I’m a new dad, I moved to the Bay Area a few years ago and I’m thinking of purchasing a single family home, but with real estate prices currently through the roof, is it still a good idea to buy a home or should I invest in stocks for now and just wait for a housing market correction? I heard Nvidia and AMD are strong buys.
Certain Ai companies are rumoured to be overvalued and might cause a market correction, I’d suggest you go with a managed portfolio, but even those don’t perform so well, so it’s best you reach out to a proper fiduciary to guide you, that’s what works for my spouse and I.
My CFA ’Margaret Johnson Arndt’ , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
Thank you for this tip. It was easy to find on web your coach Margaret Johnson Arndt Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her résumé.
I bought my first home at the worst time in 2008 and watched it depreciate from $750k to 600k by 2009. But I held on and now it’s worth $2M. It’s really never a bad time to buy if you’re in it in the long run as home prices will go up just as rents will. Yes you might get lucky and save a few thousand but you’re likely going to loose that in rent anyhow. I bought a second home in 2020 while most people said I was crazy because no one was buying at that time. Now this home has nearly doubled its price in just 4 years. Don’t let a few thousand hold you back, you’ll be paying more the longer you wait.
Glad to read this. I bought a house in October for $500k. A bigger more updated house in the same neighborhood just sold for $495k so I'm pretty bummed
The issue is that if values do drop you won't be able to refinance when interest rates come down. If you are in a good spot it may not matter but it never feels good wasting money on interest.
There was a time, when people bought a home strictly for shelter, then after the tech bubble burst investors began to view housing as an investment. After the housing bubble of 2007-2008 home construction came to a screeching halt and hasn't been able to resume with the subsequent growth in population since then, all that to say, that return on investment is now a component used to determine if someone should buy a home or now, and when to buy. The advice you shared is solid, the days of being able to flip a home for a big gain shortly after closing are long gone, and even fixer uppers are not bargains anymore as the price of construction materials and labor are through the roof. If your intention is to stay long term and you can afford the payment comfortably then time is on your side, trying to time the market doesn't always work and with the tight supply of available homes a crash in prices isn't very likely in the foreseeable future.
Best accept the fact that there will always be something... home inspectors typically don't do destructive inspections (open walls, etc...) but they do usually find symptoms of issues, like wet areas of drywall, bad GFCI's, etc... And you can always bring in a specialist. At the end of the day you're at the mercy of what the previous homeowners knew about / disclosed, and the rest is unknown... but certainly solutions exist for pretty much any problem you could run into... And if it's really bad and the Seller knew, you got yourself cause to go back to them and possibly the home inspector for a (legal) remedy.
Well yes, however... you're leaving out an important factor... appraisers. If a buyer and seller agree on a price of $350,000, but the appraiser says its only worth $300,000, that sale is probably not happening.
Buying a home should be a long term decision. If you feel like the price of your house over the next 5 years will have a material impact on you you probably shouldn't buy it
You people who feel its ok to be underwater in your home are crazy. You will be a prisoner in that home unable to sell if you get a job transfer, divorce or need to sell for any reason. Very few properties will now rent for enough to cover monthly mortgage and maintenance and repairs. Also , imagine seeing the house next to yours selling in a year or two for 50k less with a much lower interest rate. YOU WILL HATE YOUR HOUSE!
user-oh6ox9 , I understand that if you in the position of having to move it’s important but if you’re staying long term there isn’t any reason to panic. I will give you an example ; I would see my neighbor almost every morning standing in his driveway, looking like someone died 😢 . So after several days I finally asked him what was going on ? He was completely panicking- almost in tears. We were told that our house dropped below the purchase price ( housing depression ) He asked me why I’m not worried , it’s really simple-if you told me my house was worth a million or if it was below the original price. It really doesn’t matter , good schools, brand new neighborhood and I’m not moving for 10-15 years. He said WOW I never thought of it like that 🤔 . Roughly 16 years later I sold it and made enough profit to buy 2 repo homes- 1 with cash and 1 with a nice down payment , my new house payment is lower than my original mortgage payment 😂
@@bobdees6428 and see, I didn't have to go through all that. I sold in 2007 at top dollar and was able to purchase 2 homes in 2011 and paid cash for both with my proceeds. While you had to wait many years and still have a mortgage, I sold at the right time, waited patiently and bought at the right time. Nobody should be ok with losing money on a home that could take a decade or more to break even.
Javier’s fears are EXACTLY what happened to me in 2007 when I purchased. In fact even 16 years after the 2008 crash I still haven’t fully recovered. I’m finally in a position to purchase again and I’m getting the same exact gut feeling that I had in 2007 but went against my gut because everyone said real estate never falls.
What do you mean you haven't recovered? You lived in your house for 15 years and now you should have lots of equity. A renter would have paid over $200K in rent over that same period with nothing to show.
@@هذاأنا-ذ3ث I wish it was that simple. In order to avoid losing my house I rented it out and my once primary residence became a rental property. It dropped by over 60% in value from what I purchased it for in 2007. Paid $334k in 2007 and it took until 2018 for it to get back to that valuation. Every year I had to pay for tenants who ruined the property. HVAC, carpets, paint, not to mention HOA fees that just keep going up. After 16 years yes I have decent equity. Nothing close to what I would have had I bought in 2009 or 2005 just 2 years removed from when I did but still I have equity. Except for the fact that because it’s a rental i would get taxed something like 30% on the sale price effectively eliminating a ton of my equity. Combine that with the fact that I have been renting since 2007 and you see that my situation sucks. I wish I never bought ever. I could have invested in something else and would have done ten times better. No, My advice in this market is DO NOT BUY. You could end up like me.
