May 12, 2021 • 41 mins
We’re seeing one of the hottest housing markets in recent history! Bidding wars are driving up prices, homes are going under contract after just one week on the market, and mortgage rates are near historic lows. But that raises the question- is it a dumb idea to buy a home with these kinds of conditions and with the market this hot? What if this is another housing bubble? Are we going to see prices come crashing down like they did just over 12 year ago? We share our thoughts as we discuss a bunch of different reasons for residential real estate being on fire. And if you are ready to buy a home, we also cover a number of different tactics that you should implement to ensure that you get the home you want without overpaying.
During this episode we enjoyed a Rhyming Numbers- thanks to Eighth State Brewing for donating this one to the show! And please help us to spread the word by letting friends and family know about How to Money! Hit the share button, subscribe if you’re not already a regular listener, and give us a quick review in Apple Podcasts or wherever you get your podcasts. Help us to change the conversation around personal finance and get more people doing smart things with their money!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to How the Money. I'm Joel and I and
Matt and today we're asking the question, is it dumb
to buy a house when the market's hot? Yeah? Man,
(00:26):
So in our lives oftentimes we make some really dumb mistakes.
But we want to make sure that today, after listeners
listen to this episode, that they're not going to make
a dumb decision when it comes to purchasing a home.
We're gonna answer the question today if it makes sense,
if it's dumb to purchase a home today given how
hot the market is. I think we've got a lot
of listeners today who might be asking that very questions,
(00:47):
So I'm excited to get to that one today. Yeah man,
there's a there's a lot of questions to pop up
into people's minds. One, whether they should even be considering
buying a home will cover that, and then too, like
if you're like, no, I'm really interested despite the high prices.
There are some different ways you need to go about
the purchase of a home, Like buying a home has
changed a lot in the past ten years, and so
you need to react accordingly. If you do want to
(01:09):
buy a home in this market. Will kind of give
our thoughts on the whole kitten caboodle today on the
show That's Right, Dude. But first I wanted to talk
about my no penalty c D. So about a year ago,
we answered a listener question who was asking about certificates
of deposit and whether or not it made sense to
to jump on those, and given the dropping interest rate
that banks were paying out, we said that yes, it
(01:30):
was a good idea, and that's actually some advice that
I took myself. I realized that, man, I had this
chunk of money sitting there in my savings account, and
instead I could put it into a no penalty c
D H in order to earn a little bit more money. Jill,
it turns out you and I were right. Rates did
continue to drop and I was able to earn one
point three percent over the last year on that chunk
(01:51):
of money, so a whole lot better than what everyone
else was learning pitally saving US accounts. But the downside
now is that that CD has matured. But one of
the options that Ali had presented to me was that
it was it could automatically roll over into a new
penalty free c D at point five percent, which is
nearly as good I mean that's it's kind of a
bummer when you were earning one point three and now
(02:12):
they're like, oh, well we'll give you, you know, point five.
That's not something I'm interested in. Uh. So it got
me looking around online a little bit. Uh And I
found an account, dude, where I could easily slide over
fifteen thousand dollars, so a chuck of my emergency fund.
Uh And if you leave that money there within that
account for sixty days, they're paying three hundred bucks. And
so I did the math, and that's actually two percent
(02:33):
on that money over those sixty days. That's pretty good.
That's yeah, two percent over two months. I mean it's
way better than point five percent over twelve months. Right. Yeah,
And I'm guessing you found that on the website Doctor
of Credit dot com, which does an amazing job detailing
all of the best say muse accounts sign of bonuses
out there. Yeah, that's right, man. They've got like sixty
different options out there that are state specific, so they're
(02:55):
incredibly thorough. Will link to them in our show notes.
But yeah, for folks out there who have emergency fund
and you don't expect that you're gonna need it, anytime soon.
A no penalty CD might be a way to go,
but also it might make sense for you to consider
another bank. A lot of the different online institutions are
offering these sign up bonuses, UH and ngel, like you
found you actually signed up for one of these accounts.
I guess Las Year a couple of years ago, and
(03:16):
you liked it so much that you kept the account,
and so that's actually an account that you use, and
so I don't know, it makes me feel better about
taking advantage of certain bonuses because there's you know, we're human,
there's a chance that we might be swayed by that
offer and stick around when you over through great service
and just like a wonderful website and looking like that,
and that's exactly what they want, right, Like they know
there's gonna be some folks who are who are there
for the easy money. That may or may not be me,
(03:37):
we'll see, but yeah, if you like the company, you
might stick around. And that's what they're going for. They're
looking for new customers, that's right. So all right, well,
congratulations on being able to make more. I know that
was probably a bummer, like ends and you're like, no, yes,
you don't want that to end because you can't get
anywhere near that certainty of an interest rate, right. Yeah,
And it was an eleven month CD and so I've
(03:58):
never before had eleven months go by. It's so quickly,
and I was like, no, I want to continue to
earn that, but my time is up. Well, I'm glad
you found something else that is is gonna, you know,
at least for the next couple of months, pay you
decently well on that money. But all right, Matt, let's
get to the beer that we're having on this show.
This one's called Rhyming Numbers, and the nice folks over
at the Eighth State Brewing Company donated this beer to
(04:18):
the show. It's a really fascinating beer. It's got a
ton of different ingredients in it. We'll kind of let
you know all that's in the beer and give our
thoughts on it at the end of the episode, but
for now, let's get to the topic at hand. We're
asking the question is it dumb to buy a house
when the market's hot? And Matt like, the housing market
is obviously drawing a lot of attention right now. It's
the subject of a lot of headlines asking prices are
at all time highs, Bidding wars have become regular, even normalized.
(04:43):
I mean, I think more than half homes that went
on the market there's essentially multiple offers on it, and
then the sellers in just an awesome place to start
asking those buyers to compete against one another. And you know,
some people have been saying that we're in a housing
bubble that's likely to burst, while other people are basically
saying that this may the year surrounding housing is probably
gonna last for even a few more years. So, you know,
(05:04):
what do you do if you're one of the folks
who are interested in settling down in buying a home
in the near future. It's a tough position to be in.
But you and I were going to do our best
to offer some advice so that folks don't make a
reactionary move based on like this feeding frenzy. Essentially that
could you know, hurt you financially for years to come
if you make a bad decision. Yeah, folks are starting
to wonder if buying a home in today's market is
(05:26):
a good idea, dude, especially if you're a first time HomeBuyer.
If that you might be wondering if it's different right
now than when the market isn't so hot, And yeah,
certainly a lot more stressful today than it was ten
years ago. But this doesn't mean that you shouldn't consider
buying a home right now. But when the competition is
incredibly stiff, you're gonna need to modify your approach some.
And so all the tips, all the things that we're
(05:47):
gonna mention later on in the episode, I think that
you can implement regardless of what the market looks like.
But it's definitely something you're gonna need to implement today.
It's something that you're gonna need to do now. It's
certainly less optional. Yeah all right, man, I'm gonna throw
in a little sport reference here. Um. Yeah, I still
like baseball, even though I don't watch it nearly as
much as I used to. But it makes me think
of like a batter coming coming to the plate and
(06:07):
guess who's pitching today, a knuckleball pitcher. But nobody throws
the knuckleball anymore. I don't even know if there's anybody
in the major leagues that throws a knuckleball. But basically,
it's like this really weird pitch where you punch the
ball at the batter basically, k Yeah. Yeah, It's it's
like a super awkward way of throwing the ball, but
when it's headed towards the plate, it's it's going way slower,
so you think it'd be easier to hit, but because
of the way it's thrown, it has this weird spin
(06:30):
that you almost can't predict. Um and so it might
migrate like to the left or up or down, like
you don't really know where it's going. It's kind of
like a mystery flavor exactly. So it's one of those
things where you know the fundamentals that you learned as
a hitter, you still have to implement those things, but
you gotta change your strategy in order to actually get
hits off that knuckleball. You're probably not gonna be swinging
(06:50):
for the fences. You're probably gonna try to poke through
a single And I think you know, there's a similar
reaction that buyers are going to have to have in
this environment, Like buying a home still has a lot
of things that hold true, but your strategy is going
to have to change. Um And Yeah, each market is
different to right, Like the median home price has gone
up seventeen percent year over year. So it's been just
a huge spike in prices all across the nation, while
(07:12):
the hottest markets have actually seen price increases outpace even
that amount, And so it's been been really difficult if
you're in one of the markets that a lot of
people are interested in right now. But will the market
cool off anytime soon? That remains to be seen. It's
always hard to predict things like this. I mean, it
would have been almost impossible to even predict that housing
prices would have shot up at this pace a year
ago too. I don't remember anybody predicting that the housing
(07:34):
market was going to be the Sponker's part of that
is due to COVID and household priorities changing super quickly,
and it makes intuitive sense. I guess that individuals and
families are prioritizing single family homes more than they did
eighteen months ago. When you've been locked in your home
to a large extent over over the last you know,
more than twelve months. Now, people are prioritizing their living
spaces in a different way. So yeah, how long this
(07:56):
housing boom is going to last is really anyone's guess,
But to me, it doesn't make sense that that it
might continue to last for a while to come. Yeah,
So let's dig into why it's so difficult right now
to buy a home, uh, and kind of what got
us here, Let's talk about why the market is so hot.
You know, in any market where you have sellers and
buyers with transactions occurring, you have supply and demand, and
that is determining the cost, right And we have seen
(08:19):
demand go up for a number of reasons, but one
of those is definitely due to the pandemic. Like you
mentioned in lockdowns, we've been in our homes more since
last year, and because so many folks are now working
out of their house, more space has become a priority.
And so that's definitely true for buyers, but we're also
seeing that too for you know, with renters as well.
That's right, yeah, man, Even just as a small time landlord,
(08:41):
I've met a lot of folks Matt moving out of
midtown or downtown Atlanta who have been in a small
studio or one bedroom apartment or condo and they're looking
for more space. Like my sister was kind of in
that exact position. She was in a studio with her husband,
and it turns out that, uh, those conditions aren't conducive
to two people working at the same time and also
(09:01):
living in that place. And so yeah, they've moved over
into our neck of the woods there in a two
two right around the corner now, so they can live
together in peace and harmony without you know, killing each
other as I think some people are starting to do
in small spaces, like you know, back to back, essentially
working at desks in a small space. They just um,
you know, a lot of people have different needs now
in a home than they did before, right, yeah, absolutely, dude.
