2022 real estate: buy now on low interest or wait for possible bubble pop?

[Dangerous Donna]

Real estate pros giving their opinions for 2022. Some saying there is not a bubble and buy before 4% interest rate toward end of year and others saying wait until pop of bubble and scoop up lower priced properties. Thoughts ?

 

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[Guest-5ty5s4]

Don't time the market.

Find a good deal and buy it. ONLY a good deal.

 

[Sauce]

Don't time the market.

Find a good deal and buy it. ONLY a good deal.

Buy cash flowing assets below replacement cost in good locations.

 

[2dads]

Wife and I are currently back at home saving for our first house, in my area in Brisbane, QLD - Australia the market has seen an increase between 20-30% in the last 2 years. With interest rates been at the lowest point in History with no sign of this changing any time soon.

A lot of people are moving and selling from larger city's (Sydney and Melbourne) to live in more affordable/less crowded areas.

We have had to reevaluate our price range and increase, I however have seen a large amount of houses sit on the market longer than earlier/middle of last year. More bargains are coming with a lot of competition (houses on the market) - yes the good houses are been sold, some times sight unseen to interstate buyers however it gives me hope to find a bargain.

This year will be my year to join the "Mortgage Club" - if the house I buy drops 20% it will be ok (not great) in the long run.

As stated before - dont try to time the market just get a bargain screams very true to me!

 

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[MJ DeMarco]

Not sure there's a bubble, I tend to believe things will level out, but we won't see price reductions to the tune of 25 or 30%. Last time the bubble was caused by easy "sign and drive" money ... there is no such thing this time around. Money is just cheap and I think it will remain cheap for the coming year with marginal rate increases.

 

[BD64]

An asset class where demand far exceeds supply, where 90% of homeowners have 30 year fixed mortgages. I fail to see how one could possibly make the argument that there is a bubble here.

Corrections in some markets? Sure. Appreciation slowdown or flatlining? Sure.

A large-scale 30% loss in value in shortorder? Nah.

 

[Dangerous Donna]

Not sure there's a bubble, I tend to believe things will level out, but we won't see price reductions to the tune of 25 or 30%. Last time the bubble was caused by easy "sign and drive" money ... there is no such thing this time around. Money is just cheap and I think it will remain cheap for the coming year with marginal rate increases.

Explain “money is cheap”. = it’s being “enthusiastically printed” or = “dollar is losing it’s value.” Or = ?

 

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[Antifragile]

Explain “money is cheap”. = it’s being “enthusiastically printed” or = “dollar is losing it’s value.” Or = ?

You just explained it.
Printed more $$ than ever in history.
+
Made interest rates rock bottom.
=
Devaluing currency, at low interest rates. “Cheap money”.

 

[Antifragile]

Real estate pros giving their opinions for 2022. Some saying there is not a bubble and buy before 4% interest rate toward end of year and others saying wait until pop of bubble and scoop up lower priced properties. Thoughts ?

If I’m right about what’s happening, we won’t see a bubble. That’s because properties aren’t actually going up in value. Instead it’s the stimulus of the economy by the gov through monetary policy that’s making it look like that. On paper housing market is up, in real terms - is it really? Crystal ball into the future, more stimulating of the economy? If yes, then more “increases in RE” prices. But in real terms, with the deficits government is creating, we are borrowing from the future.

 

[Guest-5ty5s4]

If I’m right about what’s happening, we won’t see a bubble. That’s because properties aren’t actually going up in value. Instead it’s the stimulus of the economy by the gov through monetary policy that’s making it look like that. On paper housing market is up, in real terms - is it really? Crystal ball into the future, more stimulating of the economy? If yes, then more “increases in RE” prices. But in real terms, with the deficits government is creating, we are borrowing from the future.

Exactly, the dollar is just a derivative of the “value” in the economy.

Things like land and gold just sit there, and their “price” goes up when in actuality the dollar is actually going *down.*

It is hard for a lot of people to grasp this.

 

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[Antifragile]

It is hard for a lot of people to grasp this.

And yet it’s so elegantly simple, isn’t it?

But that’s why no one ever complains about money printing. 99% feel it’s making them richer.

 

[Bruno Calisso]

My advice is to buy ASAP on low interest, but only on cheap properties with good potential so you'll be relatively safe if rates increase.

