Housing market crash incoming?

[HockeyBjj]

What current issue? We have 2 generations that can't afford to buy houses. Tons of overpriced houses are just sitting.

https://www.dailymail.co.uk/news/ar...market-prediction-crash-Great-Depression.html

Housing supply is still very low. There’s not a ton of houses sitting. Demand is still higher than the typical “healthy” amount at these inflated prices. Prices are only going to keep going up

Housing Inventory: Active Listing Count in the United States

Graph and download economic data for Housing Inventory: Active Listing Count in the United States (ACTLISCOUUS) from Jul 2016 to Nov 2023 about active listing, listing, and USA.

fred.stlouisfed.org

Especially if interest rates drop in later half of 2024

 

[HockeyBjj]

We are at a 3% rate, although we have a home equity (no balance right now) with a higher rate. We're doing a lot: New floors throughout the entire house, total kitchen gut (cabinets, counter top, some rearranging), two bathroom guts (not relocating anything, but new showers in both, jacuzzi tub, cabinets, counter, etc.), and then replacing the old built-ins in the dining with new cabinets. There is a lot of little shit too - baseboards, some lighting stuff, removing a loft in a room, etc. Let's just say the quote is higher than my home equity line lol. With the renovations and with the appreciation of the house in general, we can probably refinance the home equity to a much higher limit. I do not want to refinance the first mortgage obviously. I own my company so I take large draws a few times a year, so I may just try to pay a lot of it out of pocket too. I don't want to drain my non-liquid investments. With having draws available whenever (I'm an S corp where I'm the sole stockholder), I only keep about $10k liquid.

2.7% interest rate. Smaller (1300 square feet) that’s probably going to be our forever home because you’d have to drag me kicking and screaming out of this rate. Upgrading down the road and renting this out would be an option, but I really don’t want to move in town just for an extra bedroom and bathroom and living room space, and don’t want the hassle of being a landlord

I’m already staring at the wall between my kitchen and living room and praying it’s not load bearing so that I can take it out someday. But it probably is.

 

[White Whale]

They say something is going to crash every year. I'm not saying it won't because crashes happen but I'm at point where if it happens there is not much you can do about it.

 

[Halifax]

Locked in 2.75% on a 15 during covid. We actually want to move but we'd be morons to leave our rate. Hoping to pay off this home and rent it out indefinitely. To your point home renovations are approaching criminal prices. Car repairs also. What type of work are you looking to have done?

15? Damn son. I was happy to lock in at 2.9% for 10. As soon as Trudeau called early election, the warning bells went off in my head and I was up for renewal anyways, so I forced the 10 year

 

[lifelessheap]

Would love the rates to come down I'm at 6.5 buying my current house last May . Had I bought 6 months sooner would be paying like 3.1. .


Biden intrest rates are killing buying a house and buying a car is worse. Intrest rates are way to high. Maybe an econ whiz on here knows why they decided yo make it hell on everyone buying a car or house this last year?

The bank paid me $1,500.00 to refi to a 20 year loan at 2.6%.


Knocked 9 years off, got paid, and ended up with a slightly lower payment.

Good times!

 

[Misfit23]

Rates should stay higher for awhile not lower. They were too low for far too long. Oregon's housing problem is a housing shortage due to dumb zoning laws.

 

[kahiljabroni]

15? Damn son. I was happy to lock in at 2.9% for 10. As soon as Trudeau called early election, the warning bells went off in my head and I was up for renewal anyways, so I forced the 10 year

That's great. I was torn between the 15 and 30 because the 15 actually increased my mortgage but knocked 8 years off. At the time we were concerned about job security. Really happy we did it though...12 years and we're mort free. Could pay it off way sooner if we wanted

 

[My name is]

It sustained through high interest and price. The rates will come down this year home sales will hold steady. Things will be fine

 

[boingyman]

That's great. I was torn between the 15 and 30 because the 15 actually increased my mortgage but knocked 8 years off. At the time we were concerned about job security. Really happy we did it though...12 years and we're mort free. Could pay it off way sooner if we wanted

When I did my refi I was also on the fence between 15 and 30 years, but after doing the math at the time when I got quotes on both (15 yr @ 2% vs 30 yr @ 2.5% both with the same lender credit) the difference in paying my house off in 15 years (with the 30 year loan) was only $110 more per month than what my payment would have been on the 15 year. I decided I rather not only have the buffer (~$875/month difference) of a lower payment that amount would do better invested in the market. That's when we decided to double the contributions to our kids 529 plans. My kids are only 8 and 5 and combined their 529 plans are already slightly over $100k. I wanted to increase contributions more last year, but I was scared of a recession so I held back. I still want to contribute more in hopes of solid gains in the coming years which I can use some of that to pay for private school tuition since it's likely we will keep them at the school from K-12 ...

