To buy at 7% or not to buy? That is the question

[Cody Lindstrom]

Our HELOC on our primary finally came through and it appraised at the top of the market! We are pleased with that 1.25% minimum pmt at @7% interest, 10 year draw with a balloon at the end. We are excited but also nervous. I see the price cooling happening in our area, which is great, but our buying power has cooled as well. A couple years ago we could have bought in the 200K area, but that same money with today's rates has us looking at 140k properties. (based on Monthly holding costs). 140K properties need way more than cosmetics or they are barely larger than a doghouse, so we will burn our HELOC up like kindling .

So the big question is, do we wait until the home prices fall enough to catch up with the rising interest raises and level off?  Will they? Or do we jump in and hope the market reverses by the time we are ready to sell or refinance and move to the next property?  Who's buying in this market?   

[Nathan Gesner]

Quote from @Cody Lindstrom:

There's the rub. The majority of buyers today are making emotional purchases. They cashed out the equity on their primary home or an investment that gained a ton of equity through wild appreciation in the past two years. What do you think will happen if the market tanks and they lose the equity they've gained?

When others are greedy, be fearful. People are still over-paying for properties that don't cash flow. I've bought multiple properties every year for six years straight, but this year I can't find anything that makes sense. I've looked in 7-8 different states and it's the same story. I think it's a good time to hold tight and wait for the market to cool.