I (tl;dr, need-to-know) have or will soon have a pretty solid nest egg available.
I have a relative here which is also a realtor who said she’ll help me find something. But I’m not sure if I should sit on my stash until after You Know Who does what he says he will do to the economy and market, or start planning on spending it rather soon.
I also plan to get a dog and would like a big yard for the git to run around in, fwiw.
Recommendations? Is there going to be any safe haven from YKW if I instead decide to invest it for a couple of years (bonds?) to wait out things? [NOTE do NOT want any off-topic drift on his behalf, just projections of what his policies may do]
Tell us more about the type of area you are thinking of buying in: declining areas would have different recommendations from rapidly growing areas; areas of high risk of climate change different recommendations than those which are not.
Probably a great question from us to start with is where are you planning on potentially buying a house. Based on your profile, presumably in/near Cleveland, OH?
If so, I might have some concerns - trying to avoid non-specific policies of YKW, but areas that lean blue in Red States seem to be targets, although certainly not as bad as what I expect will happen in Texas as an example.
Specifics wise, I expect a great deal of deregulation in most fields, so care costs (healthcare that is) going up, homeowners insurance (especially after the fallout from CA) - too soon to tell on the tariff front though, as we’re not sure he is posturing prior to demanding concessions or something else. De-regulation on lending could go either way - but I have memories of people being burned on various innovative lending practices in the prior market, and I have zero confidence that a Trump administration will protect buyers from predatory lenders, so that is a consideration as well. (Granted, not as big an issue with a solid nest egg, but…)
That’s good to know. I just erased a long post about mortgage rates.
So your main consideration, it seems to me, is whether it’s safer to have money or to have your own home to live in. I think I would I would go ahead and buy, especially if you’re not likely to want to pick up and move to another area.
The last is an important qualifier. If at all possible you want to buy in an area that is at least on a slight upwards trajectory on home prices over time and inventory does not sit empty for a year. That will drive up your own price of course, but it is a useful hedge if you do feel you have to walk away in a year or five and want to sell in a timely fashion for at least no big loss.
Areas with a stagnant housing market because of low demand (as opposed to low inventory) can be a real pain if you ever want/need to get out.
I think it all boils down to your tolerance for risk. In these uncertain times, nobody can predict what the RE market will be like next year, let alone 5 years from now. If you are renting, or in some other living arrangement that is working for you, and you’re risk averse, there’s no reason to run out and buy a house now, even if you think it may be a good investment in the long term. If you’re not averse to risk, and you know you will sleep fine knowing the house you just bought may depreciate 10% in the next few years, and you still really want to be a homeowner, then go for it.
If you don’t have an investment advisor, you may want to think about finding someone. They would be able to explain the expected ups and downs of the overall market based on how people feel about what may or may not happen over the next four years. If it makes you feel any better, I just spent a lot of money on a brand new house early last year, and I have no regrets.
What’s the alternative to not buying the house? Sounds like continued rental in a place that is not what you want: a house with a yard for the dog.
Put it in the market instead and maybe it earns more than your rental costs. Or it goes down. Housing values in your areas might go down. Or up. I’d WAG up but maybe it’s the tail wag that matters?
I’d personally not try to guess the market but instead make a quality of life decision.
The economy didn’t collapse during the last Trump administration (sorry if I should have kept up the YKW references); the stock market had one big dip but overall was up, causing some people (grumble, grumble,) who anticipated a crash to miss out on earnings.
Life is short, housing prices are probably going to keep going up though maybe not as fast as they have been, so if you’re ready for home-buying you should consider going ahead.
This cowpoke needs a home that’s in his range And up on the dresser I got me a jar of change Let’s break it open and see what we got Enough for a trailer and a half-acre lot
Cause the dog needs a yard and the cat needs a tree I’m staring at the garbage sittin’ in the street
Hey baby, why don’t we try To make a break to the country side Where the stars at night still shine Wake up to a clear blue sky and the smell of those pines We’re going doublewide
IMO , there is nothing like the knowledge that you own your living space and can do what you want with it, within reason. And emotional support dog ownership, given the trauma we are about to endure during the next 4+ years, is pretty much a requirement.
I’m personally convinced that T***p will wreck the economy, but I can’t figure out exactly what form it will take. I’ve been diversifying my meagre assets as much as I can, and one component of diversification is real estate. I’m going to pay off the small amount left on my mortgage, mostly for the peace of mind.
So if you don’t need a mortgage, I vote for the house, the yard, and the dog. And a cat. At least one cat!