@@larrybassik2768 dude it absolutely molded me into the person I am today. Going through what I did is not for the faint of heart. The only reason I made it out is because I’m resilient, flexible, and honest to myself and others. I have been living below my means for my entire life.
These same people will buy a brand new BMW for 80k and 2 years later it’s worth 30k. These same people complain about Boomers for buying a house 40 years ago although they were making the same complaints becuase the market was also high. If you can afford it just buy becuase either way you need a place to live regardless if the market crashes or not
This video hits hard. Way to tell it like it is. Society has a funny way of tricking our minds. The biggest thing is can you afford it. Are you comfortable with your payments. Is it your forever home. Will your family grow. If you need to upgrade will it rent out equivalent to your mortgage. Does that market appreciate in rental prices in line with increased property taxes/insurances. Do your homework and try your best to cover every potential circumstance.
1. To buy house is not an investment. Its place for my family. I don’t mind my house value going down while i live there paying less tax. But time when I am selling the house after a decade or two. it will be fine.
In addition to Javier’s advice; if you buy high and values drop a lot, you may end up getting the house even cheaper monthly, you can get a cheaper home insurance policy and lobby your town or city to reduce your property tax assessment. A small silver lining.
Tax assessment revaluation doesn’t work in some states. NC only reappraises to current market value every 4-8 years per county, so even if values go down, you’re stuck with that value until next reappraisal. You can always call and appeal your value (appeals aren’t uncommon, we do them all the time between April-May), but an appeal doesn’t guarantee a reduction in value. Some appeals get their value raised if they discover unlisted changes to the property (sheds, additions, renovations). Ultimately they care more about the accuracy of the records rather than the values themselves, but there is some room for appraiser’s judgement. Would only suggest appealing if you have incorrect sqft or improvements listed for the home (most info is available online, so you don’t have to call in to verify your property info)
Why are people concerned about any paper losses if they have fixed mortgage? They don't need to worry about having to renegotiate a possibly higher mortgage after buying the house?
If they need to move for job transfer/promotion or any other reason a paper loss can be catastrophic. If you are underwater, you are trapped and a prisoner in that house if it won't rent enough to cover mortgage and repairs
People have life disruptions like job losses, transfers, divorce, major medical, extended family health, etc that make them really need or want to move unexpectedly and your options are much worse or non-existent if your home value has dropped.
I bought my home late last year with the mindset that this is where i am going to live for the next 18 years. So i am not thinking of selling until i am 59 years and my kid is going to college. Do i care if the value decrease or increases? Not a bit as we dont know where the market will be in 18 years. But i chose a neighborhood that is one of the best master planned community in the State for the last 15 years and with the best schools. So i am not worried
I'm under contract right now and thinking this very question. Your video helped ease my mind haha. Definitely plan on being in the house for awhile so long term it doesn't matter
$50k (as seen in your thumbnail) is hardly a "plummet" considering current house prices. The value of things eb and flow. People, especially making big money purchases, should understand and accept this concept. If you're buying because you want/need shelter, it shouldn't matter anyway. Enough of the need to be in control. Just buy and be grateful if you're able to do so. There are many people who aren't.
@@هذاأنا-ذ3ث He had to pay the real estate agent their commission fee of 5%, other selling fees plus overdue repairs to prepare his house to be sold. I estimate he made at best $140k. A renter in 2006 would have bought a house in 2011/2012 in my neighborhood for $200k to $250k and have over $500k in equity.
1st house market isn't crashing 2nd if you buy and it does...nothing changes...u bought a house u like...hopefully...and the payment doesn't change so really there's no issue if it crashes
What if your job transfers you or offered a job promotion or have to move for any other reason and the property will not rent for enough to cover mortgage, expenses and repairs? You will be a prisoner in that home.
@@DavidM-h7cif I have the same mindset as you. I probably miss out on equity, and homeownership. Crash bros or doomers had been predicting crash since 2016 and nothing happened.
You should care. A house is the most expensive item a person will buy in their life so it's critical to be patient and negotiate. Even a difference as little as 5-10% can be the difference of $20-40k.
@@jayk3551 of course you have to pay either way. No one lives for free. Rent is cheaper today than a mortgage. Also your mortgage doesn't exactly stay fixed, property taxes increase every year regardless if the house paid off. Any increase in rent is cancelled out because you save that money on maintenance/repairs/replacements.
Hi Javier - I’m a huge fan too! There are new townhouses already build and construction still going on. My question is….will these help increase the value of my property? Or will these be a red flag to some buyers because our beautiful & quiet streets will no longer be quiet and peaceful when these townhouses became occupied soon? Thank you. Learned so much from your videos.
