# Help us figure out how to buy a house **URL:** \ **Category:** In My Humble Opinion\ **Created:** [October 8, 2013, 9:03pm UTC](https://boards.straightdope.com/t/help-us-figure-out-how-to-buy-a-house/670720 "2013-10-08T21:03:10Z")\ **Posts on this page:** 6\ **Page:** 2
**Author:** ![commasense](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/commasense/32/3017_2.png) [@commasense](https://boards.straightdope.com/u/commasense)\ **Post date:** [October 9, 2013, 6:57pm UTC](https://boards.straightdope.com/t/help-us-figure-out-how-to-buy-a-house/670720/21 "2013-10-09T18:57:31Z")
> [@Labrador\_Deceiver](#): > > They will take your IRA & 401(k) and any other assets into consideration when evaluating the loan. There is no big account specifically called “collateral”. They just take everything into consideration. Ah. I should have realized that. Thanks. ---
**Author:** ![Labrador\_Deceiver](https://avatars.discourse-cdn.com/v4/letter/l/7c8e57/32.png) [@Labrador\_Deceiver](https://boards.straightdope.com/u/Labrador_Deceiver)\ **Post date:** [October 9, 2013, 6:59pm UTC](https://boards.straightdope.com/t/help-us-figure-out-how-to-buy-a-house/670720/22 "2013-10-09T18:59:27Z")
It’s really not even collateral. The house usually serves that purpose. They’re really looking to see how long you can carry the loan if one or both of you has the misfortune of losing your job. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [October 9, 2013, 7:36pm UTC](https://boards.straightdope.com/t/help-us-figure-out-how-to-buy-a-house/670720/23 "2013-10-09T19:36:45Z")
> [@commasense](#): > > Assuming that the shenanigans of a certain political party don’t throw the whole world’s economy into a tailspin, the prospect of home prices here going down is virtually nil. I think you are being overly optimistic about future price trends. The Las Vegas [Case-Shiller index](http://us.spindices.com/indices/real-estate/sp-case-shiller-nv-las-vegas-home-price-index) shows that we’re right about at the historical trendline and headed up. To me, it looks like there’s a reasonable danger of buying into a bubble. The prudent thing is to wait until you sell your Baltimore house. That’s not to say it’s the best course, but I think you should consider how bad things would be if you had trouble selling it for an extended period, or if you ended up underwater on both of them, and then consider how likely that is to happen. If your model says that the chance is “virtually nil”, I think you’re fooling yourself. ---
**Author:** ![commasense](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/commasense/32/3017_2.png) [@commasense](https://boards.straightdope.com/u/commasense)\ **Post date:** [October 9, 2013, 8:47pm UTC](https://boards.straightdope.com/t/help-us-figure-out-how-to-buy-a-house/670720/24 "2013-10-09T20:47:51Z")
> [@iamthewalrus\_3](#): > > I think you are being overly optimistic about future price trends. The Las Vegas [Case-Shiller index](http://us.spindices.com/indices/real-estate/sp-case-shiller-nv-las-vegas-home-price-index) shows that we’re right about at the historical trendline and headed up. To me, it looks like there’s a reasonable danger of buying into a bubble. > > The prudent thing is to wait until you sell your Baltimore house. That’s not to say it’s the best course, but I think you should consider how bad things would be if you had trouble selling it for an extended period, or if you ended up underwater on both of them, and then consider how likely that is to happen. If your model says that the chance is “virtually nil”, I think you’re fooling yourself. I’m not following you: you agree that prices are going up in Las Vegas, which suggests to me that the sooner we buy, the better off we’ll be. Am I wrong about that ? If we wait a year or two, we’ll pay a lot more, and will be more likely to be underwater if the bubble bursts again in a few years. I don’t think we want to wait for the bubble to build up and burst, if that’s what you’re suggesting. That took four to six years the last time, according to your chart. Also, I don’t think the market in Baltimore is as volatile as Las Vegas, and I believe our house is worth at least 25-30% more than we owe on it (we refinanced a couple of years ago to get a lower rate and pay off some other high-interest debts). So I don’t think there’s much chance of being underwater there. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [October 18, 2013, 6:13pm UTC](https://boards.straightdope.com/t/help-us-figure-out-how-to-buy-a-house/670720/25 "2013-10-18T18:13:45Z")
> [@commasense](#): > > I’m not following you: you agree that prices are going up in Las Vegas, which suggests to me that the sooner we buy, the better off we’ll be. Am I wrong about that ? If we wait a year or two, we’ll pay a lot more, and will be more likely to be underwater if the bubble bursts again in a few years. Well, they’ve gone up in the recent past, but that doesn’t necessarily mean they’ll continue to do so. Trendlines continue until they don’t. My point was that they’re right about where the long-term trend is, meaning that you should not expect significant long-term appreciation. You may well be right that it’s better to buy now. And if you don’t want to wait a few years for prices to fall, then sooner may be better than later. Obviously, neither of us can predict the future. Mostly, I wanted to warn you to consider possible bad outcomes, and what you might do. The chances that housing prices drop precipitiously over the next few years might be low, but they’re not zero. Taking a calculated risk is fine; just make sure you’re calculating it correctly 🙂 Robert Shiller, the economist who called the housing bubble in 2003 and just won a Nobel prize for his work on asset pricing, thinks [houses are a terrible investment](http://www.theatlanticcities.com/housing/2013/10/economist-who-just-won-nobel-prize-thinks-housing-terrible-investment/7240/), that people consistently overestimate how much prices will go up and underestimate the likelihood that they’ll fall. Best of luck with your new home purchase. ---
**Author:** ![Folacin](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/folacin/32/3195_2.png) [@Folacin](https://boards.straightdope.com/u/Folacin)\ **Post date:** [October 18, 2013, 6:39pm UTC](https://boards.straightdope.com/t/help-us-figure-out-how-to-buy-a-house/670720/26 "2013-10-18T18:39:32Z")
> [@MandaJo](#): > > Your parents could buy a house and you could rent it from them. You could buy it from them later. Realizing that borrowing money from family is a bad idea - you could also give your parents a mortgage on the Vegas house. Then once (if? :)) you sell the Baltimore one, you can refinance in LV through a bank and pay off the parents. [Previous page](https://boards.straightdope.com/t/help-us-figure-out-how-to-buy-a-house/670720.md?page=1)