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Market Conditions: Wait To Buy?

 
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Hello everyone,

My country (US) is currently in a recession and, according to many economists, things are only going to get worse in 2023.

After selling my small home, I'm finally in a position where I can buy some land for homesteading, but now I'm wondering if I should wait a little longer to see what happens in the market.

On the one hand, I'd love to dive into homesteading right away. But on the other hand, prices are still a bit inflated where I want to live (FL), and I'm thinking maybe I can get a discount if I remain patient.

Would it be smarter to wait? Your advice would be appreciated!


 
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I suggest that you begin by selecting multiple areas where you would like to buy and track the property prices over the past two years looking for trends.  That should provide a hint as to what action you need to take.  
 
pollinator
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I don't think a good homestead property is like the stock market. With stocks etc. you can bide your time because you know you buy what you want whenever you want it.

It can take a long time for the right property to come along. Sometimes it won't even show up on MLS or be advertised. When it becomes available, you need to be ready to act. My 2c.
 
gardener
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Good points made so far.  I think Douglas has this summed up pretty well as homestead properties probably don’t follow the National market very closely.  For my 2 cents, I suggest that if you see the right property, consider going for it.

Eric
 
Sam Jackson
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Thank you all for the advice.

I will keep these things in mind as I shop around for land.
 
pollinator
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here is my 2 cents:  take it for what free advice is worth.

it depends on your situation.  Now that you have sold your property, (and congratulations  you got out at the near top of a very long expansion of real estate prices driven by abnormally low interest rates) you have a nice chunk of equity money.  Without sharing too many details, are you in a position to pay cash for the land you want or will you be financing?  If you are paying cash then find what you want and make an offer.  The longer you wait, now that the easy money era is over, the lower prices will go.

The Fed has already started to raise interest rates, the cost to borrow money, and this will continue for the fore seeable future. After all we had 30 years of abnormally low rates.  Now the pendulum is going to swing.  

Here is an a mathematical answer to your question.   I will use some round numbers.  if you sold your house and have $50k in the bank and wanted to buy a $100k property; you will have to go to a bank and take a loan.  A few years ago that would have cost you 5% on the life of the loan.  Today it will be 7%, if your lucky.  Soon it will be 10% after the mid term elections.  In the next 36 months it could go as high as 15% or even 20%.  Run the numbers at 3 different rates and ask yourself how much more each 1% raise in interest will cost you each month, and over the life of the loan.  It is significant.

This is true for all buyers whom have to borrow to buy land.  So the more it costs to borrow money the fewer people whom can afford that $100k property.  Few buyers means that over the next few years the market will do what it does and find a price discovery.  That will eliminate your 'competition' for property.  However, it will cost you a lot of money to buy at higher rates.

The real estate market will work its way down slowly over the next 48 months and beyond.  If you are in a cash position, you are in the driver's seat and all set.  buy when you like.  If you have to borrow, the higher rates go, the less you will be able to afford, even if prices crash.

If I were in the market and could pay cash I would find and buy what I had in the bank.  I would not borrow money in this environment no matter the price or bargain.  Good luck  and hope you enjoy your new place.  

I a sorry I can run some of those numbers and give a more detail response.  I am sitting in a hospital bed tonight trying to get some sleep but a lap top on a tray table is not a great way to work.  Ask questions if you like.  
 
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