If you have to ask a question about something losing value, you are overpaying for what the value is TO YOU. Perceived value is something that only you ascribe value to. Example of that would be a family heirloom that is priceless to your family tree but fetches $25 at a local pawn shop. Subjective value is something that is intrinsic in nature like cost of a vehicle. It has MSRP, then it has a depreciation curve. You do not want to be paying $80,000 for a 350,000 mile 1989 toyota camry but for some odd reason when a 1975 house comes on the market you are reaching to your bank to get a $1,250,000 mortgage despite the fact that the darn thing is worth like $55,000 and requires $489,000 worth of repairs and you go like wooooow that is the coolest house I have ever seeeeeeeen. You then take subjective value and throw it outside the window because your perceived valuation of this house is at 1.2 mill. You should not be afraid of house losing value IF YOU ARE CAPABLE OF ASCERTAINING SUBJECTIVE VALUE OF IT. You walk in... see the house... screw asking price... you are offering $180K for something that some moron listed for $699K and at that point you do not find yourself caught with your pants down 5 years down the road when someone paying $720K for that very house in a bidding war is like 500K underwater. If you are a big boy wearing big boy pants then you need to play the part and know the difference in perceived and subjective value and buy responsibly.
I feel like the house you live in should be looked at as an actual place you shelter and want to live in. That investment mindset only makes sense for vacation homes and rental properties. If you are thinking of your house as an investment property, you are going to follow trends to up value and probably hate living in it.
Every time I really like a house and schedule to go see it, the house goes pending, even without showings. It’s so disappointing and frustrating. I’m getting use to it know 😒
Big props to your content! Your informative and creative videos during these times of house market climate are like a knowledge goldmine. Thanks for making learning about real estate so engaging and accessible. Loving your content and videostyle every week Keep up the great work, Javeir!
I bought my first house last August for 480k I was up 15k when we closed. Every house in the neighborhood is now selling for 520k and up. Regardless, me and my wife will be here for at least 5 more years.
The housing market can be tanking like crazy! It's like a rollercoaster. Got me thinking, what's the deal with this market crash, man? anyway nice video javier always a fan of your thought process and video editing style. Very informative piece !
Even if the house keeps same value you lose with the 6% total fees of the realtors upon sale… it needs to gain to break even… these times just dont feel right to get in…
To be fair it’s really rare to pay that much nowadays and with the whole commissions lawsuit I think that’s going to change pretty drastically in the next year
@@JavyVidana really hope so! Not sure how long the 3% + 3% rates have been “standard” for, also never quite rubbed me the right way that the buyer agent basically has no incentive to haggle for you beyond what they think you’ll bite at so it often seems you cannot be fully honest with your own agent or they’ll go the bare-minimum effort route to quickly get the paycheck.
@@JavyVidana This is news to me as we are about to sell our home and my relator told me yesterday that we have to pay 6% for concessions when we close 😮.....
Cheers Mr. Javier, this video watches like I was talking to my friend who wanted to inform me & not sell me. The world is far more gray than it is black & white.
Buy a house to live in it and not as an investment. Then it doesn’t matter if its value changes. My house went up in value. Other than getting rid of PMI, this had no impact on me. It’s worth more. So what? I’m living in it.
house like stocks. time in over short term loss. even in a crash, that short term crap is only gonna last so loing. Especially with corporate overlords buyting single family homes.
If you buy a house to be your home for many years to come, then the main concern for the home buyer, shouldn’t be a potential for a housing market crash and a major reduction in their home value. However, there’s one caveat … housing market crash has a strong likelihood to be connected to a larger systemic financial crisis, which could pose a risk to the jobs market. Thus, even though the home buyer may genuinely be planning to grow old in their newly bought house, if they lose their job or face another financial challenge, during a housing crash, they may be unable to keep up with mortgage payments - and they wouldn’t be able to sell their home without losing money, eventually facing a short sale or foreclosure.
The simple solution who sold the house in the past 2and 1/2 years after COIVD should pay 20% of tax from the house selling and give to the buyer. That will quick fix for the housing market and sellers will learn the hard lessons!! It’s a criminal the government should act quickly to normalize the house market some area still over priced I saw 1 house property history sold in 2015 487k 2017 sold 430k 2029 sold 517k in 2023 sold 815k most house in this area the same tragedy!! We can imagine the people who bought 815k going through UNBELIEVABLE it’s a criminal. The government should save the working families lives 🛑🛑🛑🛑🙅🏼♂️🙅🏼♂️🙅🏼♂️🙅🏼♂️
He's renting and saving money while you more than likely overpaid to live the commercialized American Dream. Just be comfortable and stop comparing yourself to others
@@shellroc21Doubt he’s saving money paying rent He won’t be able to sell his apartment like his house he Doesn’t own I’ve been hearing about the housing market crashing for 2.5 years now
My fears were all related to "will my house be destroyed by an act of god. The value of a home is that, when its paid off, you don't owe on a house anymore, and beyond that, whoever you will it to will make a good profit. Its about planting trees whos fruit you won't get to eat, not about quadrupling your money.
Most of what you’re buying with a house is the narrative of homeownership. If you can see beyond that, what you should be looking at is Price:rent ratios. If the ratio is higher than ~15, then you would be able to buy the house outright in fewer than 30 years if you rented and invested the excess savings in VOO. If it’s lower than that, then you would be better off buying. If you’re not a homeowner right now, you can still be an owner of something. Stocks in some industries, like reits, banks, autos, fintech, international european and Chinese sectors, US long term bonds, biotech, etc. are incredibly cheap right now. Assets are cyclical. Imo there are plenty of opportunities to invest in things toward the bottom of their business cycles. Why invest in something at the top of its business cycle? Could it go up from there? Sure. But not with the kinds of gains that something like commercial real estate had last year. Sometimes the narrative becomes so bad that the reality is better than the expectation. That’s your opportunity. Sometimes the reverse is true. That’s when to be scared, though others are feeling greedy.
If you are buying a house to live permanently why will you be afraid? Market will always up and down. But is you are expecting a crash it won’t happen.