(09:22):
Also too, because of you know, lockdowns and turbulence in
the job market, you know, a lot of folks have
been spending less money overall. We've seen a lot of
households getting out of credit card debts over the past year,
and dude, this has allowed a lot of folks to
build up solid down payments. You know, folks have more
cash on hand than they ever had before. And then
on top of that, steamless checks for many have only
(09:42):
increased their ability to put down more money towards the home.
And so you know, if you didn't get laid off
and your income stayed the same all the while, you're
spending less money, you might have had an extra ten
tho dollars fall into your lap thanks to the cares acts, uh,
the other acts. I can keep up with them all
honestly at this point. But if you've got a teen
kids got way more than that, you've got a ton
of money. You're also going to need a bigger house.
(10:04):
That's true, exactly. Yeah, hopefully you don't have eighteen kids.
I don't know how you'd even take care of that many.
I've got three, and that's that's a lot to take
care of. I was talking to my daughter, and she's
in like music class. They're learning about like different composers,
I guess, and she was. She told me that Bach
had like twenty kids. Oh my gosh, she told me
that the other day. I don't know if that's true.
But he had like seven kids first, and then he
had like thirteen more with like another wife. All Right,
(10:25):
I'm gonna, uh, you know, look into this. I'm gonna
look up Wikipedia. That sounds interesting. It's a lot of kids.
It's something I want to definitely want to know more about.
Back would have got a lot of money that you
were left today. That's true also to Matt I mean,
I feel like, you know, when we're talking about the
housing market, demographics are a big part of why so
many folks want to buy a home too. And you know,
of Americans between the ages of thirty four say they
(10:47):
planned to buy a home, and among that same age
group say they planned to do it in the next
twelve months. And I was according to a study by
Fortune magazine, that's an entire generation of people that are
approaching the stage in life were perching. A home essentially
becomes more and more attractive, and so for a lot
of those people. You know, I think there were headlines
years and years ago that predicted the millennials wouldn't be
(11:08):
a homeowning generation. But I think even they want to
own a home, that part of the American dream still
remains alive and and I understand that, And so I
think because of the demographics, that's another reason the housing
market might continue to remain hot for you know, the
foreseeable future. Yeah, I feel like also to the same
headlines years ago said things like millennials don't want to
buy a home, they just want to travel. Well, guess
(11:29):
what this is another pandemic induced reason for millennials. They
kind of yeah, change their tune a little bit. It's like, Okay,
no longer can you do the things that you truly valued.
Maybe you prize that nomadic lifestyle the ability to you know,
live in a small apartment, uh and then spend all
your money elsewhere on experiences, on travel. But when you
can no longer do that, Yeah, it causes some introspection.
Then you maybe start to change your values a little bit.
(11:51):
Also to some of the folks that live that hardcore
nomadic lifestyle, maybe they got tired of it, at least
some of them. Yeah, that is true, man, Yeah, how
long do you want to live in a van? For
ten years? Sure? But like beyond that, I don't. I mean,
I couldn't do it much longer than that. Even that
sounds long to me, But like I understand the appeal
of it. But then it probably does where within after
a while, that's true. Uh So. Yeah, so we're talking
(12:12):
about demand right due institutional investors, they are also now
your competition if you're looking to buy a house. Right So,
Wall Street they got into single family homes after the
housing crash of two thousand eight. They bought up a
bunch of cheap homes as the market was recovering, and
those institutional investors are still buying, meaning that you aren't
just competing against other uh you know, quote unquote normal homebuyers.
(12:35):
You're competing in a family down the street, right, Yeah, yeah, No,
you're competing with firms that have millions or billions of
dollars that they're looking to expand their their holdings in
their portfolios with. You know, as The Wall Street Journal
reported last month, there are potentially even other foreign governments
who are looking to purchase up real estate in the US. So, yeah,
you with your limited, finite amount of resources, your bank
(12:57):
account with a certain amount of cash in it, you're
abdy just a bannage when you're competing against the likes
of a giant investment conglomoration like that, right or prints
from Saudi Ragia, right exactly, he's gonna come out on top. Right.
So I'm sorry you were outbid, oh no by a
prince from another country. Okay, it doesn't make you feel
maybe a little bit better about it, I get it.
Why don't want this three bedroom, two bath though it
(13:19):
doesn't make sense an investment exactly, But yeah, I think
to Matt that that's the demand side, But supply has
also gone down to right, like, fewer people are putting
their homes up on the market for sale. And if
you took an econ class in high school, you know
the basic fundamental principle of supply and demand. That's like
economics one on one right there. And when there's less
supply out there, we are of course going to see
(13:39):
prices on the rise. That's definitely been the case. And again,
part of the reason is that COVID nineteen was a
scary thing for a lot of folks, and especially people
with health conditions. Many weren't interested in having strangers walked
through their house, of course, right and if even if
they were kind of interested in selling. And as more
of the country gets vaccinated, I do think we're gonna
begin to see more supply and that will at least
help a lead ate some of the like red hot
(14:01):
market insanity. That's right, man, everyone is excited to get
back to their normal lives. We're talking about supply, dude.
New construction is still down as compared to the pre
Great Recession levels. We are currently still short millions of
homes on the supply side, and although builders have been
been doing well in recent years, we still don't have
enough builders to to keep up with the demand that's
(14:24):
currently out there. And just like you said, when the
supply is level, that's only going to drive prices up. Yeah.
And another thing that hasn't helped builders out is is
that lumber prices have skyrocketed during right make so you know,
the the astronomical lumber prices have added close to dollars
to the cost of a building a typical single family
home and then like ten dollars per apartment unit that's
(14:44):
going online. Uh, and that was according to the National
Association of Home Builders. That just makes it harder for
builders to get the raw materials it takes to get
those homes built. Supply shortages sometimes means that you've got
workers who aren't able to work while you're waiting for
that lumber to come in. Yeah. I expect some of
those supply issues to be worked out in the coming years,
but some of them are gonna take even longer. And yeah,
(15:05):
when you look at the fact that, like you said,
new construction is still way down than what we were
seeing in like two thousand six, um, that just impacts
everybody's ability to buy an affordable house. Today, that's right,
And so yeah, we just addressed all the different reasons
why it is the housing market is so red hot currently.
But right after the break, we're gonna touch on a
number of different things that you can do to ensure
(15:26):
that you get the house that you want to get
and to make sure too that you're thinking about it properly.
And so we'll get to all of that right after this. Alright,
we're back from the break, and if you're interested in
buying a house right now, you've probably been put off
(15:48):
by the high home prices. You might have even put
placed a couple of offers and it turns out that
somebody bids over what you um offered, even though maybe
you even offered above asking price. Like that's how crazy
things are right now. And hopefully you know what we
just talked about helps you see you know why things
are as nutty as they are, And hopefully too, you know,
some of those things will start to shift in the
(16:10):
coming months so that things do get back into like
a little bit more of a normal state. But let's
talk about, Matt, what people need to do if they're
attempting to make an offer, if they're attempting to buy
a home in this market and and maybe even whether
or not they should be right, Like, I think the
first thing that people need to know if they're planning
to buy a home in this crazy market is to
be prepared to stay in that home that they're buying
(16:31):
for a minimum of seven years. That's kind of something
that we've always said as a rule of thumbler buying
a home. And you know that's because the transaction costs
of buying and selling homes are just kind of ridiculous.
Like it's really expensive to buy and sell a home.
You know, we're talking about closing costs, agent fees, um,
you know, all that kind of stuff. So it's even
more important, I would say, when prices are at all
(16:51):
time highs to make sure that the home that you're
buying is one that you're gonna hold onto for for
quite a while. Yeah, before it's like a minimum of
seven years. Now it's kind of like, I don't know,
maybe seven us here's that you would want to hang
onto that house for. But yeah, let's go ahead and
talk more about how to go about buying a home
while the market is making it harder to do so
right now, And the first thing that we want to mention, UH,
(17:12):
is for you to get an experienced agent through to
solid agent with a lot of experience under the belt
can help sort of act as a sherpa, as a
guide for you as you kind of navigate through the
ups and downs of trying to buy a home in
a frothy market like we're currently seeing. They can help
you to avoid some of the pitfalls that others might
be making, uh in their angst to own a home.
(17:33):
And so you're gonna want to find a great agent
who has solid negotiation skills, someone who is easy to
communicate with, but a good experienced agent will also be
honest with you and will help you to kind of
navigate those emotional waters. Because there's no other asset that
we own that we're more tied to than our homes, right, Like,
it's something that we move into. We see ourselves there,
(17:54):
we see ourselves raising our family, our kids there. It
kind of becomes a part of who we are as people,
and that can cause us to make some decisions that
may not financially make the most sense for us. Oh yeah,
for sure. I think that's that's definitely true, and and
I think we're seeing that now is maybe some people
getting in over their head buying more than they actually
should be. It's probably a reactionary thing, right, and I
think a good agent can help you to avoid emotional
(18:16):
decision making. It's easy to lose out on three or
four homes and and then inwardly you resolve I'm gonna
get the next one, but that might not be the
best thing for you, right, Like fool me once or
twice or four times, never again. Yeah, yeah, but then
you overpay and you regret it, and you don't you're
like happy that you're in this home, but you're like,
I don't even know if I can actually afford this
(18:37):
home now because I made an offer that I can't
actually back up. And like, so we would say that
you need to set some parameters that you've outlined with
your agent early on, and then refer back to those consistently.
It can be easy to see your standards slowly and
incrementally changes. You're looking for a place, too, so you
have to make sure that your line is drawn. It
can easy. It can be easy to start looking at
homes and you know you're content with two bedroom to bath,
(19:01):
and then things start to creep up and you're like well,
we might want that third bedroom, and maybe we want
you know this or that, and you start adding features
onto the home you're looking for that increases the price,
and so yeah, it's it's kind of like coming up
with an investing plan and sticking to it. You probably
need to come up with a plan of the kind
of home and the location that you're looking for and
be willing to stick to that too, That's right. Yeah,
(19:21):
So having an experienced agent is really important in today's market. Also,
do getting pre approved. Making sure you have your finances
lined up is a really important step, we think before
you even start to go look at homes. But we
also think it's really important to know what you are
willing to spend, not just what the bank is willing
to approve you for. Yeah, it should likely be less
than the full amount that a bank or credit union
(19:44):
says that you can afford. You don't want to become
house poor with that mortgage payment straining your budget every
single month. Um. But having that pre approval letter lined up,
along with proof of funds that you're gonna need to
have for that down payment, are going to be really
helpful in today's market. And true it's part of making
a stronger offer is having pre approval and having proof
of funds that you actually have money in order to
(20:05):
back up that offer. And Matt two, yeah, I would
say right now, another thing people need to pay special
attention to is their credit score if they want to
make an offer on a home and they actually want
to get it accepted. Because at the same time prices
are skyrocketing, it's becoming tougher to get a loan, like
the lending standards have gone gotten even tighter in recent months.