If the house will improve your quality of life and you’re likely not to move again once you have it, just buy the house. It’s your house, not really an investment. Start looking now and if you find your dream house, get it. No one can predict what you’re looking for
RealtorTM here. The word “on the street” seems to be an expectation of rising home prices in the next few years, at least in the Midwest. Hard to say whether this expectation accounts for Trumpenomics or a war with Denmark, Canada or Panama.
What I often counsel my clients about mortgage…if you have enough spare cash to pay for a home purchase, great. That gives you more options, and if you are in a hurry, a quicker close. But you might want to consult a tax or investment adviser, because sometimes having a mortgage is a good thing for your overall financial health. It will reduce your available, spendable cash, but that can be mitigated with a line of credit backed by the property.
You don’t have to make a mortgage decision before closing on a property, as you can always get one later. Again, tax considerations might help you make a decision about if and when.
Regarding near-lake living…you are right, living near one of the Great Lakes tends to smooth out temperature fluctuations. But unless you live on an island or peninsula, this effect diminishes rapidly the farther you go from the lake. More than 50 miles, probably negligible, and living on the downwind side (usually East and South of the lake) can increase the snowfall due to “lake effect”.
This. No one knows what is going to happen to the economy, stocks, bonds, inflation, real estate, etc. If they did, it would already be priced accordingly. So, what to do in uncertain times. Diversification and owning uncorrelated assets is a solid option. Real estate is only loosely correlated with other standard investments and it is a hedge against runaway inflation and huge rent increases. Buying a reasonable house in a strategic location is not a bad idea, both in a practical sense as a place to live as well as a strategic investment. What are your other options with the nest egg? Stocks, bonds, cash, gold, etc. Those all have their own risks anyway. There is no riskless investment.
Except that history is absolutely littered with nuked portfolios of people who didn’t properly evaluate the warning signs and thus didn’t get out while the getting was good. Bubbles have always existed historically, and the astute investor is the one who bails before the guillotine drops. I just checked on price: earnings ratios for a bunch of stuff this morning, incl. some so-called blue chips, and a lot of them were scary: not just 30:1 or 40:1 scary, but well over a 100:1 in some cases.
I will be contacting my realtor relative after the cold snap is over.
You aren’t buying a bunch of real estate or investing in a real estate portfolio as an investment. You’re buying your dream home which is more likely than not going to be a good investment long term. Home ownership certainly isn’t for everyone and there are many associated expenses but I think that you’re thinking about it the wrong way. Real estate has never really tanked long term how other things have.
I’m with those who believe there’s at least an even chance that Trump will wreck the economy. That doesn’t necessarily mean you shouldn’t buy a house right now if the purpose is as a long-term primary residence. But when the economy tanks, housing demand drops as people get laid off and jobs are harder to find. So housing prices may drop and it may become a buyer’s market sometime within the next four years. Or not. That’s the calculated risk. But I wouldn’t trust a clown show of gross incompetents headed up by the Chief Orange Clown to have the first clue about responsibly managing the economy.
Part of the potential looming problem is that Trump fundamentally doesn’t understand tariffs. If he carries through on his threats to impose massive tariffs on every country he think of, and those countries then retaliate with their own tariffs on American goods, it has the potential to trigger not just a US recession but a global one. Of course since he has the attention span of a gnat, he may forget about tariffs if he gets distracted by other projects, like starting a war with Panama, bombing Mexico back to the stone age, or sending military aid to Russia. And none of those things are great for the economy, either.
I’m in the opposite position from the OP. I own a home but it’s likely that I’ll be selling in a few years to downsize to a more age-appropriate residence like a townhouse or a condo. I have a lot of capital tied up in this place and I worry about house prices plummeting due to Trump’s antics just when I need to sell. I’m in Canada which is not necessarily better protected against economic calamity than the US, and might be worse, because a trade war will hit us harder, but it will hit both sides because it will sabotage the largest mutually beneficial bilateral trade economy in the world.
I think maybe incorporating Trump Derangement Syndrome into long term financial strategy isn’t really a great idea. The American economy is not going to tank to the point where stocks and real estate becomes worthless and if it does, you’ll have bigger problems to worry about.
History is littered with nuked portfolios of people driven by emotion who tried and failed to time the market.
Now given you plan on living in the house long term, unless you are concerned that your personal economic situation might change such that you won’t be able to afford the house, I would say go ahead and buy the house if you plan to live there for 5+ years.
Yeah…that’s what I remember about Lake Erie from my childhood. The “moderating” effect.
Same applies to continuing to invest in the market for the long term. If your plan does not include needing to have the investment be liquid in the moderate term then ignore the ups and downs along the way.
This doesn’t sound like a flip plan. This is about as buy and hold long term as it gets. The market may tank rise tank and rise several cycles before it ever gets sold again.