Correct. Within the next 6-24 months your current home will be worth 20-40% less. Do Not Buy. Hoard cash. Stop spending. Hoard cash. Do not buy a house now, unless they discount the listing 25% minimum.
I feel like you missed the real point of what was being asked. Buying a house and it losing value isn't really about how other people perceive you. It's about the fact that most people will be upside down and trapped in that situation. It's great to say "well, just live in the house for 15 years" but the reality is that life happens. First time homebuyers have a family that usually grows and needs more space. Jobs come and go. Locking yourself into a loan that has a good chance of being upside down significantly seems like a bad financial decision for most young Americans.
the extra layer that's causing the fear these days, is the fact that the economy is dogsh1t, with the housing market not reflecting it. they hyperinflation of housing cost from 2020 to today, and the economic depression of 2021 to present, there's a misalignment. There's been historical precedence of a housing bubble crash with these two things happening at the same time.
This guy has the money. Buy with a 20% down payment. If you can afford another house and prices drop, buy another one. If you're concerned about investment value, spread out your investments, just as you would buying index funds.
Exactly, 2024 is the year of massive layoffs because companies over hired when money was plentiful and demand was high. Someone buying a house this year is either brave or oblivious (I bet oblivious) as to what is to come in the next 6 months.
We are about to buy a house because of a corporate transfer, sometimes it’s a requirement of career growth…but even then why buy? Because the corporate move package strongly incentivizes it with perks that only apply for the year after your transfer like paying your closing costs.
@@laurenm.6320 if the only perk is paid closing costs, I still don't think it's worth buying a house at a peak price and peak interest rates, and burdening a $2,500 monthly mortgage just because $10k in free closing costs is available. If the home drops $50k in value and interest rates drop down to 4%, are you really going to have no regret because you saved $10k in closing cost? (Be honest with yourself - that's life changing money). Now, if there are other perks from your company like a $20k moving bonus, then that might be worth the risk to buy instead of temporarily rent until better deal days.
I have a similar question and my concern is not that I would be over paying by $50,000 or even $100,000 but that the market would crash like it did in 2008 and I would buy a house for like $700,000 and the market would crash and it would be worth like $300,000. This is a concern because my first house I buy is not my forever home. I don't even plan to live in my current state forever, so when I move like 10 years from now or so I would sell it at a loss and be in debt.
I usually like your videos, but this explanation was awful. The question was clearly asking what do you do if you buy a house and then end up severely underwater. Instead of answering this, you went off on a meandering and just simply incorrect exploration of "value." First video of yours I got frustrated with to the point of not finishing it.
Javier, I have to take issue with flippers. Sorry we perform a valuable service as people look some at these dumps and there is no way they are going to buy them as is and "fix them up". We help put unliveable houses back into the market and we make a profit for that service.
*Hallelujah!!!! The daily jesus devotional has been a huge part of my transformation, God is good 🙌🏻🙌🏻🙌🏻🙌🏻🙌🏻was owning a loan of $47,000 to the bank for my son's brain surgery (Oscar), Now I'm no longer in debt after lI invested $8,000 and got my payout of m $270,500 every months,God bless Angela Christine Derle* 🇺🇸🇺🇸🇺🇸..
Hello , I am very interested. As you know, there are tons of investments out there and without solid knowledge, I can't decide what is best. Can you explain further how you invest and earn?
Our government has no idea on how people are suffering these days. I feel for people with disabilities not getting the help they deserved. God bless Mrs Angela Christine Derle for all Good works. We need such a person in the society
I’m a new dad, I moved to the Bay Area a few years ago and I’m thinking of purchasing a single family home, but with real estate prices currently through the roof, is it still a good idea to buy a home or should I invest in stocks for now and just wait for a housing market correction? I heard Nvidia and AMD are strong buys.
well you could put a downpayment on a home and as well diversify as much as you can into Ai and pharm. stocks like Pfizer and JnJ.
Certain Ai companies are rumoured to be overvalued and might cause a market correction, I’d suggest you go with a managed portfolio, but even those don’t perform so well, so it’s best you reach out to a proper fiduciary to guide you, that’s what works for my spouse and I.
this is all new to me, where do I find a fiduciary, can you recommend any?
My CFA ’Margaret Johnson Arndt’ , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
Thank you for this tip. It was easy to find on web your coach Margaret Johnson Arndt Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her résumé.
I bought my first home at the worst time in 2008 and watched it depreciate from $750k to 600k by 2009. But I held on and now it’s worth $2M. It’s really never a bad time to buy if you’re in it in the long run as home prices will go up just as rents will. Yes you might get lucky and save a few thousand but you’re likely going to loose that in rent anyhow. I bought a second home in 2020 while most people said I was crazy because no one was buying at that time. Now this home has nearly doubled its price in just 4 years. Don’t let a few thousand hold you back, you’ll be paying more the longer you wait.
Glad to read this. I bought a house in October for $500k. A bigger more updated house in the same neighborhood just sold for $495k so I'm pretty bummed
You are the only one who does realtalk..All these youtubers scare people just to get more views.. I actualy feel at ease when I watch your videos❤
If you buy a house to live in, then you shouldn't care.
Problem is that about all home buyers think they're a professional investor 😂
freaken buy a home and stay put, dammit! Its so easy.
Exactly
Unless your life unexpectedly changes and you need to move.
The issue is that if values do drop you won't be able to refinance when interest rates come down. If you are in a good spot it may not matter but it never feels good wasting money on interest.