So your credit score matters a whole lot right now
(20:27):
when you're getting a mortgage. It always has, but but
it means even more of these days. So keep track
of your credit score on sites like credit Karma or
credit score card dot com. Those are two great places
to look, or just your credit card probably when they
send you your bill. You have the ability to check
out your credit score for free to wherever you get it.
Just make sure you're kind of keeping an eye on it.
Also to in particular, if you're in the market to
(20:49):
buy a home right now, pay your bills on time, religiously,
and then don't take out any unnecessary lines of credit
in the months before you intend to start making offers.
If you do that, you're going to potentially hurt your
credit score at the time you needed the most, at
the time that you need it to secure the best
possible financing rate, and then not having a good enough
credit score one it could mean that you pay a
(21:09):
higher interest rate and that could be thousands of dollars
over the life of the loan, or it could mean
not getting that house altogether. So credit score crucial right now. Yeah,
the credit score is important, but even taking out another
loan or an additional line of credit like your credit card,
could throw off your debt to income ratio enough to
where yeah, the bank or that lender would then say, sorry, uh,
you no longer qualify um. At the very least, you're
(21:31):
gonna have to go through a lot of paperwork writing
out those letters of explanation as to what it is
these cards are, and they might even ask you to
close some lines of credit or credit cards. Something else
that we'd recommend for folks to do when it comes
to looking at houses today is to consider lowing your expectations.
You know that, like the perfect house, it's always gonna
be tough to find, but getting the exact hone that
(21:52):
you've dreamed of is even more difficult. Right now, there's
you know, like eighty two other people out there who
also think that the home that you really want is
gonna work for them, So you might need to be
willing to buy a home that doesn't check all of
the boxes. It makes me think of Actually, on Monday,
we talked with Troy and Rashad uh and they kind
of mentioned that was my big deck away from that episode,
the four three two one approach. I feel like this
(22:14):
is sort of a variation on that. You know, don't
think about purchasing your perfect little house that you know
that that's gonna work for you for the next five
to ten years or whatever. Now think of it as
something that you're going to hang onto. And definitely it
can be a house that you purchase that you know
isn't perfect, But if you're able to see it more
as an investment that can allow you to hopefully get
on board with a house that's not perfect, but it's
(22:35):
gonna be a good home. It's gonna be a home
that can serve as an investment in the cash flow
that you're gonna receive from that property can help fund
the actual dream home that you're gonna maybe purchased, yeah
years down the line. So maybe stop looking for that
single family home, start looking for the duplex, triplex or
even quadplex, you know, and that and that can be
better for your monthly budget, and that can be better
for your financial future too. I agree. I love the
(22:55):
four three two one. I thought it was like such
a such an awesome, such an awesome way to think about,
you know, buying a house and investing in property for
the future. Also to Matt, like, lowering your expectations is
important because it's harder to get everything you want in
today's you know environment. But also you've gotta be on
the ball. With more than half of homes that are
listed going under contract in a week or less, you'll
(23:16):
need to be checking the area that you're interested in.
I would say every day, sometimes more frequently than once
a day. And that's also to where a good agent
can come in is if they are on the ball
and they're feeding that stuff to you. It helps you
to be on the ball, you know, when things come
active so that you can make an offer quickly. Sometimes
things will come online on a Thursday, and people make
(23:36):
offers on Thursday and Friday and then it's done, like
they have accepted an offer by Friday night and it
doesn't even last a weekend. And so if you're one
of those people who needs a few days to really
think about it, that's gonna work against you in today's market,
You've gotta be on the ball and looking frequently is
going to allow you to tune in with the market too,
so you can spot a deal and be ready to
pounce when it comes along. You're gonna know when something's
(23:56):
undervalued if you're looking in a specific area for months
on end and you're tuning in basically every day. Yeah,
it's important to know that this is what the market
looks like today though, right because I think for some
folks they may not want that, And so it's important
to keep in mind. You're gonna have to kind of
weigh the benefits and the downsides to purchasing a house
in today's market. Are you willing to keep up with
(24:17):
it that well, if not, you might find yourself maybe
overpaying because you're not able to pounce on that deal. So, yeah,
these are things to keep in mind before you found
a house, right well, as you're searching for a home,
But what you've found a home and you want to
put an offer on it, you want to make sure
that you make your offer look strong, and so finding
out what the seller wants can help you to make
that strong offer. If the seller, say, wants to to
(24:39):
stay in the home for a week maybe two weeks
after the closing, if you can write that into the offer,
that can massively increase your chances of having an offer accepted. Uh,
If a more immediate closing is the most important factor
for them, submit an offer with a shorter due diligence
period and a closing date that is sooner than you
might normally offer. And another thing too, increasing the amount
(24:59):
of earnest money that you are willing to put down
as another way to show the buyer that you are serious.
If others are submitting offers with, you know, like say
five thousand dollars of earnesce money, then submit years with
ten thousand dollars. That alone can be a big check
mark in your favor. And keep in mind, you know,
you get that earnest money back if you terminate the
contract while in that due diligence period, so it's it's
(25:21):
not really something that is actually costing you more you
just have to have that money available. I feel like
that's how you're gonna be able to beat out the princess,
like the foreign princess of this world, right is just
buy bigger, earnest money, right, It's like I've got five
thousand more dollars, buddy, Well, I think to like one
other thing, Matt, that's obviously really really important. How a
lot of people are getting offers accepted right now is
people making cash offers, and so that's just not possible
(25:45):
for so many people. But there are a lot of investors,
a lot of you know, foreign entities that are willing
to offer all cash on on a home right now.
And so I would suggest, like, if you do have
the money in savings, even in an investment account, right
you can make a quote unquote cash offer, but you
can reserve a financing contingency. Right. Sellers know that a
(26:06):
buyer with cash is far more likely to close on
the home because of financing. Mishap won't get in the way.
And if you have cash, even if you intend to
get financing, making that cash offer with the ability to
secure financing you know during the process could really help
you out. Basically, it's making that strong offer from the
get go. It helps you to avoid counter offers and escalation.
That's what you want to stay away from, where a
(26:27):
seller says, I like your offer, but there's three others
that are similar, highest and best by Sunday night Boo. Yeah,
you don't want to be in that position. That's when
the emotions start to take hold and you offer more
than you then you actually wanted to. We're not gonna
let this one get away, So yeah, we would not
recommend that, right, But submitting a video or a letter
can make the difference for multiple reasons. First, it's an
(26:50):
emotional appeal, but you know, the seller often sees that
as a sign that you really want the home, you know,
so that means a greater chance of the deal actually
going through. And since time is money in a real
estate transactions, yeah, this helps the seller know that they
can kind of move on with their life if they
accept your offer. They're not you know, they don't have
a new part time job of trying to sell their house,
which is often the case. That's the worst thing as
(27:11):
a seller is the contract falling through, having to put
it back on the market, and it feels a little
snake bitten. Other people are like, oh, was it a
bad inspection? What's going on? And and so sometimes yeah,
that can cost a seller a lot of money. And
so if you really love the house and you're you know,
you communicate that effectively to the seller, I think that's
really helpful way of getting your offer, you know, up
(27:33):
to the top of the consideration list. Also to Matt,
there are some people that are suggesting to forego having
an inspection or for go putting that in the contract
that you have the right to an inspection, And I
don't think that's a good way though, to move forward
with your home purchase. You a waiving that contingency might
help you get under contract, but it might mean that
(27:53):
you're buying a house that could potentially be a money pit. Right.
Inspections can reveal problems that you can't see with your
own two eyes, you know, unless you are a general
contractor or you have a ton of experience with houses. Um,
you know, even personally as someone who's bought half a
dozen homes and you know, as a landlord has rental properties,
I still get each one inspected. And so if if
(28:14):
it came down to that, I would say no way.
Jose Man I'm gonna I'm going to always put that
inspection contingency in there, and I'm always going to have
an inspection done. And if anybody says that you should
forego that in order to get this home, I think
that's a step too far. It's something that I would
not be willing to do. That's rights and also too
you don't ask for a bunch of repairs to be
done within uh the negotiating and within the offer. Sellers
(28:37):
are way less likely to make repairs or press concessions
when the market is dramatically in their favor. But do
keep these things in mind. Right, factor those necessary repairs
into what you're willing to spend on the home. You
want to get your foot in the door. You want
to make sure that you're able to lock down this house.
But at the same time, you don't want to end
up out of pocket a ton of money that you
weren't necessarily expecting to spend. Yeah, And I don't think
(28:59):
we're saying don't negotiate at all. I'm just I think
we're saying that it makes me think of negotiations with
my children this way in that right, like like they
don't have much of a chance to get certain things
by me, Like Dad, can we have like two more desserts?
It's like no, And there's like zero chance that that's
gonna happen tonight. Is you getting more? You getting more dessert?
And so I think, Yeah, what you're gonna do maybe
in that process is annoy the seller. And so you
(29:20):
have to get to be kind of like ginger with
what you're asking for while you're you're you're in the
negotiation process. You don't want to overstep your balance because
that's not the kind of market we're in. Yeah, this
is another reason why having a great agent is gonna
allow you to come out ahead. So, like we said,
if you're purchasing at home, it's gonna take a lot
of mental bandwidth, a lot of emotional energy. But here's
the thing, this isn't the only option that's available to you.
And so if you're not willing to jump through all
(29:42):
those hoops. Right after the break, we're gonna get to
a few other options for you to consider. Right we're
back from break, we're talking about buying a home in
a red hot market, and I feel like it is
more difficult. Mat We we did cover a lot of
(30:03):
ground about what potential home buyers need to think about
and how the game's kind of changed essentially, you know,
over the past ten years, and especially in the past
year year and a half as things have really heated
up with a short supply. People have to be on
the ball and they have to be able to make
um able and willing to make a strong offer from
from the get go. But they also have to have
their personal finances in order to get the ball rolling
(30:26):
with buying a home too. But I think for people
who maybe aren't willing to, as you said before the break,
jump through all those hoops, there are some alternatives to
buying a home throwing a hot market. You can actually
sit this one out, don't you think? Yeah, man, that's
certainly an option you could consider waiting for more favorable
market conditions. You know, this would allow you to save
up more dough for a bigger home budget while you
(30:46):
wait for for prices to the chill acts a little bit.