 

[kahiljabroni]

When I did my refi I was also on the fence between 15 and 30 years, but after doing the math at the time when I got quotes on both (15 yr @ 2% vs 30 yr @ 2.5% both with the same lender credit) the difference in paying my house off in 15 years (with the 30 year loan) was only $110 more per month than what my payment would have been on the 15 year. I decided I rather not only have the buffer (~$875/month difference) of a lower payment that amount would do better invested in the market. That's when we decided to double the contributions to our kids 529 plans. My kids are only 8 and 5 and combined their 529 plans are already slightly over $100k. I wanted to increase contributions more last year, but I was scared of a recession so I held back. I still want to contribute more in hopes of solid gains in the coming years which I can use some of that to pay for private school tuition since it's likely we will keep them at the school from K-12 ...

My buddy did 30 year and now his mortgage is like 900 per month on a 500k house. Neither path is wrong imo as long as you refied. I know some debt makes sense but personally I hate having payments of any kind. We have to start a 529 stat... kids almost 2

 

[boingyman]

My buddy did 30 year and now his mortgage is like 900 per month on a 500k house. Neither path is wrong imo as long as you refied. I know some debt makes sense but personally I hate having payments of any kind. We have to start a 529 stat... kids almost 2

Depending on your age and retirement investments make sure other investments are maximized first. I wouldn't contribute to a 529 plan unless your 401k's and IRA's are maxed out first (and HSA if you have a HDHP). If you already max them out then go for it. I would however START a 529 ASAP and just throw in like a $100. That way you get the clock started on the 15 year wait time for 529 to roth IRA rollovers. We plan to start maxing out the annual rollover when my oldest is 15 years old (we started both 529 plans within a week of being born) asssuming he works. There are more details to this, but if you're interested just look up Secure Act 2.0 roll over 529 to roth IRA details. It's a great way to help your kids to start building up their retirement extra early.

Edit: Sorry I worded that way wrong. I meant your child would need to get a job for earned income in order to rollover. Unless they make enough to reach the annual IRA contribution max (who knows what the max will be 10-15+ years from now), it likely can be stretched out for many many years. This assumes your child wants to get a job as a teenager...

 

[PaleMoonlight]

Depending on your age and retirement investments make sure other investments are maximized first. I wouldn't contribute to a 529 plan unless your 401k's and IRA's are maxed out first (and HSA if you have a HDHP). If you already max them out then go for it. I would however START a 529 ASAP and just throw in like a $100. That way you get the clock started on the 15 year wait time for 529 to roth IRA rollovers. We plan to start maxing out the annual rollover when my oldest is 15 years old (we started both 529 plans within a week of being born) asssuming he works. There are more details to this, but if you're interested just look up Secure Act 2.0 roll over 529 to roth IRA details. It's a great way to help your kids to start building up their retirement extra early.

Edit: Sorry I worded that way wrong. I meant your child would need to get a job for earned income in order to rollover. Unless they make enough to reach the annual IRA contribution max (who knows what the max will be 10-15+ years from now), it likely can be stretched out for many many years. This assumes your child wants to get a job as a teenager...

Is the plan just to take out money from Roth IRA for kids tuition before maxing out 529? I think Roth IRA, you can take out the initial investment without penalty right?

 

[boingyman]

Is the plan just to take out money from Roth IRA for kids tuition before maxing out 529? I think Roth IRA, you can take out the initial investment without penalty right?

Yes that is correct. It's not taking out money from Roth IRA, but rather contributing to it (to the limit) before considering investing in a 529 as a 529 has significant limitations compared to a Roth IRA

 

[PaleMoonlight]

Yes that is correct. It's not taking out money from Roth IRA, but rather contributing to it (to the limit) before considering investing in a 529 as a 529 has significant limitations compared to a Roth IRA

Okay thanks. So if I still want to I invest for my kids, max out Roth IRA. And then when they’re in college, take out the funds from Roth IRA? But still open up 529 with small amount for the 15 year transfer to their own Roth IRA?

 

[boingyman]

Okay thanks. So if I still want to I invest for my kids, max out Roth IRA. And then when they’re in college, take out the funds from Roth IRA? But still open up 529 with small amount for the 15 year transfer to their own Roth IRA?

