If you’re looking at buying a second home, my assumption is that Home is in a vacation area? My suggestion would be to wait for the off-season in that area. I just made an offer on a property that had just been De listed after sitting on the market, all tourist season with no offers, so they were eager to negotiate .

I’m looking for a second home that will be MY primary residence (hubby is staying put). So we have no house to sell. I figure I can refinance when/if things improve. I remind myself that our first mortgage 35+ years ago was at 11%. I have considered continuing to rent but there are so few rentals in my desired area. Plus I’m tired of being at the whim of landlord or property management for repairs. So I will buy when I find what I want. Hopefully after the new year there will be more choices.

We have two friends who have been wanting to buy vacation homes in the beach town where we have our 2nd home. They both want to buy at 2018 prices. As they have seen in 5 years... not going to happen. Prices in desirable shore locations in NJ haven't come down at all, our 2nd home value actually doubled since 2018. No off season deals like there have been in years past.

Our investor (live in Canada) echoed the info below.

Weigh if approximately 2% will affect your decision/finances enough and since you don’t need a mortgage, it eliminates the rate concern and cash will be a valuable bargaining tool when buying.

An agent can provide you with recent sale prices in that area and consider if the value is there, which may help with decision vs staying put or throwing money into rent. Take a look at some homes as well; after a year we changed the area in order to get what we wanted.

If someone around 1972 had waited for mortgage rates to fall before buying a house, they would have waited about 22 years for them to come back down to that level or go below it.

Mortgages are much different north of the 48th.

No 30-year mortgages here! Five years is the typical longest term.

And the many homeowners with variable rate mortgages (my hand's up!) enticed into sub 2% mortgages pre-Covid are now paying up to 7.25%.

Care to guess what that does to a monthly budget? While some lenders are allowing the higher interest to accumulate if there is enough equity in the property, the jig is coming due for many cash-strapped homeowners as their short-term mortgages come due.

So a great time to buy here, as prices reflect the pressures.

My daughter and SIL picked up a "bargain" C$1 million starter home last month from such a seller. And our mortgage company has just sold a foreclosed townhome for less than its purchase price two years ago and more than C$100,000 less than it would have reasonably fetched a year ago.

OP is paying cash -- interest rates are irrelevant to her.

We paid 18% interest on our first house. This is not the worst time to buy.

Higher interest rates generally depress prices.

It’s mainly low inventory and high prices that affect me. But egads, an 18 or 22% interest rate is scary, although you were probably financing a much much smaller chunk of money.

Got some good advice about a year ago....."Sit tight. It will swing your way."- ShadyWillowFarm.

Higher interest rates actually decrease inventory, since people are unwilling to move and put their old house on the market.

We bought our first house in 1983 at 15% interest. BUT -- that little 2-bedroom bungalow was $77,000, which was about 2 times our yearly income. Current Zestimate of the same house is $510,000 and buyers would have to be making more than $250,00 to have the same ratio. This would be a starter home for most people and incomes have not increased like home prices.

It used to be that when interest rates were high, home prices were low but that's not where we are right now.

Yes, this veered off topic (me included). As mxk3 pointed out, the OP is paying cash, so I’m assuming the houses aren’t to their liking. Or, aren’t worth what they think they should be. I get it. I’m getting used to the idea that house prices have risen and I’ll have to pay up to get what I want. Like most things in life 😊.

The OP and I are buying second homes, so we won’t need to sell. 😁

Seriously, all the metrics say it’s the worst time in history to buy a house. As kitchenwitch pointed out, interest rates have been higher, but house prices were a fraction of what they are now, and much more affordable wrt average income.

What metrics exactly point to this being the worst time in history to buy a house?

All that is required for houses to be good investments is continued appreciation. Kitchenwitch111didn’t discuss appreciation. In the 80’s it took ten years for house prices to increase 10% (e.g. the HPI increased 9.7% between 1983 and 1993). Currently it takes less than three years to see a cumulative ten percent increase. That is going to have to change eventually but there is plenty of global data that says it doesn’t have to change soon.

Having said that, the Democrats introduced a bicameral bill last week that would bar hedge funds from owning houses. The bill requires hedge funds to sell the properties over the next ten years snd since hedge funds account for almost 25% of homes owned in the U.S. that would drop prices, but I doubt Republicans are going to support it, so….