There was a time, when people bought a home strictly for shelter, then after the tech bubble burst investors began to view housing as an investment. After the housing bubble of 2007-2008 home construction came to a screeching halt and hasn't been able to resume with the subsequent growth in population since then, all that to say, that return on investment is now a component used to determine if someone should buy a home or now, and when to buy. The advice you shared is solid, the days of being able to flip a home for a big gain shortly after closing are long gone, and even fixer uppers are not bargains anymore as the price of construction materials and labor are through the roof. If your intention is to stay long term and you can afford the payment comfortably then time is on your side, trying to time the market doesn't always work and with the tight supply of available homes a crash in prices isn't very likely in the foreseeable future.
I’m more worried about buying a house then 6 months later I find out the inspection missed mold, foundation issue, structural damage, electrical, etc.
that’s the real scary point
Best accept the fact that there will always be something... home inspectors typically don't do destructive inspections (open walls, etc...) but they do usually find symptoms of issues, like wet areas of drywall, bad GFCI's, etc... And you can always bring in a specialist. At the end of the day you're at the mercy of what the previous homeowners knew about / disclosed, and the rest is unknown... but certainly solutions exist for pretty much any problem you could run into... And if it's really bad and the Seller knew, you got yourself cause to go back to them and possibly the home inspector for a (legal) remedy.
Well yes, however... you're leaving out an important factor... appraisers. If a buyer and seller agree on a price of $350,000, but the appraiser says its only worth $300,000, that sale is probably not happening.
Buying a home should be a long term decision. If you feel like the price of your house over the next 5 years will have a material impact on you you probably shouldn't buy it
You people who feel its ok to be underwater in your home are crazy. You will be a prisoner in that home unable to sell if you get a job transfer, divorce or need to sell for any reason. Very few properties will now rent for enough to cover monthly mortgage and maintenance and repairs. Also , imagine seeing the house next to yours selling in a year or two for 50k less with a much lower interest rate. YOU WILL HATE YOUR HOUSE!
Don’t buy I’ll buy😂
@@House_hacker_619 great and I'll buy it from the bank when you lose it. 😂
user-oh6ox9 , I understand that if you in the position of having to move it’s important but if you’re staying long term there isn’t any reason to panic. I will give you an example ; I would see my neighbor almost every morning standing in his driveway, looking like someone died 😢 . So after several days I finally asked him what was going on ? He was completely panicking- almost in tears. We were told that our house dropped below the purchase price ( housing depression ) He asked me why I’m not worried , it’s really simple-if you told me my house was worth a million or if it was below the original price. It really doesn’t matter , good schools, brand new neighborhood and I’m not moving for 10-15 years. He said WOW I never thought of it like that 🤔 . Roughly 16 years later I sold it and made enough profit to buy 2 repo homes- 1 with cash and 1 with a nice down payment , my new house payment is lower than my original mortgage payment 😂
@@bobdees6428 and see, I didn't have to go through all that. I sold in 2007 at top dollar and was able to purchase 2 homes in 2011 and paid cash for both with my proceeds. While you had to wait many years and still have a mortgage, I sold at the right time, waited patiently and bought at the right time. Nobody should be ok with losing money on a home that could take a decade or more to break even.
Javier’s fears are EXACTLY what happened to me in 2007 when I purchased. In fact even 16 years after the 2008 crash I still haven’t fully recovered. I’m finally in a position to purchase again and I’m getting the same exact gut feeling that I had in 2007 but went against my gut because everyone said real estate never falls.
THAT HAD TO BE CHALLENGING BUT YOU MADE IT‼️‼️
What do you mean you haven't recovered? You lived in your house for 15 years and now you should have lots of equity. A renter would have paid over $200K in rent over that same period with nothing to show.
@@هذاأنا-ذ3ث I wish it was that simple. In order to avoid losing my house I rented it out and my once primary residence became a rental property. It dropped by over 60% in value from what I purchased it for in 2007. Paid $334k in 2007 and it took until 2018 for it to get back to that valuation. Every year I had to pay for tenants who ruined the property. HVAC, carpets, paint, not to mention HOA fees that just keep going up. After 16 years yes I have decent equity. Nothing close to what I would have had I bought in 2009 or 2005 just 2 years removed from when I did but still I have equity. Except for the fact that because it’s a rental i would get taxed something like 30% on the sale price effectively eliminating a ton of my equity. Combine that with the fact that I have been renting since 2007 and you see that my situation sucks. I wish I never bought ever. I could have invested in something else and would have done ten times better. No, My advice in this market is DO NOT BUY. You could end up like me.
@@larrybassik2768 dude it absolutely molded me into the person I am today. Going through what I did is not for the faint of heart. The only reason I made it out is because I’m resilient, flexible, and honest to myself and others. I have been living below my means for my entire life.
These same people will buy a brand new BMW for 80k and 2 years later it’s worth 30k. These same people complain about Boomers for buying a house 40 years ago although they were making the same complaints becuase the market was also high. If you can afford it just buy becuase either way you need a place to live regardless if the market crashes or not
This video hits hard. Way to tell it like it is. Society has a funny way of tricking our minds. The biggest thing is can you afford it. Are you comfortable with your payments. Is it your forever home. Will your family grow. If you need to upgrade will it rent out equivalent to your mortgage. Does that market appreciate in rental prices in line with increased property taxes/insurances. Do your homework and try your best to cover every potential circumstance.