Yes and no. The funds need to be in the account for at least 5 years in order to rollover and your kid needs to have eligible income up to or above the amount you want to rollover for that year. You can use your Roth IRA to pay for college, but do you want to? I guess it will depend on your situation at the time I including age and portfolio as a whole. Personally I hope to just use their 529 plans for undergrad at the very least. Depending on their ambitions I may have to tap into some Roth IRA funds for more schooling. It's really hard to say since my kids are still young. If both decided on med school I would just tell them to get student loans and hopefully it will be forgiven or I can work a few more years and pay it off. Maybe our portfolio will be in the 8 figures by then and I can just pay their way through school. Hard to say tbh.

 

[RoastBeast]

When I did my refi I was also on the fence between 15 and 30 years, but after doing the math at the time when I got quotes on both (15 yr @ 2% vs 30 yr @ 2.5% both with the same lender credit) the difference in paying my house off in 15 years (with the 30 year loan) was only $110 more per month than what my payment would have been on the 15 year. I decided I rather not only have the buffer (~$875/month difference) of a lower payment that amount would do better invested in the market. That's when we decided to double the contributions to our kids 529 plans. My kids are only 8 and 5 and combined their 529 plans are already slightly over $100k. I wanted to increase contributions more last year, but I was scared of a recession so I held back. I still want to contribute more in hopes of solid gains in the coming years which I can use some of that to pay for private school tuition since it's likely we will keep them at the school from K-12 ...

That's crazy. Your kids retirement is already basically set and they're still in elementary school.

 

[boingyman]

That's crazy. Your kids retirement is already basically set and they're still in elementary school.

Definitely not set, but potentially a head start. Also the max lifetime rollover currently is $35k. That's not much and by then who knows what the max annual IRA limit will be.

I see a lot of videos on how to create "jobs" for your kids to work for you which then opens up the ability to contribute to an IRA, but I haven't looked into it deeply enough yet on it's legitimacy. I mean it can be legit (kid modeling/actor/singer, youtube star, content creator, your kid works for your business, etc), but I think there is a lot of gray area in things such as babysitting, lawn work, house work, other services, etc especially when they are real young. Simply doing chores won't cut it. Probably easier when they reach the work permit age of 12. My guess is that you need proper tracking and documentation including filing with the IRS if it's just cash jobs in the event that you are audited.

With that being said if your kid can generate income consistently at a young age and you/they can afford contributing (ideally maxing) their Roth IRA then their compounding potential would be awesome as they get much older.

 

[mjfan23]

You have money saved up and are debating between a trip to nicaragua or buying a house?? Lmfao


That’s such an obvious choice to go Nicaragua. Walk back through Mexico and when you get here we will give you free housing

 

[mjfan23]

Definitely not set, but potentially a head start. Also the max lifetime rollover currently is $35k. That's not much and by then who knows what the max annual IRA limit will be.

I see a lot of videos on how to create "jobs" for your kids to work for you which then opens up the ability to contribute to an IRA, but I haven't looked into it deeply enough yet on it's legitimacy. I mean it can be legit (kid modeling/actor/singer, youtube star, content creator, your kid works for your business, etc), but I think there is a lot of gray area in things such as babysitting, lawn work, house work, other services, etc especially when they are real young. Simply doing chores won't cut it. Probably easier when they reach the work permit age of 12. My guess is that you need proper tracking and documentation including filing with the IRS if it's just cash jobs in the event that you are audited.

With that being said if your kid can generate income consistently at a young age and you/they can afford contributing (ideally maxing) their Roth IRA then their compounding potential would be awesome as they get much older.

Just hire a creative account. They will sell you a job that opens up the right contribution amounts.

Of course if your accountant gets busted in a few years IRS might audit you and the kids too

 

[Broke Lester]

2.7% interest rate. Smaller (1300 square feet) that’s probably going to be our forever home because you’d have to drag me kicking and screaming out of this rate. Upgrading down the road and renting this out would be an option, but I really don’t want to move in town just for an extra bedroom and bathroom and living room space, and don’t want the hassle of being a landlord

I’m already staring at the wall between my kitchen and living room and praying it’s not load bearing so that I can take it out someday. But it probably is.

The hassle of being a landlord is well worth it, especially for your kids, but it is a legit hassle.

If only you knew an engineer.
Go up to the attic, if the joists( 1 piece) go end to end it's not load bearing, if 2 separate joists connect above the wall you're talking about, it's load bearing. If the joists run parallel to the wall you're talking about, it's also not load bearing. If it's a 1300sq,ft. bungalow, odds are it's not load bearing cause it's would be a relatively short run.