But the problem, though, right, is that with his plan,
there's no guarantee that the home prices will actually chill
out and take it easy, allowing you to execute that plan.
And there's there's certainly pros and that might allow you
to personally get in a more stable financial position. But
that doesn't necessarily mean that the market is going to
back down, allowing for lower prices in the future. True,
(31:10):
although I'd be surprised if you know, the market continued
at the same rate that it's been doing over the
past year for the next year or two. I mean,
you know, home prices industry going up year over a year,
Like that's that'd be um. It would be unlikely that
that would continue to happen over the next couple of years.
Each year at your home will be worth like one
point five million, but in like two years, you're like
your two bedroom, one bath is now just worth a
(31:31):
ridiculous amount of money. But yeah, so I think another
alternative to buying a home during a hot market, you know,
instead of taking part in the game you said, you know,
waiting for more favorable market conditions, another reaction is to
maybe move somewhere else. Right, Like Austin is a specific
city that maybe if you live there, but you don't
have to live there, maybe it's a perfect opportunity to
find a new location to to exist in. Right, It's
(31:53):
easier said than done, Right, Like, I'd prefer some of
the other options, you know, than to to this option
because I love where we if and it's it's not
my intention to leave anytime soon. Family, community, friendships, like
all those things are really important when you're thinking about
where you want to live. But if owning a home
is a priority for a lot of folks out there,
and you are flexible about where that house is located,
(32:13):
I mean, moving even just a few miles away from
your ideal location could really change the pricing equation. And
if you wanted to take it to an extreme, I mean,
be willing to move to another state or city altogether.
If you're facing extreme market conditions and extreme headwinds in
buying a home where you currently live, like it might
make sense to go elsewhere you might find more buying
opportunities just around the corner. Yeah, and I definitely see
(32:35):
this as an option for folks who are a little
bit younger. Right, if you haven't been, you know, in
your career for very long, like maybe you've only recently
gotten out of school, but maybe you haven't put down roots,
and it is easier for you to potentially, you know,
kind of uproot your very shallow roots and move somewhere
that's maybe a little more affordable. That might also be
true for people who are actually quite a bit older.
I think sometimes for folks who are in the middle
(32:56):
of their lives, like that's when you have the most
roots or the most difficult movie, like that's why the school. Yeah,
really it's kids in the roots that you put down
once you kind of get involved and you get you
get used to a certain neighborhood and and those friendships
in particular, I think are more difficult to replicate elsewhere, right. Yeah,
And and if your kids are grown, you know, and
they're off doing their own thing, now, maybe it's the
(33:17):
perfect time, actually, if you're older, to move somewhere else
to make maybe even move closer to kids and grandkids.
And especially I mean, given just the ability for folks
who work from home, right, I mean, never before have
we been able to live wherever we wanted to while
still maintaining our jobs. And so certainly one of the
effects of the pandemic a huge amount of people who
can do that for sure. Yeah, and one other option
(33:38):
I guess we wanted to if they're out there for folks, uh,
And it's not going to be one that you're excited
to hear if you've been looking at houses recently, become
a prince. Yeah, oh no, yeah no, but yeah, if
if zilla, if you're constantly on zillo and buying a
home is top of mind for you, you're not gonna
want to hear a say, but maybe you shouldn't buy
a home at all. Right, Renting is still to be
(34:00):
a better decision for a lot of folks. Rents have
actually gone down in much of the country as single
family house prices have risen. And so if that's you
keep renting and save and invest your money for a
time when supply and demand are a little back and sink.
And we're hardly even touching on the fact that owning
your own place, owning your own house or your apartment
may not necessarily be in the cards given the lifestyle
(34:22):
that you want to continue living, right, I mean, we
talked about how the pandemic has caused maybe a lot
of millennials to kind of really look at what it
is that they want to spend their money on. But
I mean, folks are getting back to traveling right now.
Countries are opening up, travelers becoming more a part of
our lives again, And so don't let this temporary although
significant occurrence you know that we've had over the past
year lead to a permanent or not permanent. You can
(34:45):
always sell your house, but lead to something that you
you might regret in a couple of years. Yeah, and
that regret too, can come with a high cost, especially
if you're trying to sell a home a year or
two after you bought it. Now, we know too many
friends and family members who have done that, and you know,
they end up hurting them if they didn't known the
home long enough. It just doesn't give you enough time
to recoup those costs. And so let's offer a little
(35:08):
hope to Matt. I think because you know, for those
who feel like the home price insanity is going to
continue in perpetuity, that's just not true either. Like we
always find ourselves in cycles. Market cycles are a part
of life. Supply and demand will get back in sync
as builders ramp up to glean the profits, or other
people put their homes on the market as they see
prices rising and they're like going for the cash grab.
(35:29):
And I truly think that even current homeowners are are
going to see the beauty in selling and renting. For
a while, some people will see this, They'll say, why
in the world when I not sell my home for
six thousand dollars when I can rent in the same
neighborhood for two thou dollars a month. And that's actually
the disparity, the true disparity in some locations, Um, you
can you can rent a six hundred thousand dollar house
for two thousand dollars a month. If that's the case,
(35:51):
it's gonna make more sense to a lot of people
to to start selling their homes. There will be more supply,
but it's gonna take time, and we've pretty much spent
this entire episode talking about the inside of the equation,
But the supply side will inevitably respond accordingly until there's
a balance. I mean, there is more incentive for home
builders to ramp things back up as much as possible,
and there is going to be more incentive for you know,
(36:12):
sellers to put their house on the market. So while
this glitch is painful right now, if you want to
buy a house like you know, in the next year,
it's not gonna last forever. Yeah, and don't forget too
that rising interest rates could cool things off. You know,
we're not predicting an interest rate spike per se, but
we are still near all time lows and so and
this has helped housing affordability. If interest rates take up,
(36:33):
that will likely cool off the rising prices, because you
know it's gonna hurt overall affordability and so. On one hand,
I guess, you know, rates going up, it's a bad
thing because that means you're gonna be paying more to
the bank. But it's also it kind of bounces out
maybe a little bit, because we might see prices come
down a little bit in the future. Yeah, Obviously, housing
prices in the last couple of years have been insane,
and it stinks if you're in the market or if
you want to be in the market to buy a
(36:53):
house and you're like, I'm forced to sell on the sidelines.
This is not even a choice. I cannot participate, and
it can be discouraging. I think if owning your home
has been a big goal for you and your family,
you've been saving for it for maybe even years now.
But also at the same time, Matt, the mortgage rates
you just mentioned, they do mean that affordability hasn't gotten
as out of whack as I think a lot of
people might think. They see the sky high prices, but
(37:14):
you know, super low interest rates, you know, thirty year
mortgage in the twos, you know, is what we were
seeing at the end of last year that made it
so that people could afford to buy more home. And
I think we need to reiterate if you're planning to
stay in the home that you're buying for seven years
or longer, buying a home even in the middle of
this current madness, it's it's not a terrible idea, but
you just got to make sure you follow some of
the steps that we've discussed so that you don't don't
(37:35):
end up with six figures of buyer remorse or pull
the trigger based on kind of an emotional reaction to
what's happening now, wanting to get in before prices outstrip
your ability to afford a home. That would be a
bad reason to buy. And Matt and I we continue
to believe, and we will continue to say on the
show that renting is not throwing away money, and it
makes more sense for more and more people every single
(37:56):
day as prices continue to just kind of shoot through
the roof. Yeah, man, that's right. And hopefully with this episode,
listeners are able to see that purchasing home in today's
hot environment, it's not as simple as a yes or no.
There are a lot of different things that we need
to take into account. But if you do want to
purchase at home, there are a number of things that
you need to keep in mind to make sure that
you're successful at snagging that home. But Joel, now it's
(38:18):
time for us to shift gears. Let's get back to
the beer that you and I shared on this episode.
That's one was called Rhyming Numbers by the Eighth State
Brewing Company, and this was an Imperial sour with lots
of different things included. Uh in this beer? What your
thoughts on it? All? Right? So, yeah, there was a
ton of things in this beer. I would say when
when we poured the beer, it looked like I was
drinking Perade Beat. And I will say, I'm glad it
(38:41):
wasn't purade Beat, because I don't think I want to
dug that beats are good. Uh yeah, I'm kind personally,
I'm glad you like them. I love beats. Would you
drink parade Beat? Um? Yes? Well, okay, but it didn't
taste like that. It tasted like had pineapples and cherries.
Kind of kind of vibe going on also to some
sweetness because they was marshmallows in this beer. And then
(39:02):
like the beer said, there were pistachios in it. I
was barely getting any nuttiness in it, but maybe just
a hint. But this beer really was like a kitchen
sink beer. They tossed a bunch of stuff in. But
this brewery, they ate stayed out of South Carolina. They
know what they're doing to such an extent that this
was delicious, like SPoD imminently drinkable sour beer with a
bunch of different flavors coming at you that just blended
(39:23):
perfectly together. Yeah, you mentioned pistachio. That's one of the
ingredients they had listened to. Here we can all agree
that pistachio are like the best nut out there. Yeah, like,
yeahstachio came down. There's no better nut than the pistachio.
But yeah, it's interesting you mentioned are close second. Almonds
are very good, Yeah, but they still don't. Dude, if
pistachios were as easy to eat as almonds, then I
think pistachios would definitely win. You need to you need
(39:44):
to go my route and buy the pre shell in
the bag at the costco. Man, it's it's a wonderful feeling. Uh.
