Should I wait to buy my first home?

Maybe wait a bit to see if the huge real estate market collapse predicted by jamin comes to pass. Might be 40% cheaper next year.

How did housing prices hold up in your area during the 2008 crash? If you live in a hot market like Boston then I wouldn't worry about it, buy when you're ready. Housing prices here didn't go down, they stayed flat.

What geographic area are you in? What is the housing market like where you live?

It may make sense to hold off a little longer to see if housing prices cool off.

I'm in Indianapolis.

The thing is, we can probably afford the house we want, it just feels ridiculous that houses are selling for 400-500k here when the majority of families are bringing in like 50k a year.

Wait until you decide what you want to buy. Selling every few years is not free. Every time you sell, you will have to update and prep the house. That comes out of your pocket.

When you are starting out, before you buy, figure out your careers, kids, schools, services. Gain some handyman skills. You will need that. I spent all day Sunday doing yard work. Were I to pay for help, it would have been $1500, easily. That sort of stuff is fun in the beginning but after a while it is work. There are people out there with a carousel of contractor trucks to do everything for them. That eats into whatever profit they see when they sell and blows through budgets, of course. After buying my first house in CA 30 years ago, I was so broke that I had to use a pair of large shears to mow my tiny lawn. Couple of months later, my father in law sent me a broken mower that I had to fix. All that takes time. Budget time, too. On some Saturdays, you will be so tired that you will not be able to host friends for dinner. And all that before you have kids. That will give you something to do so you don't spend your time instead thinking of ways to get into trouble. It will be more work after you buy.

I’d wait a year. But that’s one man’s opinion. Your rents cheap. Considering about 80% of a mortgage payment goes to interest early on and not principal, It’s actually cheaper to keep renting if you (like many others) believe housing is going to go down.

Indianapolis is an infinitely affordable housing market. Price increases in Indianapolis have been nowhere near 50-100%. Popular close in neighborhoods are gentrifying rapidly and demand is high and supply is low (due mostly to COVID problems with supply chains and resulting construction delays waiting for things like HVAC units, and rising costs of lumber and construction workers).

$500k in Indianapolis will get you more house than you could ever get in the more popular metros. The house in the link below would cost $1.2-$1.5 in a close in neighborhood in Denver.

If you are really concerned about prices being inflated, wait six months. If there is a big economic shock due to war, COVID, monkey pox, etc., prices will take a beating and you can buy on the dip. But prices are so low in Indianapolis that if you see something you love and plan to stay for 10+ years, there is probably no harm in spending 10-20% more just to get what you want instead of sitting out and hoping that prices will fall when they may not.

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Average listing price in December 2019 was $165,375 vs. $229,000 now. So you're right, a 39% increase rather than 50-100%. This was also in a much lower interest rate environment. Anecdotally I just know a lot of folks throwing every penny that have at buying a house around here. Keep in mind wages in Indy are a lot lower than higher cost of living areas.

I'm young so I wasn't a working adult during the 2008 crash, and I'm not trying to compare now to 2008 as it's vastly different, (low supply of sellers, etc etc). I'm just saying, it seems like this can't carry on. Wife and I make > 200k combined so I don't really care too much at the end of the day. I just don't want to piss away 100-200k on a house from FOMO.

I actually know that area really well over on Delaware on 39th. It's a stone's throw away from the hood, which is why that price is only ~500k.

Which part of Indianapolis are you looking to buy?

I’ve been watching this area pretty closely as well. Especially the side of Indy I’m in (Southeast), the new builds are outrageous so I don’t see the prices dipping anytime soon, just maybe stabilizing and if interest rates continue to climb then you may just get a worse rate rather than a better deal as time passes.

Broad Ripple / South Broad Ripple / Fountain Square. I'd really rather not move to the suburbs (which are equally as expensive if not even more expensive). The more I think about it, maybe this is just the new cost of homes around here. It blows my mind that there are so many households making < 100k that are buying these 300k+ houses. 300k used to be a "nice" house in a safe area.

I say this as someone who is closing on a house in 5 weeks and selling their current residence. Unless there is some underlying, time sensitive reason to purchase at the moment I would probably hold off a bit. Price reductions are starting to pick up and seem to be outpacing any prospective rise in rates. Moreover you don't have to worry about the market you would be selling I to because you are going from renting to buying.

We went into it eyes wide open but have a kid starting kindergarten and ran out of bedrooms in our home so elected to proceed anyhow even if we may see a near term dip.

The issue is, if you live in a state that doesn't have any regulations on rent, then you might be out of options soon. I've heard stories from friends in South Florida who live in Coral Gables, Aventura, and Kendall where their rent went up $1-$2K during renewal. People can't afford something like that, especially such an unexpected big jump. A running friend's mom rents an apt in Aventura for $3,400, the association upped the rent during renewal to $5,200 during renewal and she negotiated them down to $4,200. 1br/1ba apts in Plantation up in Ft. Lauderdale have gone from $1,700 in 2018 to $2,400+ now. Solution seems to be to move in-the-middle of nowhere and hope you can find a remote job to not eat a 2hr commute both ways.

And you have just summed up FOMO in one sentence. Basically, you are saying "I need to overpay now because if I wait, I will have to pay even more at a higher rate in the future.". The idea we are in a supply crunch is somewhat false, as there are as many housing units per capita as there were when the market tanked.

One thing that keeps property prices lower in Indy than other parts of the country is their tax system. If you use a property as a rental property you pay 2% property tax. If you are owner-occupied, you pay 1% and if it is a commercial property, you pay 3%. This discourages out of area investment.

I lived in South Broad Ripple from 2000-2013. I paid $92k for my house there in 2000, albeit with 7% interest rates. Sold it for $125k in 2013. It sold last year for around $190k, probably worth over $200k now. 2 bed/1 bath, 1200 square feet. $200k for that seems absurd. Wish I had held onto it..

I live in Nora now. Paid $220k for my house in 2013, wouldn't sell for less than $500k today. I'd say $100k of that appreciation is in the last year. An un-remarkable ranch home in my neighborhood just sold for $535k. I have a two story, larger, more yard, etc. You get the picture.

A lot of people buying into my neighborhood are younger than me (I'm 50), but mostly married couples. I don't see how 30somethings end up in a $450k house in Indianapolis, but I'll admit others probably make a lot more than my wife and I. Or they're ok with a much larger percentage of their income going to their mortgage.

Don't move to 39th/Delaware unless you want to hear gunshots at night. I like Roy, but he knows nothing about our local property.

By the way, I would be really leery of paying a premium to live in Fountain Square. 2 Chicks and a Hammer have driven prices way up in that area, despite many really poorly maintained and destitute homes. If the property market craters, an area like that could swing really fast.

If you want to preserve value, I would look north of 54th street, west of Keystone, east of Spring MIll.

That's probably where we'll end up. I only threw out fountain square because I like being close-ish to bars and restaurants. Really though anything close to the Monon is nice as my wife and I enjoy riding our bikes to places.

The houses in fountain square seem to be in two camps: crappy houses with a face lift for 300k (insanely over priced), or super nice designer homes which I don't want and could never afford. These 2 bed 1 baths selling for 350k-400k are bananas.