1. To buy house is not an investment. Its place for my family. I don’t mind my house value going down while i live there paying less tax. But time when I am selling the house after a decade or two. it will be fine.
In addition to Javier’s advice; if you buy high and values drop a lot, you may end up getting the house even cheaper monthly, you can get a cheaper home insurance policy and lobby your town or city to reduce your property tax assessment. A small silver lining.
Tax assessment revaluation doesn’t work in some states. NC only reappraises to current market value every 4-8 years per county, so even if values go down, you’re stuck with that value until next reappraisal. You can always call and appeal your value (appeals aren’t uncommon, we do them all the time between April-May), but an appeal doesn’t guarantee a reduction in value. Some appeals get their value raised if they discover unlisted changes to the property (sheds, additions, renovations). Ultimately they care more about the accuracy of the records rather than the values themselves, but there is some room for appraiser’s judgement. Would only suggest appealing if you have incorrect sqft or improvements listed for the home (most info is available online, so you don’t have to call in to verify your property info)
Why are people concerned about any paper losses if they have fixed mortgage? They don't need to worry about having to renegotiate a possibly higher mortgage after buying the house?
They may be hoping to refinance to a lower fixed rate once interest rates come down. That's not going to be possible if they don't have any equity.
If they need to move for job transfer/promotion or any other reason a paper loss can be catastrophic. If you are underwater, you are trapped and a prisoner in that house if it won't rent enough to cover mortgage and repairs
If you don't plan to sell, why do you care how much it is worth? I really don't understand.
You really don't understand?
People have life disruptions like job losses, transfers, divorce, major medical, extended family health, etc that make them really need or want to move unexpectedly and your options are much worse or non-existent if your home value has dropped.
I bought my home late last year with the mindset that this is where i am going to live for the next 18 years. So i am not thinking of selling until i am 59 years and my kid is going to college. Do i care if the value decrease or increases? Not a bit as we dont know where the market will be in 18 years. But i chose a neighborhood that is one of the best master planned community in the State for the last 15 years and with the best schools. So i am not worried
I'll buy my first home later this year or next year hope intrest rates go down to 5.
I'm under contract right now and thinking this very question. Your video helped ease my mind haha. Definitely plan on being in the house for awhile so long term it doesn't matter
If you can afford it and the time is right for you, buy it.
Housing goes up over the long run
Housing in nominal dollars goes up in the long run. You could be upside down in real though.
@@rathelmmc3194but if you aren’t moving who really cares
House value going down means you pay less taxes
$50k (as seen in your thumbnail) is hardly a "plummet" considering current house prices. The value of things eb and flow. People, especially making big money purchases, should understand and accept this concept. If you're buying because you want/need shelter, it shouldn't matter anyway. Enough of the need to be in control. Just buy and be grateful if you're able to do so. There are many people who aren't.
Bigg up, you are by far one of the real ones that's being honest to the mass. Keep doing what you do, my friend
Don’t buy in an area with a ton of new builds being put up and you should be fine
Why?
@@mariofigueroag bunch of new builds = more inventory
More inventory = lower home prices
@@WillV_is t lower priced homes a good thing?
It took 16 years for my neighbor to sell his house for $800k which he bought for $600k in 2006.
OK, so he will make $200K. A renter over that same period woul have spent over $200K in rent and ZERO equity. Your neighbor is fine.
@@هذاأنا-ذ3ث He had to pay the real estate agent their commission fee of 5%, other selling fees plus overdue repairs to prepare his house to be sold. I estimate he made at best $140k. A renter in 2006 would have bought a house in 2011/2012 in my neighborhood for $200k to $250k and have over $500k in equity.
1st house market isn't crashing 2nd if you buy and it does...nothing changes...u bought a house u like...hopefully...and the payment doesn't change so really there's no issue if it crashes
What if your job transfers you or offered a job promotion or have to move for any other reason and the property will not rent for enough to cover mortgage, expenses and repairs? You will be a prisoner in that home.
@@DavidM-h7cif I have the same mindset as you. I probably miss out on equity, and homeownership. Crash bros or doomers had been predicting crash since 2016 and nothing happened.
@@House_hacker_619 go for it. You must be too young to see or remember how these cycles work.
You should care. A house is the most expensive item a person will buy in their life so it's critical to be patient and negotiate. Even a difference as little as 5-10% can be the difference of $20-40k.
@@jayk3551 of course you have to pay either way. No one lives for free. Rent is cheaper today than a mortgage. Also your mortgage doesn't exactly stay fixed, property taxes increase every year regardless if the house paid off. Any increase in rent is cancelled out because you save that money on maintenance/repairs/replacements.
Hi Javier - I’m a huge fan too! There are new townhouses already build and construction still going on. My question is….will these help increase the value of my property? Or will these be a red flag to some buyers because our beautiful & quiet streets will no longer be quiet and peaceful when these townhouses became occupied soon? Thank you. Learned so much from your videos.
Can you please make a video on ways to know if your home will appreciate in value? I can’t find one.