You mentioned cherry, and it's interesting because there's actually not
cherry listed out on here, but it totally has cherry
vibes going on. I feel like it almost has like
this mold red wine kind of of flavor profile gone on,
Like in my in my mind, there's like almost like
warming spices where it feels like a you know, just
(40:06):
like a kind of blanket of a beer on your
on your tongue as you drink it. And so this
hour almost kind of has like stout like qualities, Like
you know, you're kind of drawn to that heaviness, you're
kind of drawn to that texture. Maybe a little more
in the in the winter or maybe even in the
autumn months, but you're typically looking for that with the stouts,
and so to have that in a sour is actually
was to me really unexpected but at the same time
(40:27):
extremely delicious. I'm glad that you and I got to
share this one, and big things to the folks out
there at eight State Brewing for donating this one to
the show. No doubt, all right, that's gonna do it
for this episode. If you want to check out the
show notes and links to anything that we mentioned on
the this episode. Just go to our website at how
to money dot com. That's right, man. So that's gonna
do it for this episode. Until next time, Best Friends Out,
Best Friends Out, m
Welcome to How the Money. I'm Joel and I and
Matt and today we're asking the question, is it dumb
to buy a house when the market's hot? Yeah? Man,
(00:26):
So in our lives oftentimes we make some really dumb mistakes.
But we want to make sure that today, after listeners
listen to this episode, that they're not going to make
a dumb decision when it comes to purchasing a home.
We're gonna answer the question today if it makes sense,
if it's dumb to purchase a home today given how
hot the market is. I think we've got a lot
of listeners today who might be asking that very questions,
(00:47):
So I'm excited to get to that one today. Yeah man,
there's a there's a lot of questions to pop up
into people's minds. One, whether they should even be considering
buying a home will cover that, and then too, like
if you're like, no, I'm really interested despite the high prices.
There are some different ways you need to go about
the purchase of a home, Like buying a home has
changed a lot in the past ten years, and so
you need to react accordingly. If you do want to
(01:09):
buy a home in this market. Will kind of give
our thoughts on the whole kitten caboodle today on the
show That's Right, Dude. But first I wanted to talk
about my no penalty c D. So about a year ago,
we answered a listener question who was asking about certificates
of deposit and whether or not it made sense to
to jump on those, and given the dropping interest rate
that banks were paying out, we said that yes, it
(01:30):
was a good idea, and that's actually some advice that
I took myself. I realized that, man, I had this
chunk of money sitting there in my savings account, and
instead I could put it into a no penalty c
D H in order to earn a little bit more money. Jill,
it turns out you and I were right. Rates did
continue to drop and I was able to earn one
point three percent over the last year on that chunk
(01:51):
of money, so a whole lot better than what everyone
else was learning pitally saving US accounts. But the downside
now is that that CD has matured. But one of
the options that Ali had presented to me was that
it was it could automatically roll over into a new
penalty free c D at point five percent, which is
nearly as good I mean that's it's kind of a
bummer when you were earning one point three and now
(02:12):
they're like, oh, well we'll give you, you know, point five.
That's not something I'm interested in. Uh. So it got
me looking around online a little bit. Uh And I
found an account, dude, where I could easily slide over
fifteen thousand dollars, so a chuck of my emergency fund.
Uh And if you leave that money there within that
account for sixty days, they're paying three hundred bucks. And
so I did the math, and that's actually two percent
(02:33):
on that money over those sixty days. That's pretty good.
That's yeah, two percent over two months. I mean it's
way better than point five percent over twelve months. Right. Yeah,
And I'm guessing you found that on the website Doctor
of Credit dot com, which does an amazing job detailing
all of the best say muse accounts sign of bonuses
out there. Yeah, that's right, man. They've got like sixty
different options out there that are state specific, so they're
(02:55):
incredibly thorough. Will link to them in our show notes.
But yeah, for folks out there who have emergency fund
and you don't expect that you're gonna need it, anytime soon.
A no penalty CD might be a way to go,
but also it might make sense for you to consider
another bank. A lot of the different online institutions are
offering these sign up bonuses, UH and ngel, like you
found you actually signed up for one of these accounts.
I guess Las Year a couple of years ago, and
(03:16):
you liked it so much that you kept the account,
and so that's actually an account that you use, and
so I don't know, it makes me feel better about
taking advantage of certain bonuses because there's you know, we're human,
there's a chance that we might be swayed by that
offer and stick around when you over through great service
and just like a wonderful website and looking like that,
and that's exactly what they want, right, Like they know
there's gonna be some folks who are who are there
for the easy money. That may or may not be me,
(03:37):
we'll see, but yeah, if you like the company, you
might stick around. And that's what they're going for. They're
looking for new customers, that's right. So all right, well,
congratulations on being able to make more. I know that
was probably a bummer, like ends and you're like, no, yes,
you don't want that to end because you can't get
anywhere near that certainty of an interest rate, right. Yeah,
And it was an eleven month CD and so I've
(03:58):
never before had eleven months go by. It's so quickly,
and I was like, no, I want to continue to
earn that, but my time is up. Well, I'm glad
you found something else that is is gonna, you know,
at least for the next couple of months, pay you
decently well on that money. But all right, Matt, let's
get to the beer that we're having on this show.
This one's called Rhyming Numbers, and the nice folks over
at the Eighth State Brewing Company donated this beer to
(04:18):
the show. It's a really fascinating beer. It's got a
ton of different ingredients in it. We'll kind of let
you know all that's in the beer and give our
thoughts on it at the end of the episode, but
for now, let's get to the topic at hand. We're
asking the question is it dumb to buy a house
when the market's hot? And Matt like, the housing market
is obviously drawing a lot of attention right now. It's
the subject of a lot of headlines asking prices are
at all time highs, Bidding wars have become regular, even normalized.
(04:43):
I mean, I think more than half homes that went
on the market there's essentially multiple offers on it, and
then the sellers in just an awesome place to start
asking those buyers to compete against one another. And you know,
some people have been saying that we're in a housing
bubble that's likely to burst, while other people are basically
saying that this may the year surrounding housing is probably
gonna last for even a few more years. So, you know,
(05:04):
what do you do if you're one of the folks
who are interested in settling down in buying a home
in the near future. It's a tough position to be in.
But you and I were going to do our best
to offer some advice so that folks don't make a
reactionary move based on like this feeding frenzy. Essentially that
could you know, hurt you financially for years to come
if you make a bad decision. Yeah, folks are starting
to wonder if buying a home in today's market is
(05:26):
a good idea, dude, especially if you're a first time HomeBuyer.
If that you might be wondering if it's different right
now than when the market isn't so hot, And yeah,
certainly a lot more stressful today than it was ten
years ago. But this doesn't mean that you shouldn't consider
buying a home right now. But when the competition is
incredibly stiff, you're gonna need to modify your approach some.
And so all the tips, all the things that we're
(05:47):
gonna mention later on in the episode, I think that
you can implement regardless of what the market looks like.
But it's definitely something you're gonna need to implement today.
It's something that you're gonna need to do now. It's
certainly less optional. Yeah all right, man, I'm gonna throw
in a little sport reference here. Um. Yeah, I still
like baseball, even though I don't watch it nearly as
much as I used to. But it makes me think
of like a batter coming coming to the plate and
(06:07):
guess who's pitching today, a knuckleball pitcher. But nobody throws
the knuckleball anymore. I don't even know if there's anybody
in the major leagues that throws a knuckleball. But basically,
it's like this really weird pitch where you punch the
ball at the batter basically, k Yeah. Yeah, It's it's
like a super awkward way of throwing the ball, but
when it's headed towards the plate, it's it's going way slower,
so you think it'd be easier to hit, but because
of the way it's thrown, it has this weird spin
(06:30):
that you almost can't predict. Um and so it might
migrate like to the left or up or down, like
you don't really know where it's going. It's kind of
like a mystery flavor exactly. So it's one of those
things where you know the fundamentals that you learned as
a hitter, you still have to implement those things, but
you gotta change your strategy in order to actually get
hits off that knuckleball. You're probably not gonna be swinging
(06:50):
for the fences. You're probably gonna try to poke through
a single And I think you know, there's a similar
reaction that buyers are going to have to have in
this environment, Like buying a home still has a lot
of things that hold true, but your strategy is going
to have to change. Um And Yeah, each market is
different to right, Like the median home price has gone
up seventeen percent year over year. So it's been just
a huge spike in prices all across the nation, while
(07:12):
the hottest markets have actually seen price increases outpace even
that amount, And so it's been been really difficult if
you're in one of the markets that a lot of
people are interested in right now. But will the market
cool off anytime soon? That remains to be seen. It's
always hard to predict things like this. I mean, it
would have been almost impossible to even predict that housing
prices would have shot up at this pace a year
ago too. I don't remember anybody predicting that the housing
(07:34):
market was going to be the Sponker's part of that
is due to COVID and household priorities changing super quickly,
and it makes intuitive sense. I guess that individuals and
families are prioritizing single family homes more than they did
eighteen months ago. When you've been locked in your home
to a large extent over over the last you know,
more than twelve months. Now, people are prioritizing their living
spaces in a different way. So yeah, how long this
(07:56):
housing boom is going to last is really anyone's guess,
But to me, it doesn't make sense that that it
might continue to last for a while to come. Yeah,
So let's dig into why it's so difficult right now
to buy a home, uh, and kind of what got
us here, Let's talk about why the market is so hot.
You know, in any market where you have sellers and
buyers with transactions occurring, you have supply and demand, and
that is determining the cost, right And we have seen
(08:19):
demand go up for a number of reasons, but one
of those is definitely due to the pandemic. Like you
mentioned in lockdowns, we've been in our homes more since
last year, and because so many folks are now working
out of their house, more space has become a priority.
And so that's definitely true for buyers, but we're also
seeing that too for you know, with renters as well.
That's right, yeah, man, Even just as a small time landlord,
(08:41):
I've met a lot of folks Matt moving out of
midtown or downtown Atlanta who have been in a small
studio or one bedroom apartment or condo and they're looking
for more space. Like my sister was kind of in
that exact position. She was in a studio with her husband,
and it turns out that, uh, those conditions aren't conducive
to two people working at the same time and also
(09:01):
living in that place. And so yeah, they've moved over
into our neck of the woods there in a two
two right around the corner now, so they can live
together in peace and harmony without you know, killing each
other as I think some people are starting to do
in small spaces, like you know, back to back, essentially
working at desks in a small space. They just um,
you know, a lot of people have different needs now
in a home than they did before, right, yeah, absolutely, dude.
(09:22):
Also too, because of you know, lockdowns and turbulence in
the job market, you know, a lot of folks have
been spending less money overall. We've seen a lot of
households getting out of credit card debts over the past year,
and dude, this has allowed a lot of folks to
build up solid down payments. You know, folks have more
cash on hand than they ever had before. And then
on top of that, steamless checks for many have only
(09:42):
increased their ability to put down more money towards the home.
