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by jurassic
1586 days ago
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I really appreciate this comment. The $1M house I bought last year at 2.75% (now supposedly valued $1.1M) might go down to $600-700k if we have some kind of major correction, but it's in a desirable area and never going to zero. I'm prepared for it to drop, but over the long term I expect to be fine. My house is a place to live for the long term, not something I'm looking to day trade. The only day I care what it's "worth" is the day I need to sell it. Thinking of your primary residence as a speculative investment seems so strange to me. If you buy something that is comfortably affordable for you now where you're willing to stay for the long term, with a fixed rate loan, I don't see the benefit of waiting until the peak comes. I'd rather be building equity than paying rent waiting for the market to peak. People have been predicting another crash every year for the last decade, and I'm sure it will go down again at some point, but I wouldn't plan my life around anybody's ability to call the top accurately. Just buy what you can afford and get on with your life. |
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1) Cash out refis. e.g. if you want to renovate, purchase a rental property or better yielding investment with the funds. Say you can take out cash at 2% rate, and buy a SFH rental with a 6% cap rate... you can build net worth faster (at more risk)
2) Being able to move without writing the bank a check. If you're underwater, you will have to pay out of pocket to sell, and then save a new down payment. If you don't ever plan to move, then this doesn't matter.
I consider valuation before purchasing property, rather than just whether I like it. But many don't, and that's fine too.
Commercial RE will definitely be driven by the fundamentals though, so I'm sure we will see cap rate expansion there unless rates begin to fall again. Residential can move out of line with fundamentals, for sure