Growing up I never thought to ask the questions of how and why and when you should buy a house nor did I even understand the process. Being a millennial in the 2021 housing market has certainly opened my eyes to just how crazy and dynamic buying a house can be but there are many things I wish I didn't have to learn by trial and error. That said, I will never understand why this isn't taught more in upper education since geometry and calculus don't seem like more applicable skills than this measly little topic of investing.
Before I start, I will put this disclaimer in even though it feels obvious to me but hey, people are weird. I am by no means an expert on real estate, current market trends or even remotely involved in the real estate industry. I speak from my own research, experience and overall opinion on buying a home in 2021. Got it? Good.
I got the question, "how did you know you were ready to buy a house?"
As much as I could start with some cliche of, you're never really ready, you make the leap or it will happen at the right time, etc, I am instead going to be frank. Marc was the entire brains behind the whole operation. If I were left to my own devices, buying a home would not have been on my radar until...honestly I don't even know? I came from a community of renters in New York where I intended to stay so why would it ever be relevant to me?
Society tells us: you go to college, you get a job, you save up, you get married and boom you can buy a house
Well I wish it could be that linear but life is anything but that. What society fails to teach us, honestly Marc did which is: buying a home is an investment and if you are at the point in your life where investing is an interest or within your means, it should be investigated...regardless of relationship status. (My amazing younger brother bought a condo last year by himself) When you are renting, you are essentially paying someone else's mortgage. We all have to pay to live somewhere whether you buy or rent so if you are able and circumstances are right, buying can be a great opportunity to grow your portfolio and actually invest time and effort into designing a space you enjoy.
And yes, this may sound salty but regardless of societal expectations or 'Marriage or Mortgage' shows on Netflix which we all know set ridiculous, toxic standards, life usually isn't black or white, this or that, so allowing yourself a gray area of figuring it out as you go and making the right decision for you at that moment is usually the best way to go.
All this to say, I went back and forth constantly. Home ownership means a lot more bills. We moved in in September and the AC has already broke, skylight flew off due to wind, pool started leaking, the cactus roots cracked our wall, we found two scorpions and our back gate broke. Once again, only speaking from my experience, but after talking with friends, it seems to be the norm that home ownership has a direct correlation with an increase in expenses. I never thought I would miss my NYC landlord who would fix everything themselves but alas.
The pandemic put a lot of things into perspective for us. After so much time of uncertainty and instability not only with my career but the state of the world, finding a corner of our own that we could really spend time on sounded like a good idea. In my head, I wasn't thinking of societal timelines - we decided it was best to at least gather enough research on how we could make it happen and give it a shot.
We started looking for houses in March of 2021 which is right when *apparently* the housing market skyrocketed. In Phoenix, houses were selling for an average of 50k above asking price and buyers were waiving appraisals* and inspections*. We put a total of 9 offers in before finally getting ours accepted which, if you've watched House hunters you'll know, getting an offer declined is heartbreaking. I felt like I was back waiting in line to audition at 4am, getting to the callback and being told no.
When a realtor lists the house, they usually list it comparable to similar homes in the area at the price they believe will sell fastest. Occasionally, the appraisal will come in significantly lower than the list price which puts the sale price back up for negotiation. Well in today's market, if you waive the appraisal, you're basically saying, I don't care what the house is *actually* worth, I'll pay what you want for it. All this to say, it took us a very long time and a lot of tears to find something that stuck.
A few tips to keep in mind before buying a house:
1. Prioritize savings - Even though the lender may approve you for a high price, make sure to account for all the extra costs that come with buying a house other than just the down payment.
2. Research how much you need to put down - 5% of the purchase price with mortgage insurance for the first year but upwards of 20% depending on the loan
3. Don't be afraid of buying something that needs work - My whole thought was, why buy something at the top of our budget that's already at its highest value point when we could buy something that needs a little renovating, make it appreciate automatically and reap the benefits when it naturally appreciates with time. Buying a perfect home just means you'll have to wait longer to gain equity!
4. Ask questions and work with someone knowledgeable about the area - I wouldn't ask too many people for their opinion but rather find 1-3 knowledgable, industry professionals that can really guide your decision making. It's hard to weed out the noise so avoid asking too many.
5. Don't fall in love or picture your kids growing up, etc - This was my hardest task. You have to fall in love enough to put an offer in and see the value, but not enough that if you get declined it crushes you. Look at it more as an investment, something you can decorate and renovate to your liking and live happily and proudly in!
6. Expenses to account for: down payment, closing costs, HOA costs, property taxes, insurance...I think that's it but the only other thing I would include would be any repairs or renovations you plan to do! Make a plan, know your budget and stick to it.
I'll wrap this up by saying again, though I think we got unlucky with our timing and I really hope it doesn't continue this way, I don't really see the housing market slowing down, at least not in Phoenix. I'm not in the industry so can't speak to what you should or shouldn't do but I would say that from our experience, if you are ready or even thinking about it, I would give it some research and talk with educated members of the industry to at least get a gauge on what is right for you.
Thanks for reading. xoxo
Glossary:
Appraisal: Basically when someone looks at the house, its condition, features, etc and determines how much they believe the house is actually worth
Inspection: Someone stops by and lists out all the things that are broken, will need replacing, etc and allows you to get a good gauge on what additional expenses you'll have after closing. This period of time is usually 10 days long but can be negotiated and you can rescind your offer/break contract if it becomes too much.
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