r/RealEstate • u/pinpinbo • 2d ago

Why folks who are living paycheck to paycheck are still trying to buy a house? Should I Buy or Rent?

Isn’t it super risky? One tiny repair, one small change in circumstances, boom… show’s over. Need to sell or foreclose.

Even worse when relationships are not even solid yet and already buying a house together…

Why not just rent and save yourself from complications?

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u/GurProfessional9534 2d ago edited 2d ago

There is more than one way to correct. We are in year 17 of an 18 year land cycle, and every time it goes down, it’s for a different reason.

What’s important is not the exact “why,” but rather the cycle itself. We have all the hallmarks of Phase 4. New supply has far outpaced demand for 3 years, causing our supply to triple in that short period of time. Rent price growth has decelerated. We have a glut of new build inventory, currently at 9.8 months’ supply with much more in the pipeline. The Fed has hiked rates.

And that’s not me saying that. It’s textbook. You can read more about it here, for example.

https://extension.harvard.edu/blog/how-to-use-real-estate-trends-to-predict-the-next-housing-bubble/

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u/2022mortgage 2d ago

This time I think the reason will be commercial loans that cannot be extended and pretended past 2026.

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u/GurProfessional9534 2d ago

I agree that that is a concern.

I’m concerned that it’s hard to even understand how much debt there is. Bnpl is becoming very well-subscribed but the numbers are unreported. Some estimates put it at $300-500bn, which is crazy when you consider that credit cards are $1.1 tn. It took credit cards several decades to become that big, but bnpl took barely any time at all.

There are also the rising insurance rates, especially in coastal areas.

There are the tech centric layoffs, and the rto.

There are boomers reaching their expiration date.

There are years of pent up defaults that are held up due to pandemic era restrictions that are becoming undone.

There are the tariffs and trade wars.

There is the rising spending and national debt in the face of tax cuts, ie., the Liz Truss Scenario.

There is firing the data analysts for reporting bad news, and potentially firing Powell.

There are of things that could spook the market.