Well, several things are true. It can be a tough time to buy a house now, but also, the insanely low interest rates of the past 15 years or so essentially inflated seller prices plus did allow buyers to buy “ more house”. And since first- home buyers especially don’t have much sense of the interest rates over many decades, it seems shocking, like interest rates are “ SO high”. And homeowners who want to buy & move, may well have had their home appreciate in value, but that value is also relative to buyers’ buying power, plus now the mover’s buying power has shrunk.

Hence the real estate business continues to be exciting (!) because everything is relative, to when & how you’re buying or selling.

I last bought in 2016. I thought it was bad then. Here it is only 7 years later, and I now cannot afford to buy my own house. Prices have gone up quite a bit in my area, and the interest rate is double what I paid.

Supply is low. It doesn't help that people own second vacation homes. I feel more sorry for people trying to looking for their main home.

It doesn’t matter whether or not a house is a good investment if buyers are unable to scrape together a down payment, or can’t afford the monthly payments.

You’re buying a second home… if you can’t scrape together a down payment or can’t afford the monthly payments, then maybe one home is enough.

As for other people, in 2023, almost 50% of home purchases were first time buyers, which is the highest since the boom after WW2.

if you took the time to read the OP you would have seen that they were looking to pay all cash so nothing about financing down payments or monthly payments.

and the fact that the first time homebuyers made up 50% of home purchases in 2023 says nothing about inventory and the availability of homes to buy. You have to look at the denominator i.e. How many homes traded. It's possible that fewer trades took place among buyers because folks who had low mortgages preferred to stay put. SIn other words it's an irrelevant stat to the fact that the inventory of homes remains low.

Iluvdark kychns said, if you took the time to read the OP you would have seen that they were looking to pay all cash so nothing about financing down payments or monthly payments.”

The OP posted (two posts above yours), “It doesn’t matter whether or not a house is a good investment if buyers are unable to scrape together a down payment, or can’t afford the monthly payments.” Which is almost verbatim what I was responding to. Thanks for pointing out the value of reading though.

Your cash offer holds a lot of clout. I don't know your location, and I am commenting about mine (Cape Cod), Covid, and its panic, raised home prices here to an unbelievable amount, at least 3 times the actual value. Homes weren't on the market but a few hours and were gone...cash (over asking) with no home inspection. I am waiting to see what plays out. If you remember the 80's, when a similar market was in full steam, everyone lost, even the banks. Do your research. When was the house purchased? If during Covid, the buyer wants out. Fast. Find the house you want; make your offer (lower than asking), with a contingency of inspection (don't want to get foolish here). Sit back and see what happens. Only my opinion, but I think there is a lot of panic out there. Thousands of properties were purchased under Covid duress. With cash in hand, this is your time to buy. Rates are falling, so should you go for a mortgage after purchase, you are golden.

The history of the housing market really has little to do with the present and the future. Consider for instance what a car cost 15 years ago and there will be no going back. Most incomes have not increased to keep up, investment income dipped and set people back if having to cash in, rents and the cost of living are huge problems (highest number of homeless and in part by not enough affordable housing). If you are worried about the value of the property dropping a ton; a stable economy/interest rates and housing prices depend on so many factors, including what is happening in the world vs just the US.

Decision comes down to: your urgency/desire, will waiting a year for a potential 2% home drop be worth it, are you better to keep your money invested, did you find a home you like that you can afford, and how short/long do you plan on keeping,

It’s mainly low inventory and high prices that affect me. But egads, an 18 or 22% interest rate is scary, although you were probably financing a much much smaller chunk of money.

I was looking at a house back in 1978-9 that was listed for $65,000 which was a huge sum then. If I recall, mortgage rates then were about the same as they are now. That house now is well over $1.3 million.

investments are doing poorly,

My investments are doing great again.

(highest number of homeless ever

At what percentage of the population? After all there are a heck of a lot more people living here than at any other time in our history. Not that homelessness isn't a problem. It's a huge problem that needs to be solved.

