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maybe we're renters

April 20th, 2016 at 01:13 am

I know we were hoping to buy and settle in but more and more the signs I think are pointing to renting long term. Maybe even moving into another bigger rental. What brought this on?

Well my neighbors with the 4 bd/2.5, 2000 sq ft home sold today for $712.5k. That makes it $313/sq ft, highest in the area and a record. My neighbors next door in July 2015 same exact layout, same size 4 bd/2.5 ba, 2000 sq ft home bought for $570k. So in 8 months (they bought the 1st weekend of March) the house went up $142.5k in 8 months or 25% in 8 months. The annualized return is 37.5% so the house should be worth in July $783k if the prices keep rising on track.

But I wonder what sort of people participate in a bidding war and end up paying $80k over asking price. Do they have any regrets? Was that always the plan and were they planning on spending more? Did they realize they were setting a new bar for price/sq ft? Do they even care?

But I'm concerned. We left an expensive area for an area that is still cheaper but I'm wondering if in 1-2 years will be just as expensive? We sold around $400/sq ft and but that seemed to be the cap in the sense that it's going up maybe 3-5% a year. Not going 37.5%/year.

So right now I'm not sure it's a sustainable market. Maybe I'm wrong and it's time to buy before it goes up another 40%. But if it goes up another 40% then this "entry" level home will be $1 million.

Thoughts?

3 Responses to “maybe we're renters”

  1. ceejay74 Says:
    1461117809

    I guess I'd say don't try to time the market, and go more with what works for your desires and your budget. If the prices are still cheap by your previous cost-of-living standards, and you want to own, then go for it. If not, just stop thinking about it and enjoy the renting!

  2. LivingAlmostLarge Says:
    1461127946

    Maybe but instead I think I might look for rentals instead. Seeing some come on that maybe we can compete for that are less than the mortgages.

  3. creditcardfree Says:
    1461150950

    If you are staying long term, I would be looking to own, just to settle in. If you think this is a short term town because of work, then I would definitely keep renting. It does cost a lot to move. Are there other areas or older homes that are not moving up in price so fast. And consider looking to buy in the off season...when the demand isn't as strong, and you are competing with fewer people.

    Renting is different, but we are okay with it for now. We will settle and buy when my husband retires.

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