With The Current House Prices, How Are You Guys Giving Any Saving Advice?

[Like2Plan]

Conventional wisdom points to a scenario where the price should correct. But then people in California was waiting for that correction to happen for 2 decades now. Most new buyers in the coastal area couldn't afford to buy a house...ever.

CA has always been difficult. My spouse and I lived in Los Angeles when we were first married. We would have had to wait a lot longer to buy a house in that area. Many of our co-workers purchased homes that were so far away from work that commute times were 1-2hours each way. We elected to rent an apartment so we didn't have to drive so far. Then, we moved to Northern VA and prices were more affordable.

[Singuy]

CA has always been difficult. My spouse and I lived in Los Angeles when we were first married. We would have had to wait a lot longer to buy a house in that area. Many of our co-workers purchased homes that were so far away from work that commute times were 1-2hours each way. We elected to rent an apartment so we didn't have to drive so far. Then, we moved to Northern VA and prices were more affordable.

Yes, don't get me wrong there are plenty of houses available with a 50+ min commute. However I'm wary to recommend these type of houses in case there's a correction and houses farther away would suffer the most and they have the least desirability.

[ua_guy]

Ok, Central FL, so let's pick a place like Lakeland. Using this list is there not a single home good enough for a young family pulling in $120k/year (assuming the spouse of a pharmacist doesn't even have a job!)?? Price Max = $250k.



https://www.remax.com/homes-for-sale/fl/lakeland/city/1238250/page-3?filters={%22locationRect%22:{%22minLat%22:27.786 923503011284,%22maxLat%22:28.521872532504247,%22mi nLon%22:-82.51487219726565,%22maxLon%22:-81.39426672851565},%22bPropertyType%22:[%22Single%20Family%22],%22city%22:[%22Lakeland%22],%22State%22:[%22FL%22],%22minPrice%22:%2210000%22,%22maxPrice%22:%222500 00%22}

[Singuy]

Ok, Central FL, so let's pick a place like Lakeland. Using this list is there not a single home good enough for a young family pulling in $120k/year (assuming the spouse of a pharmacist doesn't even have a job!)?? Price Max = $250k.



https://www.remax.com/homes-for-sale/fl/lakeland/city/1238250/page-3?filters={%22locationRect%22:{%22minLat%22:27.786 923503011284,%22maxLat%22:28.521872532504247,%22mi nLon%22:-82.51487219726565,%22maxLon%22:-81.39426672851565},%22bPropertyType%22:[%22Single%20Family%22],%22city%22:[%22Lakeland%22],%22State%22:[%22FL%22],%22minPrice%22:%2210000%22,%22maxPrice%22:%222500 00%22}

Many small boonie cities in FL(and in any state for that matter) where you can find plenty of cheap houses. I found plenty of houses in NY for under 200k, same with California. Drive far enough and you can find anything. The thing is these are not places you want to invest your wealth into unless you actually are okay with living out there. Because when desirable places appreciate, you are left in the dust, and when things correct your house also corrects. They say real estate is all about Location Location Location.

[disneysteve]

Many small boonie cities in FL(and in any state for that matter) where you can find plenty of cheap houses.

So that's the answer to your question about what kind of advice to give to people starting out. Look for homes in affordable areas. Yes they may be a little farther away from stuff but it's a good place to start. Lakeland is only about 40 minutes from downtown Tampa and about an hour from Disney property. Surely there are plenty of jobs in and around both of those areas.

There will always be people who can't afford certain homes in certain areas.
There will always be places where those people can afford homes.

None of this is new. Advice? Go where the jobs are and where you can afford to live. Same advice I would have given 5 or 10 or 30 years ago.

Beyond that, I really don't understand the point of this thread.

[Singuy]

So that's the answer to your question about what kind of advice to give to people starting out. Look for homes in affordable areas. Yes they may be a little farther away from stuff but it's a good place to start. Lakeland is only about 40 minutes from downtown Tampa and about an hour from Disney property. Surely there are plenty of jobs in and around both of those areas.

There will always be people who can't afford certain homes in certain areas.
There will always be places where those people can afford homes.

None of this is new. Advice? Go where the jobs are and where you can afford to live. Same advice I would have given 5 or 10 or 30 years ago.

Beyond that, I really don't understand the point of this thread.

The point is to discuss how are advice being affected as the cost of living doubled in 2 years time. Please click on the history of those Lake land home prices. 2018 the house was valued at 110k@3.5% interest rate. Today the listing price is 240k@7.5% interest rate. It seems that housing is so unaffordable in Orlando and Tampa that it has pushed people into places like Lakeland which also doubled their house value.

[disneysteve]

The point is to discuss how are advice being affected as the cost of living doubled in 2 years time. Please click on the history of those Lake land home prices. 2018 the house was valued at 110k@3.5% interest rate. Today the listing price is 240k@7.5% interest rate. It seems that housing is so unaffordable in Orlando and Tampa that it has pushed people into places like Lakeland which also doubled their house value.

Okay. So people who a few years ago might have been able to buy in Tampa I’d now advise to look in places like Lakeland.

[Singuy]

Okay. So people who a few years ago might have been able to buy in Tampa I’d now advise to look in places like Lakeland.

Is it that simple?

You think it's sound advice for someone to have a 2k mortgage a month in Lakeland for this house that was worth 84k in 2017 with school scores of 3/2/2 out of 10?

