Impossible To Buy A House In 2024

  • May 27, 2024
  • 4 min read

It’s very common knowledge that the real estate market is problematic if you’re looking to buy a house you’re facing a lot of headwinds talked to a good colleague of mine the other day and he’s looking to buy an additional vacation home for him and his wife his family and even though he’s you know has good finances has a good income has a lot of money he’s having trouble finding a property that fits his needs and even in the face of properties that need work the sellers are not coming down on price so why is that the case and if he’s facing it for a second home that’s um you know an affluent High net worth situation what about first-time buyers what about Workforce buyers what about middle- class buyers they’re facing even bigger problems.

Reasons for the Low Housing Inventory
Here’s why Yahoo Finance has a great article about the math keeping housing inventory so low. We’ve talked about some of this in previous videos, but let’s take a closer dive.

Financial Disincentives for Current Homeowners
the first reason is for current owners it’s not financially smart to sell your house right now that’s the the bottom line why because if you sell your house and even if you bought the exact same house somewhere else first of all you’re going to lose about 10% of your value with closing cost you’re going to lose 6% on a real estate commission selling your existing house you’re going to have about 3% on points title fees closing fees not counting moving buying new drapes everything else so for example even if you were going sideways on a $500,000 house which this day and age is a nice house but not a luxury house you’re going to lose $50,000 right off the bat moving from one house to another not counting the fact that the mortgage on your new house the payment is probably going to be much much bigger for example if that $500,000 house if you have a $300,000 mortgage and if it was at 3% you’re probably paying about $1,200 a month your new house even if you financed about the same amount maybe 350 if you tack on that 50,000 put all your Equity back in you’re going to be spending closer to $3,000 more than double your mortgage payment that’s for the same house going sideways if you upgrade your house to go to maybe a six or seven or $800,000 house you’re going to pay a lot more so people aren’t selling maybe they’re putting some money into their existing house fixing it up.

Limited availability of new homes
um the other problem is inventory it’s hard to find homes that are available because nobody wants to sell certainly new home builders are constructing new homes however the rate and Pace they’re doing that is very small and they can only do that in certain areas where there’s land you can’t do that everywhere so if you’re looking to move up in home new firsttime buyer you’re probably running into some problems because of what’s called that lock in effect because people who had mortgages they took out four or five years ago they can’t sell because their mortgage payment would be higher in fact some of them wouldn’t even be able to get approved for a mortgage on their existing house because of their income.

Advice for Buyers
What do you do if you’re a buyer? Well, what we always recommend is to buy the cheapest house. You can stand, maybe not your dream house. If you’re a first-time buyer, you’re a renter. Buy just anything you can and get approved for that. At least you can stand the house. That way, you’re in the homeowner market. The house probably won’t lose any value. Your money will be going towards mortgages, not towards rent. In the future, if you do want to move up, you already have some equity being built up. If rates stabilize or go down, which may not go down anytime soon, at least now you’re a homeowner and in that pipeline in that uh that assembly that uh conveyor belt of home ownership.

Conclusion
So it’s not looking like it’s going to turn around anytime soon, and it’s bad news for waiting for rates to fall. Even just recently, they talked about the interest rate cuts that may happen this year, which may not happen at all, and as a as a matter of fact, they may have to raise rates once again.

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