And so you know, if you didn't get laid off
and your income stayed the same all the while, you're
spending less money, you might have had an extra ten
tho dollars fall into your lap thanks to the cares acts, uh,
the other acts. I can keep up with them all
honestly at this point. But if you've got a teen
kids got way more than that, you've got a ton
of money. You're also going to need a bigger house.
(10:04):
That's true, exactly. Yeah, hopefully you don't have eighteen kids.
I don't know how you'd even take care of that many.
I've got three, and that's that's a lot to take
care of. I was talking to my daughter, and she's
in like music class. They're learning about like different composers,
I guess, and she was. She told me that Bach
had like twenty kids. Oh my gosh, she told me
that the other day. I don't know if that's true.
But he had like seven kids first, and then he
had like thirteen more with like another wife. All Right,
(10:25):
I'm gonna, uh, you know, look into this. I'm gonna
look up Wikipedia. That sounds interesting. It's a lot of kids.
It's something I want to definitely want to know more about.
Back would have got a lot of money that you
were left today. That's true also to Matt I mean,
I feel like, you know, when we're talking about the
housing market, demographics are a big part of why so
many folks want to buy a home too. And you know,
of Americans between the ages of thirty four say they
(10:47):
planned to buy a home, and among that same age
group say they planned to do it in the next
twelve months. And I was according to a study by
Fortune magazine, that's an entire generation of people that are
approaching the stage in life were perching. A home essentially
becomes more and more attractive, and so for a lot
of those people. You know, I think there were headlines
years and years ago that predicted the millennials wouldn't be
(11:08):
a homeowning generation. But I think even they want to
own a home, that part of the American dream still
remains alive and and I understand that, And so I
think because of the demographics, that's another reason the housing
market might continue to remain hot for you know, the
foreseeable future. Yeah, I feel like also to the same
headlines years ago said things like millennials don't want to
buy a home, they just want to travel. Well, guess
(11:29):
what this is another pandemic induced reason for millennials. They
kind of yeah, change their tune a little bit. It's like, Okay,
no longer can you do the things that you truly valued.
Maybe you prize that nomadic lifestyle the ability to you know,
live in a small apartment, uh and then spend all
your money elsewhere on experiences, on travel. But when you
can no longer do that, Yeah, it causes some introspection.
Then you maybe start to change your values a little bit.
(11:51):
Also to some of the folks that live that hardcore
nomadic lifestyle, maybe they got tired of it, at least
some of them. Yeah, that is true, man, Yeah, how
long do you want to live in a van? For
ten years? Sure? But like beyond that, I don't. I mean,
I couldn't do it much longer than that. Even that
sounds long to me, But like I understand the appeal
of it. But then it probably does where within after
a while, that's true. Uh So. Yeah, so we're talking
(12:12):
about demand right due institutional investors, they are also now
your competition if you're looking to buy a house. Right So,
Wall Street they got into single family homes after the
housing crash of two thousand eight. They bought up a
bunch of cheap homes as the market was recovering, and
those institutional investors are still buying, meaning that you aren't
just competing against other uh you know, quote unquote normal homebuyers.
(12:35):
You're competing in a family down the street, right, Yeah, yeah, No,
you're competing with firms that have millions or billions of
dollars that they're looking to expand their their holdings in
their portfolios with. You know, as The Wall Street Journal
reported last month, there are potentially even other foreign governments
who are looking to purchase up real estate in the US. So, yeah,
you with your limited, finite amount of resources, your bank
(12:57):
account with a certain amount of cash in it, you're
abdy just a bannage when you're competing against the likes
of a giant investment conglomoration like that, right or prints
from Saudi Ragia, right exactly, he's gonna come out on top. Right.
So I'm sorry you were outbid, oh no by a
prince from another country. Okay, it doesn't make you feel
maybe a little bit better about it, I get it.
Why don't want this three bedroom, two bath though it
(13:19):
doesn't make sense an investment exactly, But yeah, I think
to Matt that that's the demand side, But supply has
also gone down to right, like, fewer people are putting
their homes up on the market for sale. And if
you took an econ class in high school, you know
the basic fundamental principle of supply and demand. That's like
economics one on one right there. And when there's less
supply out there, we are of course going to see
(13:39):
prices on the rise. That's definitely been the case. And again,
part of the reason is that COVID nineteen was a
scary thing for a lot of folks, and especially people
with health conditions. Many weren't interested in having strangers walked
through their house, of course, right and if even if
they were kind of interested in selling. And as more
of the country gets vaccinated, I do think we're gonna
begin to see more supply and that will at least
help a lead ate some of the like red hot
(14:01):
market insanity. That's right, man, everyone is excited to get
back to their normal lives. We're talking about supply, dude.
New construction is still down as compared to the pre
Great Recession levels. We are currently still short millions of
homes on the supply side, and although builders have been
been doing well in recent years, we still don't have
enough builders to to keep up with the demand that's
(14:24):
currently out there. And just like you said, when the
supply is level, that's only going to drive prices up. Yeah.
And another thing that hasn't helped builders out is is
that lumber prices have skyrocketed during right make so you know,
the the astronomical lumber prices have added close to dollars
to the cost of a building a typical single family
home and then like ten dollars per apartment unit that's
(14:44):
going online. Uh, and that was according to the National
Association of Home Builders. That just makes it harder for
builders to get the raw materials it takes to get
those homes built. Supply shortages sometimes means that you've got
workers who aren't able to work while you're waiting for
that lumber to come in. Yeah. I expect some of
those supply issues to be worked out in the coming years,
but some of them are gonna take even longer. And yeah,
(15:05):
when you look at the fact that, like you said,
new construction is still way down than what we were
seeing in like two thousand six, um, that just impacts
everybody's ability to buy an affordable house. Today, that's right,
And so yeah, we just addressed all the different reasons
why it is the housing market is so red hot currently.
But right after the break, we're gonna touch on a
number of different things that you can do to ensure
(15:26):
that you get the house that you want to get
and to make sure too that you're thinking about it properly.
And so we'll get to all of that right after this. Alright,
we're back from the break, and if you're interested in
buying a house right now, you've probably been put off
(15:48):
by the high home prices. You might have even put
placed a couple of offers and it turns out that
somebody bids over what you um offered, even though maybe
you even offered above asking price. Like that's how crazy
things are right now. And hopefully you know what we
just talked about helps you see you know why things
are as nutty as they are, And hopefully too, you know,
some of those things will start to shift in the
(16:10):
coming months so that things do get back into like
a little bit more of a normal state. But let's
talk about, Matt, what people need to do if they're
attempting to make an offer, if they're attempting to buy
a home in this market and and maybe even whether
or not they should be right, Like, I think the
first thing that people need to know if they're planning
to buy a home in this crazy market is to
be prepared to stay in that home that they're buying
(16:31):
for a minimum of seven years. That's kind of something
that we've always said as a rule of thumbler buying
a home. And you know that's because the transaction costs
of buying and selling homes are just kind of ridiculous.
Like it's really expensive to buy and sell a home.
You know, we're talking about closing costs, agent fees, um,
you know, all that kind of stuff. So it's even
more important, I would say, when prices are at all
(16:51):
time highs to make sure that the home that you're
buying is one that you're gonna hold onto for for
quite a while. Yeah, before it's like a minimum of
seven years. Now it's kind of like, I don't know,
maybe seven us here's that you would want to hang
onto that house for. But yeah, let's go ahead and
talk more about how to go about buying a home
while the market is making it harder to do so
right now, And the first thing that we want to mention, UH,
(17:12):
is for you to get an experienced agent through to
solid agent with a lot of experience under the belt
can help sort of act as a sherpa, as a
guide for you as you kind of navigate through the
ups and downs of trying to buy a home in
a frothy market like we're currently seeing. They can help
you to avoid some of the pitfalls that others might
be making, uh in their angst to own a home.
(17:33):
And so you're gonna want to find a great agent
who has solid negotiation skills, someone who is easy to
communicate with, but a good experienced agent will also be
honest with you and will help you to kind of
navigate those emotional waters. Because there's no other asset that
we own that we're more tied to than our homes, right, Like,
it's something that we move into. We see ourselves there,
(17:54):
we see ourselves raising our family, our kids there. It
kind of becomes a part of who we are as people,
and that can cause us to make some decisions that
may not financially make the most sense for us. Oh yeah,
for sure. I think that's that's definitely true, and and
I think we're seeing that now is maybe some people
getting in over their head buying more than they actually
should be. It's probably a reactionary thing, right, and I
think a good agent can help you to avoid emotional
(18:16):
decision making. It's easy to lose out on three or
four homes and and then inwardly you resolve I'm gonna
get the next one, but that might not be the
best thing for you, right, Like fool me once or
twice or four times, never again. Yeah, yeah, but then
you overpay and you regret it, and you don't you're
like happy that you're in this home, but you're like,
I don't even know if I can actually afford this
(18:37):
home now because I made an offer that I can't
actually back up. And like, so we would say that
you need to set some parameters that you've outlined with
your agent early on, and then refer back to those consistently.
It can be easy to see your standards slowly and
incrementally changes. You're looking for a place, too, so you
have to make sure that your line is drawn. It
can easy. It can be easy to start looking at
homes and you know you're content with two bedroom to bath,
(19:01):
and then things start to creep up and you're like well,
we might want that third bedroom, and maybe we want
you know this or that, and you start adding features
onto the home you're looking for that increases the price,
and so yeah, it's it's kind of like coming up
with an investing plan and sticking to it. You probably
need to come up with a plan of the kind
of home and the location that you're looking for and
be willing to stick to that too, That's right. Yeah,
(19:21):
So having an experienced agent is really important in today's market. Also,
do getting pre approved. Making sure you have your finances
lined up is a really important step, we think before
you even start to go look at homes. But we
also think it's really important to know what you are
willing to spend, not just what the bank is willing
to approve you for. Yeah, it should likely be less
than the full amount that a bank or credit union
(19:44):
says that you can afford. You don't want to become
house poor with that mortgage payment straining your budget every
single month. Um. But having that pre approval letter lined up,
along with proof of funds that you're gonna need to
have for that down payment, are going to be really
helpful in today's market. And true it's part of making
a stronger offer is having pre approval and having proof
of funds that you actually have money in order to
(20:05):
back up that offer. And Matt two, yeah, I would
say right now, another thing people need to pay special
attention to is their credit score if they want to
make an offer on a home and they actually want
to get it accepted. Because at the same time prices
are skyrocketing, it's becoming tougher to get a loan, like
the lending standards have gone gotten even tighter in recent months.