 

[biophase]

Real estate pros giving their opinions for 2022. Some saying there is not a bubble and buy before 4% interest rate toward end of year and others saying wait until pop of bubble and scoop up lower priced properties. Thoughts ?

Makes no sense. Why would you buy before interest rates go up? That would lower the price of real estate.

 

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[biophase]

Explain “money is cheap”. = it’s being “enthusiastically printed” or = “dollar is losing it’s value.” Or = ?

Money is cheap because you can borrow at 3% or even under. Rent is high, and ROI is greater than 3%. So essentially you can own a home for free.

I also don’t see a bubble, maybe a slow down but not decreasing by prices. There’s just too much money out there.

The house prices aren’t really going up. They are staying the same but the dollar is worth less.

For example, you see this in food, but nobody is following the food market so you don’t think about it.

For shits and giggles I know that my chipotle chicken taco was $6.95 3 years ago. My house was worth $600k.
So my house was worth 86,330 tacos.

Today Chipotle is $9.35, my house is $850k or 90,910 tacos. So my house has gone up by 4,600 tacos in 3 years. About 4.5%.

 

[2dads]

For example, you see this in food, but nobody is following the food market so you don’t think about it.

I remember heading to my local Aldi 5-10 years ago, $150 would get me 2 trolleys of food.

$150 now get's me 3 bags, use the diet has changed but ooooooof!

Your on point ^

 

[tomzestatlu]

Real estate situation is my country is a little bit specific. Out of whole Europe, local prices skyrocketed the most.

By the beginning of 2021, 80LTV mortgage was under 2% and 90LTV morgage was a 2,x%
Currently mortgages exceeded 4% (80LTV) and even though, prices are going up.

I can see price raise slowing down or stagnating in next months (people will wait for better mortgage prices). But popping of a bubble? There´s no reason for that. There´s extremely high demand and very small offer.

 

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[Dangerous Donna]

And yet it’s so elegantly simple, isn’t it?

But that’s why no one ever complains about money printing. 99% feel it’s making them richer.

And this is the rabbit hole

 

[Guest-5ty5s4]

but TLDR, buy real estate any time if the deal makes sense, if you can see the cash flow potential, upside, what have you.

It's a highly local thing. The national or global real estate markets might not even make a difference at all with your property. The deal is the deal.

(this is what I've learned from reading a lot of RE books and my own experiences with my last two properties)

 

[Dangerous Donna]

but TLDR, buy real estate any time if the deal makes sense, if you can see the cash flow potential, upside, what have you.

It's a highly local thing. The national or global real estate markets might not even make a difference at all with your property. The deal is the deal.

(this is what I've learned from reading a lot of RE books and my own experiences with my last two properties)

My eagle eyes are on acreage outside of city, 20+ acres with power and water access, (may have a Dorothy trailer on it to deal with). Cash flow? Possible subdivide or commercial opp in future? ... perhaps.

 

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[MJ DeMarco]

Explain “money is cheap”. = it’s being “enthusiastically printed” or = “dollar is losing it’s value.” Or = ?

Easy money = "Sign here, here's $1M." (no credit check, no income verify)
Cheap money = "Here's $1M at 1.5%, but we'll have to check your credit and finances)

The bubble was caused by easy money. This time, it's cheap money with a lot of hoops to jump through, which makes me believe it is not a bubble, but more inflationary and demand/supply.

 

[Dangerous Donna]

And this is the rabbit hole

And I’m not Alice

 

[newdynasty]

Real estate pros giving their opinions for 2022. Some saying there is not a bubble and buy before 4% interest rate toward end of year and others saying wait until pop of bubble and scoop up lower priced properties. Thoughts ?

Time in the market trumps timing the market. No one can time the top or the bottom. There's always money to be made in real estate. I wish someone taught me that when I was younger. I thought I had a crystal ball and could time the market. I ended up just waisting a bunch of time...

 

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[Antifragile]

Time in the market trumps timing the market. No one can time the top or the bottom. There's always money to be made in real estate. I wish someone taught me that when I was younger. I thought I had a crystal ball and could time the market. I ended up just waisting a bunch of time...

Yes. Bet on the upside long term. But only bet so much that you won’t be kicked out of the game if the market turns. Survive the bad times, and you’ll do great.