It might be the worst time, and I'm sitting on the sideline unwilling to pay cash for grossly overinflated house prices and agree with many comments nailing parts of the problem. Right now I have a house listed (not my primary) well below appraised and comp values with little interest and had only one offer which fell through. The realtor stated this fall season has been the worst housing market they've seen in 13 years. Plenty of buyers but the over inflated prices at the present interest rates take most buyers out of the market, along with limited inventory. People with a desire but not a need to sell aren't listing, or pulling their listings because they want the price others got a year ago and are looking in a rear view mirror. They also don't want to pay the present interest rate and give up their existing low rate just to move for no solid or urgent reason .

I sold another house in spring of 2021 (not my primary) and was the easiest sale ever getting 22% over asking, but the one I'm selling now I've already dumped $20K into it last week for a new heating system and will spend another $5K this week. I'm looking forward and will do a price drop if the upgrades don't work because I don't want to be the last one holding. On the flip side I won't pay stupid prices to others who haven't gotten the message even if I have the cash so I will wait. I've already seen some cracks in the price dam but will wait until it breaks and comply to the rules of Buy low sell high, and don't be the last one holding as simple strategy.

I'm sure everyone knows what happened 13 years ago when housing crashed and is when investors started ramping up the buying of houses and did help stabilize the market, but got cheap or free money from the government to do it. Government policies, the quantitative easing, the reserve buying public (treasuries) and private debt has pushed interest rates to record lows, along with inflation to record highs by printing near endless amounts of money. None of it was based on a free market and manipulated to ease one problem but created others. So about the proposed bill to force investment companies to sell off housing inventory, and something they helped fund is as stupid as it gets when talking about a free market and cause more problems. Investment firms have already started selling investment houses because these people can read the writing on the wall unlike politicians who just can't read. ROI determines rotation of capital and returns are looking better else where, and they are smart investors knowing you don't want to be the last one holding a depreciating asset. Caught holding in a mob ruled panic is the very last place anyone wants to be. Again politicians = dumb and investment funds = smart.

My Nephew has sold two of the 12 houses he bought between 2010 and 2017 and will liquidate the other 10 next year. He can get a better ROI from the equity earned in his investment houses through other means, and plans on retiring when the homes are sold at the age of 50 and give up the hassle of rentals. The house I mentioned is my last extra house I have to sell but buying another extra house with cash now is like throwing a bundle of money down a well. Shady be patient because prices are cracking and you'll find a fair buy soon because cash is king, But if the stupid lawmakers pass a bill to force investment funds to sell investment property it may cause an over correction and this is when the real bargains will come, Deflation is the kiss of death for a government and again they will throw everything at it and double down on quantitative easing with the fed reserve buying T bills at action to lower mortgage rates with helicopter money. Government wants inflation! Government is not our friend, just a necessary enemy but dumber than a rock and like the kid who'd pull your finger everyday when asked, and must like the stink.

We built a house in the 1970's and my in-laws held the mortgage at 14% because it was cheaper than bank rate for us and a good return for them. So today's rates are not the worst in history. We paid that rate until the rates came down and we refinanced. Or actually, my husband died and I asked for a rate reduction because the rates were now much less, and my in-laws wouldn't reduce the rate and suggested I should just sell my home. I couldn't refinance fast enough to get them out of my life. I think I refinanced at 8%, paid them off and never looked back.

It’s not simply the rates, it’s everything all together all at once.

It depends on the market you are wanting to enter. Anything in the US on the coasts near the water is probably NEVER going to go down in price unless the property becomes useless (under water) or contaminated. Or until the demand decreases, which I can't see happening.

Where I am on Long Island in New York, the houses in vacation areas and/or near the ocean or the sound have never been higher, and demand just keeps going up. Many homes are all-cash deals, so interest rates don't affect buyers' decision process. And some of these properties are not just second homes, but third and fourth ones.

But your location may be different. I may be wrong but I think the only times that housing prices declined were during the 1930s depression and the 2009 mortgage crisis. But they always rebounded and went up again, sharply.

So if you see something you like, you may want to seriously consider it.