So your credit score matters a whole lot right now
(20:27):
when you're getting a mortgage. It always has, but but
it means even more of these days. So keep track
of your credit score on sites like credit Karma or
credit score card dot com. Those are two great places
to look, or just your credit card probably when they
send you your bill. You have the ability to check
out your credit score for free to wherever you get it.
Just make sure you're kind of keeping an eye on it.
Also to in particular, if you're in the market to
(20:49):
buy a home right now, pay your bills on time, religiously,
and then don't take out any unnecessary lines of credit
in the months before you intend to start making offers.
If you do that, you're going to potentially hurt your
credit score at the time you needed the most, at
the time that you need it to secure the best
possible financing rate, and then not having a good enough
credit score one it could mean that you pay a
(21:09):
higher interest rate and that could be thousands of dollars
over the life of the loan, or it could mean
not getting that house altogether. So credit score crucial right now. Yeah,
the credit score is important, but even taking out another
loan or an additional line of credit like your credit card,
could throw off your debt to income ratio enough to
where yeah, the bank or that lender would then say, sorry, uh,
you no longer qualify um. At the very least, you're
(21:31):
gonna have to go through a lot of paperwork writing
out those letters of explanation as to what it is
these cards are, and they might even ask you to
close some lines of credit or credit cards. Something else
that we'd recommend for folks to do when it comes
to looking at houses today is to consider lowing your expectations.
You know that, like the perfect house, it's always gonna
be tough to find, but getting the exact hone that
(21:52):
you've dreamed of is even more difficult. Right now, there's
you know, like eighty two other people out there who
also think that the home that you really want is
gonna work for them, So you might need to be
willing to buy a home that doesn't check all of
the boxes. It makes me think of Actually, on Monday,
we talked with Troy and Rashad uh and they kind
of mentioned that was my big deck away from that episode,
the four three two one approach. I feel like this
(22:14):
is sort of a variation on that. You know, don't
think about purchasing your perfect little house that you know
that that's gonna work for you for the next five
to ten years or whatever. Now think of it as
something that you're going to hang onto. And definitely it
can be a house that you purchase that you know
isn't perfect, But if you're able to see it more
as an investment that can allow you to hopefully get
on board with a house that's not perfect, but it's
(22:35):
gonna be a good home. It's gonna be a home
that can serve as an investment in the cash flow
that you're gonna receive from that property can help fund
the actual dream home that you're gonna maybe purchased, yeah
years down the line. So maybe stop looking for that
single family home, start looking for the duplex, triplex or
even quadplex, you know, and that and that can be
better for your monthly budget, and that can be better
for your financial future too. I agree. I love the
(22:55):
four three two one. I thought it was like such
a such an awesome, such an awesome way to think about,
you know, buying a house and investing in property for
the future. Also to Matt, like, lowering your expectations is
important because it's harder to get everything you want in
today's you know environment. But also you've gotta be on
the ball. With more than half of homes that are
listed going under contract in a week or less, you'll
(23:16):
need to be checking the area that you're interested in.
I would say every day, sometimes more frequently than once
a day. And that's also to where a good agent
can come in is if they are on the ball
and they're feeding that stuff to you. It helps you
to be on the ball, you know, when things come
active so that you can make an offer quickly. Sometimes
things will come online on a Thursday, and people make
(23:36):
offers on Thursday and Friday and then it's done, like
they have accepted an offer by Friday night and it
doesn't even last a weekend. And so if you're one
of those people who needs a few days to really
think about it, that's gonna work against you in today's market,
You've gotta be on the ball and looking frequently is
going to allow you to tune in with the market too,
so you can spot a deal and be ready to
pounce when it comes along. You're gonna know when something's
(23:56):
undervalued if you're looking in a specific area for months
on end and you're tuning in basically every day. Yeah,
it's important to know that this is what the market
looks like today though, right because I think for some
folks they may not want that, And so it's important
to keep in mind. You're gonna have to kind of
weigh the benefits and the downsides to purchasing a house
in today's market. Are you willing to keep up with
(24:17):
it that well, if not, you might find yourself maybe
overpaying because you're not able to pounce on that deal. So, yeah,
these are things to keep in mind before you found
a house, right well, as you're searching for a home,
But what you've found a home and you want to
put an offer on it, you want to make sure
that you make your offer look strong, and so finding
out what the seller wants can help you to make
that strong offer. If the seller, say, wants to to
(24:39):
stay in the home for a week maybe two weeks
after the closing, if you can write that into the offer,
that can massively increase your chances of having an offer accepted. Uh,
If a more immediate closing is the most important factor
for them, submit an offer with a shorter due diligence
period and a closing date that is sooner than you
might normally offer. And another thing too, increasing the amount
(24:59):
of earnest money that you are willing to put down
as another way to show the buyer that you are serious.
If others are submitting offers with, you know, like say
five thousand dollars of earnesce money, then submit years with
ten thousand dollars. That alone can be a big check
mark in your favor. And keep in mind, you know,
you get that earnest money back if you terminate the
contract while in that due diligence period, so it's it's
(25:21):
not really something that is actually costing you more you
just have to have that money available. I feel like
that's how you're gonna be able to beat out the princess,
like the foreign princess of this world, right is just
buy bigger, earnest money, right, It's like I've got five
thousand more dollars, buddy, Well, I think to like one
other thing, Matt, that's obviously really really important. How a
lot of people are getting offers accepted right now is
people making cash offers, and so that's just not possible
(25:45):
for so many people. But there are a lot of investors,
a lot of you know, foreign entities that are willing
to offer all cash on on a home right now.
And so I would suggest, like, if you do have
the money in savings, even in an investment account, right
you can make a quote unquote cash offer, but you
can reserve a financing contingency. Right. Sellers know that a
(26:06):
buyer with cash is far more likely to close on
the home because of financing. Mishap won't get in the way.
And if you have cash, even if you intend to
get financing, making that cash offer with the ability to
secure financing you know during the process could really help
you out. Basically, it's making that strong offer from the
get go. It helps you to avoid counter offers and escalation.
That's what you want to stay away from, where a
(26:27):
seller says, I like your offer, but there's three others
that are similar, highest and best by Sunday night Boo. Yeah,
you don't want to be in that position. That's when
the emotions start to take hold and you offer more
than you then you actually wanted to. We're not gonna
let this one get away, So yeah, we would not
recommend that, right, But submitting a video or a letter
can make the difference for multiple reasons. First, it's an
(26:50):
emotional appeal, but you know, the seller often sees that
as a sign that you really want the home, you know,
so that means a greater chance of the deal actually
going through. And since time is money in a real
estate transactions, yeah, this helps the seller know that they
can kind of move on with their life if they
accept your offer. They're not you know, they don't have
a new part time job of trying to sell their house,
which is often the case. That's the worst thing as
(27:11):
a seller is the contract falling through, having to put
it back on the market, and it feels a little
snake bitten. Other people are like, oh, was it a
bad inspection? What's going on? And and so sometimes yeah,
that can cost a seller a lot of money. And
so if you really love the house and you're you know,
you communicate that effectively to the seller, I think that's
really helpful way of getting your offer, you know, up
(27:33):
to the top of the consideration list. Also to Matt,
there are some people that are suggesting to forego having
an inspection or for go putting that in the contract
that you have the right to an inspection, And I
don't think that's a good way though, to move forward
with your home purchase. You a waiving that contingency might
help you get under contract, but it might mean that
(27:53):
you're buying a house that could potentially be a money pit. Right.
Inspections can reveal problems that you can't see with your
own two eyes, you know, unless you are a general
contractor or you have a ton of experience with houses. Um,
you know, even personally as someone who's bought half a
dozen homes and you know, as a landlord has rental properties,
I still get each one inspected. And so if if
(28:14):
it came down to that, I would say no way.
Jose Man I'm gonna I'm going to always put that
inspection contingency in there, and I'm always going to have
an inspection done. And if anybody says that you should
forego that in order to get this home, I think
that's a step too far. It's something that I would
not be willing to do. That's rights and also too
you don't ask for a bunch of repairs to be
done within uh the negotiating and within the offer. Sellers
(28:37):
are way less likely to make repairs or press concessions
when the market is dramatically in their favor. But do
keep these things in mind. Right, factor those necessary repairs
into what you're willing to spend on the home. You
want to get your foot in the door. You want
to make sure that you're able to lock down this house.
But at the same time, you don't want to end
up out of pocket a ton of money that you
weren't necessarily expecting to spend. Yeah, And I don't think
(28:59):
we're saying don't negotiate at all. I'm just I think
we're saying that it makes me think of negotiations with
my children this way in that right, like like they
don't have much of a chance to get certain things
by me, Like Dad, can we have like two more desserts?
It's like no, And there's like zero chance that that's
gonna happen tonight. Is you getting more? You getting more dessert?
And so I think, Yeah, what you're gonna do maybe
in that process is annoy the seller. And so you
(29:20):
have to get to be kind of like ginger with
what you're asking for while you're you're you're in the
negotiation process. You don't want to overstep your balance because
that's not the kind of market we're in. Yeah, this
is another reason why having a great agent is gonna
allow you to come out ahead. So, like we said,
if you're purchasing at home, it's gonna take a lot
of mental bandwidth, a lot of emotional energy. But here's
the thing, this isn't the only option that's available to you.
And so if you're not willing to jump through all
(29:42):
those hoops. Right after the break, we're gonna get to
a few other options for you to consider. Right we're
back from break, we're talking about buying a home in
a red hot market, and I feel like it is
more difficult. Mat We we did cover a lot of
(30:03):
ground about what potential home buyers need to think about
and how the game's kind of changed essentially, you know,
over the past ten years, and especially in the past
year year and a half as things have really heated
up with a short supply. People have to be on
the ball and they have to be able to make
um able and willing to make a strong offer from
from the get go. But they also have to have
their personal finances in order to get the ball rolling
(30:26):
with buying a home too. But I think for people
who maybe aren't willing to, as you said before the break,
jump through all those hoops, there are some alternatives to
buying a home throwing a hot market. You can actually
sit this one out, don't you think? Yeah, man, that's
certainly an option you could consider waiting for more favorable
market conditions. You know, this would allow you to save
up more dough for a bigger home budget while you
(30:46):
wait for for prices to the chill acts a little bit.
But the problem, though, right, is that with his plan,
there's no guarantee that the home prices will actually chill
out and take it easy, allowing you to execute that plan.