736 Fairway Ave, Lakeland, FL 33801 | MLS #U8203319 | Zillow

[breathemusic]

Is it that simple?

You think it's sound advice for someone to have a 2k mortgage a month in Lakeland for this house that was worth 84k in 2017 with school scores of 3/2/2 out of 10?

736 Fairway Ave, Lakeland, FL 33801 | MLS #U8203319 | Zillow

I mean.... isn't it really that simple? I think the issue is that you are hung up on comparing what financial advice years or decades ago was to what it is now. Markets change, economies change, cities change. Advice should always be based on whatever the current conditions are. So at the end of the day, who cares what advice was years ago? That's irrelevant. All that matters is what is the best way to save or invest or buy a house now. And the reality is that in many instances that advice is:

don't put yourself into massive student loan debt if you don't have a high chance of ending up in a career that will pay you enough to pay off the debt
do the math based on your area and financial situation to actually determine if renting or buying is the smarter strategy
buy what you can actually afford
save for retirement

That advice really isn't all that different than it used to be, other than many more people bought rather than rented because renting just wasn't as popular, but cities have changed.

[Like2Plan]

You have to pay attention to fundamentals. Save for a down payment. Save for an emergency fund. Pay down your debt. Don't jump into buying an overpriced house that you can't afford. Don't buy a house in the woods unless that's where you want to be. You don't have to have everything immediately. Sometimes, it makes sense to rent an apartment.

[MonkeyMama]

You have to pay attention to fundamentals. Save for a down payment. Save for an emergency fund. Pay down your debt. Don't jump into buying an overpriced house that you can't afford. Don't buy a house in the woods unless that's where you want to be. You don't have to have everything immediately. Sometimes, it makes sense to rent an apartment.

Very well said.

We managed starting out in Bay Area (bought a condo) with the advice above. Just fundamentals that apply everywhere. In high cost regions, you might not expect to own a house ever. But it might make more sense to own a condo with a 20%+ down payment, versus literally paying twice as much to rent the same amount of space. I've actually never rented with my spouse because we could never afford rent. But that's just going back to fundamentals. We leveraged our good savings habits and good credit into a mortgage on a condo. In another market, we might have chosen to rent instead, to save money. (Renting alone was different. Everyone and their brother has a room to rent in HCOLAs. We rented alone, but just not together. An apartment might as well have been a mansion.) Regardless, we eventually gave up and moved somewhere more affordable.

[mattbram]

I think it is all about finding a balance between finding somewhere to live that is affordable and where there are jobs.

In the UK have a problem where the majority of the well paid jobs are centralised in London...but then it costs so much that even with a well paid job the quality of life is pretty bad for the majority of people.

Over covid we saw an awful lot of people move away from London. I think they are slowly filtering back now.

[Singuy]

Very well said.

We managed starting out in Bay Area (bought a condo) with the advice above. Just fundamentals that apply everywhere. In high cost regions, you might not expect to own a house ever. But it might make more sense to own a condo with a 20%+ down payment, versus literally paying twice as much to rent the same amount of space. I've actually never rented with my spouse because we could never afford rent. But that's just going back to fundamentals. We leveraged our good savings habits and good credit into a mortgage on a condo. In another market, we might have chosen to rent instead, to save money. (Renting alone was different. Everyone and their brother has a room to rent in HCOLAs. We rented alone, but just not together. An apartment might as well have been a mansion.) Regardless, we eventually gave up and moved somewhere more affordable.

This post is perhaps the first that is on point to this thread. All other posts are about macro advice on "live below your means, nothing has changed but things have changed " but this post right here gets to the micro advice that is recommending things usually against conventional wisdom. Condos are usually never recommended in low cost of living areas because they are not worth the lack of appreciation and people eventually grow tired of all the noise, lack of a yard or space. However now it's getting to the point of exploring these options if one wants to stay in the city and get ahead in life.

Also moving out of the state is currently on the table as well to a places like Texas or places not greatly affected by the real estate boom. By the sound of it, most of you guys didn't experience too much of a living expense change unlike FL that 2x.

[disneysteve]

By the sound of it, most of you guys didn't experience too much of a living expense change unlike FL that 2x.

Bingo! This is what you’ve been missing in this discussion. You’re looking at a situation that is hyperlocal for you, which makes sense since that’s what you see around you, but it is atypical. Most of the country isn’t experiencing that.

As I’ve said, we bought our house in the Philly suburbs in 1994 for 142K. Today it’s worth maybe 350K. Slow steady appreciation over 30 years.

[Singuy]

Bingo! This is what you’ve been missing in this discussion. You’re looking at a situation that is hyperlocal for you, which makes sense since that’s what you see around you, but it is atypical. Most of the country isn’t experiencing that.

As I’ve said, we bought our house in the Philly suburbs in 1994 for 142K. Today it’s worth maybe 350K. Slow steady appreciation over 30 years.

The situation is getting hyperlocal to the individuals who are coming out of school about to have an adult life. It is getting to the point where my financial advice is no longer valid. My lecture was based on a low cost of living and low interest rate environment. Since I never lived through a high cost of living high interest rate environment, people will just see this as blowing smoke. I would like more opinions from people who lived through this back when the bay area was appreciating like mad. How, if any of those people actually managed to get ahead in life while facing such a challenge. Right now my lecture, my story, and all of our circumstances are no longer relatable.