If you have to ask a question about something losing value, you are overpaying for what the value is TO YOU. Perceived value is something that only you ascribe value to. Example of that would be a family heirloom that is priceless to your family tree but fetches $25 at a local pawn shop. Subjective value is something that is intrinsic in nature like cost of a vehicle. It has MSRP, then it has a depreciation curve. You do not want to be paying $80,000 for a 350,000 mile 1989 toyota camry but for some odd reason when a 1975 house comes on the market you are reaching to your bank to get a $1,250,000 mortgage despite the fact that the darn thing is worth like $55,000 and requires $489,000 worth of repairs and you go like wooooow that is the coolest house I have ever seeeeeeeen. You then take subjective value and throw it outside the window because your perceived valuation of this house is at 1.2 mill. You should not be afraid of house losing value IF YOU ARE CAPABLE OF ASCERTAINING SUBJECTIVE VALUE OF IT. You walk in... see the house... screw asking price... you are offering $180K for something that some moron listed for $699K and at that point you do not find yourself caught with your pants down 5 years down the road when someone paying $720K for that very house in a bidding war is like 500K underwater. If you are a big boy wearing big boy pants then you need to play the part and know the difference in perceived and subjective value and buy responsibly.
I feel like the house you live in should be looked at as an actual place you shelter and want to live in.
That investment mindset only makes sense for vacation homes and rental properties. If you are thinking of your house as an investment property, you are going to follow trends to up value and probably hate living in it.
This is why you should never fall in love with anything. Your emotions will rationalize stupid and illogical decisions.
That’s what I tell my friends about my ex wives. 🤪
Every time I really like a house and schedule to go see it, the house goes pending, even without showings. It’s so disappointing and frustrating. I’m getting use to it know 😒
Does that include falling in love with people?
Big props to your content! Your informative and creative videos during these times of house market climate are like a knowledge goldmine. Thanks for making learning about real estate so engaging and accessible. Loving your content and videostyle every week Keep up the great work, Javeir!
I bought my first house last August for 480k I was up 15k when we closed. Every house in the neighborhood is now selling for 520k and up. Regardless, me and my wife will be here for at least 5 more years.
I bought a townhome in September of 2023. I'm not worried about my home value increasing right away. It was better for me to buy versus renting.
The housing market can be tanking like crazy! It's like a rollercoaster. Got me thinking, what's the deal with this market crash, man? anyway nice video javier always a fan of your thought process and video editing style. Very informative piece !
Even if the house keeps same value you lose with the 6% total fees of the realtors upon sale… it needs to gain to break even… these times just dont feel right to get in…
To be fair it’s really rare to pay that much nowadays and with the whole commissions lawsuit I think that’s going to change pretty drastically in the next year
@@JavyVidana really hope so! Not sure how long the 3% + 3% rates have been “standard” for, also never quite rubbed me the right way that the buyer agent basically has no incentive to haggle for you beyond what they think you’ll bite at so it often seems you cannot be fully honest with your own agent or they’ll go the bare-minimum effort route to quickly get the paycheck.
@@JavyVidana This is news to me as we are about to sell our home and my relator told me yesterday that we have to pay 6% for concessions when we close 😮.....
Cheers Mr. Javier, this video watches like I was talking to my friend who wanted to inform me & not sell me. The world is far more gray than it is black & white.
When you get emotionally attached and pay over market value then it is worth it to you but often not to others if you must sell.
The best house to buy is one that is a fixer upper. You are guaranteed you have not overpaid for it and there is still room for price appreciation.
Fixer uppers can be huge risk.
Best for me is a dated home. I'd rather stay away from a fixer upper
Buy a house to live in it and not as an investment. Then it doesn’t matter if its value changes. My house went up in value. Other than getting rid of PMI, this had no impact on me. It’s worth more. So what? I’m living in it.
house like stocks. time in over short term loss. even in a crash, that short term crap is only gonna last so loing. Especially with corporate overlords buyting single family homes.
If you buy a house to be your home for many years to come, then the main concern for the home buyer, shouldn’t be a potential for a housing market crash and a major reduction in their home value. However, there’s one caveat … housing market crash has a strong likelihood to be connected to a larger systemic financial crisis, which could pose a risk to the jobs market. Thus, even though the home buyer may genuinely be planning to grow old in their newly bought house, if they lose their job or face another financial challenge, during a housing crash, they may be unable to keep up with mortgage payments - and they wouldn’t be able to sell their home without losing money, eventually facing a short sale or foreclosure.
How will the market crash considering builders have under built for the last 12 years? Inventory is still at historical lows.…
The simple solution who sold the house in the past 2and 1/2 years after COIVD should pay 20% of tax from the house selling and give to the buyer. That will quick fix for the housing market and sellers will learn the hard lessons!! It’s a criminal the government should act quickly to normalize the house market some area still over priced I saw 1 house property history sold in 2015 487k 2017 sold 430k 2029 sold 517k in 2023 sold 815k most house in this area the same tragedy!! We can imagine the people who bought 815k going through UNBELIEVABLE it’s a criminal. The government should save the working families lives 🛑🛑🛑🛑🙅🏼♂️🙅🏼♂️🙅🏼♂️🙅🏼♂️
I know a guy who laughed at me for buying in 2020 and told me I was going to be underwater because the market was going to crash. He’s still renting.
He's renting and saving money while you more than likely overpaid to live the commercialized American Dream. Just be comfortable and stop comparing yourself to others
@@shellroc21Doubt he’s saving money paying rent He won’t be able to sell his apartment like his house he Doesn’t own
I’ve been hearing about the housing market crashing for 2.5 years now
@@shellroc21 not when rent went up a lot. And renters don’t get the tax incentives homeowners get.
My fears were all related to "will my house be destroyed by an act of god. The value of a home is that, when its paid off, you don't owe on a house anymore, and beyond that, whoever you will it to will make a good profit. Its about planting trees whos fruit you won't get to eat, not about quadrupling your money.