And there's there's certainly pros and that might allow you
to personally get in a more stable financial position. But
that doesn't necessarily mean that the market is going to
back down, allowing for lower prices in the future. True,
(31:10):
although I'd be surprised if you know, the market continued
at the same rate that it's been doing over the
past year for the next year or two. I mean,
you know, home prices industry going up year over a year,
Like that's that'd be um. It would be unlikely that
that would continue to happen over the next couple of years.
Each year at your home will be worth like one
point five million, but in like two years, you're like
your two bedroom, one bath is now just worth a
(31:31):
ridiculous amount of money. But yeah, so I think another
alternative to buying a home during a hot market, you know,
instead of taking part in the game you said, you know,
waiting for more favorable market conditions, another reaction is to
maybe move somewhere else. Right, Like Austin is a specific
city that maybe if you live there, but you don't
have to live there, maybe it's a perfect opportunity to
find a new location to to exist in. Right, It's
(31:53):
easier said than done, Right, Like, I'd prefer some of
the other options, you know, than to to this option
because I love where we if and it's it's not
my intention to leave anytime soon. Family, community, friendships, like
all those things are really important when you're thinking about
where you want to live. But if owning a home
is a priority for a lot of folks out there,
and you are flexible about where that house is located,
(32:13):
I mean, moving even just a few miles away from
your ideal location could really change the pricing equation. And
if you wanted to take it to an extreme, I mean,
be willing to move to another state or city altogether.
If you're facing extreme market conditions and extreme headwinds in
buying a home where you currently live, like it might
make sense to go elsewhere you might find more buying
opportunities just around the corner. Yeah, and I definitely see
(32:35):
this as an option for folks who are a little
bit younger. Right, if you haven't been, you know, in
your career for very long, like maybe you've only recently
gotten out of school, but maybe you haven't put down roots,
and it is easier for you to potentially, you know,
kind of uproot your very shallow roots and move somewhere
that's maybe a little more affordable. That might also be
true for people who are actually quite a bit older.
I think sometimes for folks who are in the middle
(32:56):
of their lives, like that's when you have the most
roots or the most difficult movie, like that's why the school. Yeah,
really it's kids in the roots that you put down
once you kind of get involved and you get you
get used to a certain neighborhood and and those friendships
in particular, I think are more difficult to replicate elsewhere, right. Yeah,
And and if your kids are grown, you know, and
they're off doing their own thing, now, maybe it's the
(33:17):
perfect time, actually, if you're older, to move somewhere else
to make maybe even move closer to kids and grandkids.
And especially I mean, given just the ability for folks
who work from home, right, I mean, never before have
we been able to live wherever we wanted to while
still maintaining our jobs. And so certainly one of the
effects of the pandemic a huge amount of people who
can do that for sure. Yeah, and one other option
(33:38):
I guess we wanted to if they're out there for folks, uh,
And it's not going to be one that you're excited
to hear if you've been looking at houses recently, become
a prince. Yeah, oh no, yeah no, but yeah, if
if zilla, if you're constantly on zillo and buying a
home is top of mind for you, you're not gonna
want to hear a say, but maybe you shouldn't buy
a home at all. Right, Renting is still to be
(34:00):
a better decision for a lot of folks. Rents have
actually gone down in much of the country as single
family house prices have risen. And so if that's you
keep renting and save and invest your money for a
time when supply and demand are a little back and sink.
And we're hardly even touching on the fact that owning
your own place, owning your own house or your apartment
may not necessarily be in the cards given the lifestyle
(34:22):
that you want to continue living, right, I mean, we
talked about how the pandemic has caused maybe a lot
of millennials to kind of really look at what it
is that they want to spend their money on. But
I mean, folks are getting back to traveling right now.
Countries are opening up, travelers becoming more a part of
our lives again, And so don't let this temporary although
significant occurrence you know that we've had over the past
year lead to a permanent or not permanent. You can
(34:45):
always sell your house, but lead to something that you
you might regret in a couple of years. Yeah, and
that regret too, can come with a high cost, especially
if you're trying to sell a home a year or
two after you bought it. Now, we know too many
friends and family members who have done that, and you know,
they end up hurting them if they didn't known the
home long enough. It just doesn't give you enough time
to recoup those costs. And so let's offer a little
(35:08):
hope to Matt. I think because you know, for those
who feel like the home price insanity is going to
continue in perpetuity, that's just not true either. Like we
always find ourselves in cycles. Market cycles are a part
of life. Supply and demand will get back in sync
as builders ramp up to glean the profits, or other
people put their homes on the market as they see
prices rising and they're like going for the cash grab.
(35:29):
And I truly think that even current homeowners are are
going to see the beauty in selling and renting. For
a while, some people will see this, They'll say, why
in the world when I not sell my home for
six thousand dollars when I can rent in the same
neighborhood for two thou dollars a month. And that's actually
the disparity, the true disparity in some locations, Um, you
can you can rent a six hundred thousand dollar house
for two thousand dollars a month. If that's the case,
(35:51):
it's gonna make more sense to a lot of people
to to start selling their homes. There will be more supply,
but it's gonna take time, and we've pretty much spent
this entire episode talking about the inside of the equation,
But the supply side will inevitably respond accordingly until there's
a balance. I mean, there is more incentive for home
builders to ramp things back up as much as possible,
and there is going to be more incentive for you know,
(36:12):
sellers to put their house on the market. So while
this glitch is painful right now, if you want to
buy a house like you know, in the next year,
it's not gonna last forever. Yeah, and don't forget too
that rising interest rates could cool things off. You know,
we're not predicting an interest rate spike per se, but
we are still near all time lows and so and
this has helped housing affordability. If interest rates take up,
(36:33):
that will likely cool off the rising prices, because you
know it's gonna hurt overall affordability and so. On one hand,
I guess, you know, rates going up, it's a bad
thing because that means you're gonna be paying more to
the bank. But it's also it kind of bounces out
maybe a little bit, because we might see prices come
down a little bit in the future. Yeah, Obviously, housing
prices in the last couple of years have been insane,
and it stinks if you're in the market or if
you want to be in the market to buy a
(36:53):
house and you're like, I'm forced to sell on the sidelines.
This is not even a choice. I cannot participate, and
it can be discouraging. I think if owning your home
has been a big goal for you and your family,
you've been saving for it for maybe even years now.
But also at the same time, Matt, the mortgage rates
you just mentioned, they do mean that affordability hasn't gotten
as out of whack as I think a lot of
people might think. They see the sky high prices, but
(37:14):
you know, super low interest rates, you know, thirty year
mortgage in the twos, you know, is what we were
seeing at the end of last year that made it
so that people could afford to buy more home. And
I think we need to reiterate if you're planning to
stay in the home that you're buying for seven years
or longer, buying a home even in the middle of
this current madness, it's it's not a terrible idea, but
you just got to make sure you follow some of
the steps that we've discussed so that you don't don't
(37:35):
end up with six figures of buyer remorse or pull
the trigger based on kind of an emotional reaction to
what's happening now, wanting to get in before prices outstrip
your ability to afford a home. That would be a
bad reason to buy. And Matt and I we continue
to believe, and we will continue to say on the
show that renting is not throwing away money, and it
makes more sense for more and more people every single
(37:56):
day as prices continue to just kind of shoot through
the roof. Yeah, man, that's right. And hopefully with this episode,
listeners are able to see that purchasing home in today's
hot environment, it's not as simple as a yes or no.
There are a lot of different things that we need
to take into account. But if you do want to
purchase at home, there are a number of things that
you need to keep in mind to make sure that
you're successful at snagging that home. But Joel, now it's
(38:18):
time for us to shift gears. Let's get back to
the beer that you and I shared on this episode.
That's one was called Rhyming Numbers by the Eighth State
Brewing Company, and this was an Imperial sour with lots
of different things included. Uh in this beer? What your
thoughts on it? All? Right? So, yeah, there was a
ton of things in this beer. I would say when
when we poured the beer, it looked like I was
drinking Perade Beat. And I will say, I'm glad it
(38:41):
wasn't purade Beat, because I don't think I want to
dug that beats are good. Uh yeah, I'm kind personally,
I'm glad you like them. I love beats. Would you
drink parade Beat? Um? Yes? Well, okay, but it didn't
taste like that. It tasted like had pineapples and cherries.
Kind of kind of vibe going on also to some
sweetness because they was marshmallows in this beer. And then
(39:02):
like the beer said, there were pistachios in it. I
was barely getting any nuttiness in it, but maybe just
a hint. But this beer really was like a kitchen
sink beer. They tossed a bunch of stuff in. But
this brewery, they ate stayed out of South Carolina. They
know what they're doing to such an extent that this
was delicious, like SPoD imminently drinkable sour beer with a
bunch of different flavors coming at you that just blended
(39:23):
perfectly together. Yeah, you mentioned pistachio. That's one of the
ingredients they had listened to. Here we can all agree
that pistachio are like the best nut out there. Yeah, like,
yeahstachio came down. There's no better nut than the pistachio.
But yeah, it's interesting you mentioned are close second. Almonds
are very good, Yeah, but they still don't. Dude, if
pistachios were as easy to eat as almonds, then I
think pistachios would definitely win. You need to you need
(39:44):
to go my route and buy the pre shell in
the bag at the costco. Man, it's it's a wonderful feeling. Uh.
You mentioned cherry, and it's interesting because there's actually not
cherry listed out on here, but it totally has cherry
vibes going on. I feel like it almost has like
this mold red wine kind of of flavor profile gone on,
Like in my in my mind, there's like almost like
warming spices where it feels like a you know, just
(40:06):
like a kind of blanket of a beer on your
on your tongue as you drink it. And so this
hour almost kind of has like stout like qualities, Like
you know, you're kind of drawn to that heaviness, you're
kind of drawn to that texture. Maybe a little more
in the in the winter or maybe even in the
autumn months, but you're typically looking for that with the stouts,
and so to have that in a sour is actually
was to me really unexpected but at the same time
(40:27):
extremely delicious. I'm glad that you and I got to
share this one, and big things to the folks out
there at eight State Brewing for donating this one to
the show. No doubt, all right, that's gonna do it
for this episode. If you want to check out the
show notes and links to anything that we mentioned on
the this episode. Just go to our website at how
to money dot com. That's right, man. So that's gonna
do it for this episode. Until next time, Best Friends Out,
Best Friends Out, m
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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