Once you take buyer’s interest rates out of the equation, and also are looking for a second home, a significant part of the “ worst “ falls out of the equation, though of course there are still a lot of obstacles. Low inventory, because owners who will need mortgages not finding it financially feasible to move just for upgrading/ upsizing. And inflated house prices. So, that’s not good. But there may still be people who need to offload a second house, or who can negotiate some and have enough equity to buy their next home, or families who may be selling for an older relative and again not trying to get a mortgage.

So in some ways things stay the same—if you find something that’s just dreamy and maybe starting that part of your homeowner journey ( location, activities or such) is important to start now, and you can afford it , you may prefer to buy rather than rue “the one that got away”. If you’re much more pragmatic about how it fits into your portfolio then you could have different criteria & just biding your time.

I don't think we're going to see major price cuts. If interest rate go down, even a little, people will start buying again. Personally I waited to purchase a house for too long and it bit me in the ass, but I'm an older millineal that was delayed from starting my career due to 2009 crisis and could not qualify for many years. If i would have just settled for something i could have doubled my investment and just sold the house and got something better even in this terrible market. I remember when median home prices were 316k and I kept saying to myself, "too expensive, better wait" That was the worst decision. Now all I'm willing to buy is a new house at an inflated price because I refuse to buy a used outdated house that needs a ton of repairs and updating. Not to mention there are very few people in the trades that can do the work to an acceptable standard for a reasonable price. Also i do not think it makes one bit of difference wheather you are paying cash to the seller. When you say im a cash buyer they know you can pay and will not negotiate with you. Sellers just dont care.

"Worst time in history" sounds like hypebole to me. I bought my first home in 1980 with a 15% VA mortgage. It was a tiny, crappy fixer in a marginal neighborhood (I was assaulted a block from my home) but it was what I could afford. I currently hold a 30-year 3.25% mortgage on a home I purchased in 2010 and refinanced several years ago. Over the years I've owned seven homes in urban, suburban and rural settings in three different regions, sold six of them and refinanced quite a few. I remember when interest rates first dropped below 10% and everyone thought we struck gold. A bit of perspective helps.

The residential real estate market is no different than any other financial market -- it has it's ups and downs and is dependent on many factors -- the economy, pandemics, demographic changes, social and political forces, etc. But through it all people want a home and need a place to live. I've bought and sold homes in the middle of recessions when the market was SLOW and rates were HIGH. Mortgages can be refinanced as the markets change, as they inevitably do. Find a good agent, educate yourself about the local market and don't be greedy. Or rent, which is sometimes the best option.

Good points about historical interest rates, einportlander. The OP is considering paying all cash for a second home, so as many have noted, mortgage interest rates are not a factor in the decision process to buy. However, they are a factor when determining the return on that investment. If the home will be rented, then the cash proceeds from the rental should be compared to the return on alternate investments to see whether the funds are being put to good use. If it isn't going to provide any cash flow, then you still need to calculate the opportunity cost of buying the house versus buying another investment. Of course, it's difficult to put a dollar value on the recreational benefits of a vacation home.

However, the residential real estate market for primary homes is different than other financial instruments. It's really not an investment in the classic sense of the word. An investment is something you purchase with the proviso that you will receive some sort of financial benefit in the form of cash flow (dividends on stock, interest on bonds, etc.) It also assumes that you can sell the investment at the point that it isn't continuing to give you the return you want. As opposed to two-family or multi-family homes, one-family homes that you live in don't generate cash flow, they actually consume cash (mortgage interest, utilities, insurance, repairs and maintenance, taxes, capital improvements, etc.) And you can't just sell it, because then you need to buy another house to live in, and there goes all your "profit," unless you decide to rent.

The common theory is that you are making money on your primary residence because it increased in value. However, you need to compare the increase in value with all the above costs incurred in carrying the home over all the years of ownership. Most likely, the costs will outweigh the capital appreciation. Of course it's better to have owned a home that increased in value over the years rather than one that decreased in value, but the fact remains that economically it's a drain on your resources rather than an investment.

You've gotton some GREAT advice! Paying cash does make a difference...your NOT dependant on loan rates. If you like it...your buying it to use it yourself...buy it! This is your life. If it makes you happy to buy a 2nd home and you can afford it...do it! There is NO bad time to buy anything...if you will enjoy it? Not every purchase is about profit.