Ask HN: Is now a bad time to buy a home?

[Macintosh007]

My wife and I have been saving for a house for the past few years, and were thinking about purchasing one this year. And with COVID-19, I’m curious what people think will happen to the housing market?

[eloff]

Real estate is a lagging indicator, meaning it lags quite a bit behind changes in the economy. I suspect home prices will drop after this crisis. Probably 1-2 years from now. The economy is going to take a big hit, maybe the largest since the great depression.

I'm not qualified to offer financial advice, but that's what I've been thinking for myself personally. I don't have a crystal ball though.

[sigmaprimus]

You have to live somewhere, unless you are living for free with relatives your probably paying rent right now.

With mortgage rates as low as they are right now, chances are your paying more in rent than you would paying off a mortgage.

So it's really how you look at it, I see it like you have two choices, pay someone else's mortgage by renting or pay your own.

[bvandewalle]

This is a common fallacy. Lower mortgage rates mean that houses are more expensive as other bidders are able to qualify for the same mortgage rates. There is actually quite a lot of papers showing that it's better to buy at a high mortgage rate and refinance down the road.

As for your other comment, renting or paying a mortgage is a cost/benefit analysis that is way more complicated than "paying someone else's mortgage". If you live in a desirable locale (Bay Area, Seattle), the Buy/rent ratio means that at this point you are most probably ahead by renting and investing the difference in the stock market.

[aphextron]

It depends on your market. But if you are in an under appreciated housing market in a decent size city with good growth potential, and you have secure income, now is a great time to buy a home. With the recent fed rate cut mortgages will be at an all time low (if you have good credit and can get a loan).

[Macintosh007]

I’m in Minneapolis. And the prices just keep going up and up.

[bvandewalle]

Prices should go up and up on average since there is on average a national inflation of about 3%. If it goes up about 3% only you just come out about even (well actually you lost "purchasing power" since buying a house comes with a tons of fees).