conscripts is honestly invaluable.
This was just before COVID, but even at the time, the housing market was really hot in our area (Midwest). Houses were still often going above the asking price (though not by huge margins) and often had an accepted offer within a week of being listed.
We were probably actively looking for about a month before we found the house we ended up buying, and we had put in one previous offer but it wasn't accepted (not sure if someone outbid us or if the other offer had more money down or was offering cash). We started watching new listings like a hawk (via the real estate agent's system that gets the listings in realtime, unlike Zillow or whatever else). Saw two houses go up on the same day that we were potentially interested in, emailed our agent immediately to set up viewings, and got in to view it the first day it was on the market. We really liked it, so we put in an offer (for $1,000 over asking) and it was accepted.
We plan on staying here as long as it makes sense to continue staying here. Given interest rates, though, we probably won't be moving any time soon. Part of the reason we bought the house that we did was because it wasn't likely to be something we would outgrow too quickly.
I'm no expert on the markets, but unless there's some kind of global economic depression, I don't think housing prices (as a whole) will drop any time soon. If local or regional market pricing ballooned for artificial or temporary reasons, those values may see a starker correction than other areas, but it largely seems to be a standard supply and demand economics model: build-able real estate is a finite resource, and it takes time to develop land with the infrastructure required for building new homes (roads, water, sewer, etc.).
So I wouldn't expect overall things to change dramatically in the near future. But, again, I'm far from an expert.
Don't forget to consider things like lawn care when looking at a house: if you've been renting, you will need basic equipment like a lawn mower. Depending on the size of your lawn, a push mower might be impractical (and don't forget to consider the value of your time spent mowing with a push mower vs a riding one). Also look at any trees on the property, consider their age/health, and whether they're deciduous that will be dropping their leaves in the fall.
You'll also want to make sure you have a decent set of general tools, a solid electric drill with drill bits (make sure that it has an adjustable clutch and learn how to use it so you don't end up necessarily stripping or over-torquing screws), a laser level, a high-quality stud finder, and flashlights.
If you aren't an experienced DIYer, make sure you look up how to do things even if they seem like they may be simple: there are often-less obvious things that can end up biting you in the ass down the road if you didn't do the first time, and it can mean a lot more work and possible collateral damage later.
I don’t have advice about how, but I do have some thoughts about where.
If I were unattached and of middling income, I would look at buffalo, kansas city, tempe, or ashe county, nc.
In ashe county, gay gentrification is starting, and it’s beautiful by itself, and adjacent to some if the most beautiful country in the world. Not sure about internet tho.
Kansas city may already be tok expensive, but it has cool people, good food, great internet, and again, if not too late, great deals. Weather is iffy tho.
Buffalo has a cool mayor, great people, great proximity, and still a lot of good deals.
A decade ago I would have said, watch where they are soting Trader Joe’s, because those neighborhoods are about to hit. History proved me right. I’m not sure what today’s Trader Joe’s is but I’d like to.
The thing I would look for in a site is whether I can add on an apartment or two to the structure. It helps with the mortgage and with the housing problem and with the sprawl.
One tip that helped my wife and I (third time home owners): Shop around a lot and find a mortgage loan officer that will be your partner. We lucked out big time and have refinanced many times over our nearby 15 years of home ownership whenever the loan officer has found lower rates. She doesn’t charge us a fee, so we have nothing to lose other than the hassle of signing a million documents at refi time and digging up a ton of bank/finance statements to satisfy the lender’s approval requirements. Obviously rates have been going up in the past year, but for years previously, we were refinancing once or twice a year and consistently lowering our mortgage rate. I’m not sure how easy it is to find a loan officer that doesn’t charge a fee, but it’s worth looking for.
Thank you all for your responses)
It has given me a lot to think about these past few weeks as I prepare in the next month or two to get financing lined up and putting in offers. I think my target location right now is Greensboro, NC but I am keeping my options open for Michigan and Minneapolis if my visit to the Triad area doesn't go well. I will keep reading this thread of more people chime in later!