Selling/Buying a House in Today's Market

[BigPiney]

Mayne this should got the MOTCOJCOLDS in the news thread, but I came across this fine young elder while perusing the FBIs most wanted list.

2004, that is a long time to be on the run. Impressive.

[Clark Addison]

Hey, this is my thread!!

I have zero recollection of thinkin of moving in 2010. FWIW, we are still in the same home.

[Moliere]

Mayne this should got the MOTCOJCOLDS in the news thread, but I came across this fine young elder while perusing the FBIs most wanted list.

We were in the Paris mission together. IIRC, he wasn’t an avid rule follower.

[old_gregg]

the key is to find a widow going into assisted living that is well off enough to pay for their own care and isn’t relying on house sale proceeds and buy the house before it hits the market. boom, cheap house.

[All-American]

the key is to find a widow going into assisted living that is well off enough to pay for their own care and isn’t relying on house sale proceeds and buy the house before it hits the market. boom, cheap house.

At first I thought you were going to say, marry the widow.

[Shaka]

We were in the Paris mission together. IIRC, he wasn’t an avid rule follower.

I know him too. We had mutual friends and occasionally would be on the same Lake Powell trip and other social functions. I've driven the Mastercraft in the pics.

[old_gregg]

At first I thought you were going to say, marry the widow.

depends on the amount of land

[Art Vandelay]

the key is to find a widow going into assisted living that is well off enough to pay for their own care and isn’t relying on house sale proceeds and buy the house before it hits the market. boom, cheap house.

You almost described my MIL. Had a nice 2700 sq ft home in south Provo. Decided it was time to move into assisted living. Had several offers prior to her listing the home. She ended up selling it to a niece for market value; which i is probably 50K less than she could have gotten

[chrisrenrut]

the key is to find a widow going into assisted living that is well off enough to pay for their own care and isn’t relying on house sale proceeds and buy the house before it hits the market. boom, cheap house.

Then use the savings to pay for half the renovation costs from the 80’s or 90’s decor.

[Color Me Badd Fan]

It's hilarious to see the new listings come on the market in my neck of the woods. It's as if people don't understand the difference between 3% and 6.5% interest rates. It seems like builders better understand the reality. Utah County appears to be quite a bit less stubborn, particularly with the huge amount of newly built supply. Builders are in the process of cleaning other home sellers' clocks.

[Color Me Badd Fan]

I can't remember if I mentioned it on here, but my wife and I sold our house a year ago. We're renting a house in the same neighborhood as this listing for $2,800, only our house has 250 more square feet with an additional bedroom and half bath. It was built in 2017 vs 2018. The lot is the same size. To be fair, this house is nicer on the inside than our rental.

But with 20% down, you're looking at a $4,800 payment. These neighborhoods started getting built by Salisbury around ten years ago with these phases started six years ago. The people selling are likely the original owners who spent, at most, $550k on this house. More likely, less than $500k.

Option A: Sell your house at pandemic bubble prices. Rent a house for $2,800 instead of buying a similar house in the same neighborhood and pay around $4,800 in a mortgage payment with 20% down. Stick around $300k of the proceeds from the sale of your house into a one year t-bill yielding around 4.8%, making around $14,400. Your rental expense for the year subtracted by the $14,400 ends up at around $1,600 per month.

Option B: Buy the house for $879k, put down around $175k. Your mortgage is $4,800. You put the remaining $125k (sticking with the same $300k figure from above) into a 1 year t-bill (currently yielding substantially more than longer term to maturity US bonds), which produces $6,000. Your mortgage expense for the year subtracted by the $6,000, is $4,300. You've also paid off around $8,000 in principal and in theory you'll recapture that when you sell your house. That brings the mortgage monthly expense to $3,635. With the $44k in mortgage interest, you're able to itemize your taxes. If you add in, say, another $15k in itemized deductions, then you're at around $60k in itemized deductions vs. the standard deduction of $27,700. For the sake of simplicity, let's say your tax burden is 20%, the extra tax benefit you're getting from the mortgage interest and itemizing your deductions is around $6,500, reducing your monthly mortgage expense to around $3,100. I'm probably forgetting something with the itemized deductions, so let's just chop down the mortgage expense down to $3,000.

So that's $3,000 vs. $1,600, and you'd be buying into a market that appreciated close to 70% from Spring 2020 through the beginning of 2022.

https://www.realtor.com/realestatean...0_M92105-10087

[Northwestcoug]

Selling/buying a house? In this market?!?

[old_gregg]

option b ignores tax on t bill. if thesis is you’ll recoup principal on exit makes no sense to get maximize costlier debt.

[Color Me Badd Fan]

option b ignores tax on t bill. if thesis is you’ll recoup principal on exit makes no sense to get maximize costlier debt.

You're right, I thought about it when I was going through the hypothetical and forgot to add that in. That makes the after tax cost to rent around $200-$250 more expensive. It also increases the after tax cost on the mortgage by $100.

Option C would be putting the other $125k into the house. While the investing environment right now is terrible, I would hope that the stock market and other investments will eventually yield more than US treasuries. The virtue of treasuries is a risk free return in an otherwise extremely risky market. Option B allows for someone to eventually put the $125k into something hopefully better in a couple years.

Then you have one of the best traders ever (used to work for Soros, average annual return 30%), Stan Druckenmiller, thinking we're going to have repeat of 1969-1982 when the stock market basically didn't move at all.

[Color Me Badd Fan]

By the way, did anyone buy the i-bonds when they were yielding 9.6%? I bought the biggest allotment I could at the end of October, but I first heard about these things around last April or May. IIRC, had you bought last April, you were getting around 7.5% for the first six months, then 9.6% for the next six, followed by the current rate of 6.89%.