Most of what you’re buying with a house is the narrative of homeownership.
If you can see beyond that, what you should be looking at is Price:rent ratios. If the ratio is higher than ~15, then you would be able to buy the house outright in fewer than 30 years if you rented and invested the excess savings in VOO. If it’s lower than that, then you would be better off buying.
If you’re not a homeowner right now, you can still be an owner of something. Stocks in some industries, like reits, banks, autos, fintech, international european and Chinese sectors, US long term bonds, biotech, etc. are incredibly cheap right now.
Assets are cyclical. Imo there are plenty of opportunities to invest in things toward the bottom of their business cycles. Why invest in something at the top of its business cycle? Could it go up from there? Sure. But not with the kinds of gains that something like commercial real estate had last year. Sometimes the narrative becomes so bad that the reality is better than the expectation. That’s your opportunity. Sometimes the reverse is true. That’s when to be scared, though others are feeling greedy.
Javier, your are the man! I like the way you explain things simply and educate your audience.
Scared money doesn’t make money.
Love the Green Stanley Cup. 😆🤣
If you are buying a house to live permanently why will you be afraid? Market will always up and down. But is you are expecting a crash it won’t happen.
This is my exact worry right now
Correct. Within the next 6-24 months your current home will be worth 20-40% less. Do Not Buy. Hoard cash. Stop spending. Hoard cash. Do not buy a house now, unless they discount the listing 25% minimum.
I feel like you missed the real point of what was being asked. Buying a house and it losing value isn't really about how other people perceive you. It's about the fact that most people will be upside down and trapped in that situation. It's great to say "well, just live in the house for 15 years" but the reality is that life happens. First time homebuyers have a family that usually grows and needs more space. Jobs come and go. Locking yourself into a loan that has a good chance of being upside down significantly seems like a bad financial decision for most young Americans.
the extra layer that's causing the fear these days, is the fact that the economy is dogsh1t, with the housing market not reflecting it. they hyperinflation of housing cost from 2020 to today, and the economic depression of 2021 to present, there's a misalignment. There's been historical precedence of a housing bubble crash with these two things happening at the same time.
Warren Buffett once said “price is what you pay value is what you get.”
This guy has the money. Buy with a 20% down payment. If you can afford another house and prices drop, buy another one. If you're concerned about investment value, spread out your investments, just as you would buying index funds.
Already fearing that your future home loses value?
Wait til that person hear about layoffs and unemployment rising.
Exactly, 2024 is the year of massive layoffs because companies over hired when money was plentiful and demand was high. Someone buying a house this year is either brave or oblivious (I bet oblivious) as to what is to come in the next 6 months.
@@drwayne_carter9115 yup, the writing is on the wall. Unemployment of white collar jobs is on the rise, but that’s another topic.
We are about to buy a house because of a corporate transfer, sometimes it’s a requirement of career growth…but even then why buy? Because the corporate move package strongly incentivizes it with perks that only apply for the year after your transfer like paying your closing costs.
@@laurenm.6320 if the only perk is paid closing costs, I still don't think it's worth buying a house at a peak price and peak interest rates, and burdening a $2,500 monthly mortgage just because $10k in free closing costs is available. If the home drops $50k in value and interest rates drop down to 4%, are you really going to have no regret because you saved $10k in closing cost? (Be honest with yourself - that's life changing money). Now, if there are other perks from your company like a $20k moving bonus, then that might be worth the risk to buy instead of temporarily rent until better deal days.
I have a similar question and my concern is not that I would be over paying by $50,000 or even $100,000 but that the market would crash like it did in 2008 and I would buy a house for like $700,000 and the market would crash and it would be worth like $300,000. This is a concern because my first house I buy is not my forever home. I don't even plan to live in my current state forever, so when I move like 10 years from now or so I would sell it at a loss and be in debt.
Meanwhile, I’m hoping my home value plummets. I know my 1900 home is not worth $400k😅
Then buy it next year
A home isn't an investment, it's a purchase. It's only an investment if it generates cashflow.
Why do you hate wholesalers?
I just want a house to live in. I really don’t care about all that shit lmao
The only people I know don’t have fear are the extremely wealthy people
I usually like your videos, but this explanation was awful. The question was clearly asking what do you do if you buy a house and then end up severely underwater. Instead of answering this, you went off on a meandering and just simply incorrect exploration of "value." First video of yours I got frustrated with to the point of not finishing it.
New video!!!
Javier, I have to take issue with flippers. Sorry we perform a valuable service as people look some at these dumps and there is no way they are going to buy them as is and "fix them up". We help put unliveable houses back into the market and we make a profit for that service.
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Hello , I am very interested. As you know, there are tons of investments out there and without solid knowledge, I can't decide what is best. Can you explain further how you invest and earn?
Hello how do you make such monthly?? I'm a born Christian and sometimes I feel so down 🤦♀️of myself because of low finance but I still
believe in God
Our government has no idea on how people are suffering these days. I feel for people with disabilities not getting the help they deserved. God bless Mrs Angela Christine Derle for all Good works. We need such a person in the society
51years and I’m retiring next year 2025 all glory to Angela for all her good works in my life…. 970k earned so far
I contacted her and she responded 🙏God bless 🙂🎉2024 is a LOVE'ly continuation in humanitys growth💜
❤❤❤
Buy land, build your own home.
First Ese!
too much talking and never say something helpful
'Promo sm' ✅