Gyroscopic Investing

We are looking to move/downsize, and wanted the flexibility of buying the new house without needing a contingency for selling our current house. In the past, we'd usually try to time the selling/buying for the same date, which adds stress and also sometimes puts you in a bind. For example, we once had the house we were selling come in with a low value from the buyer's appraiser, which resulted in us eating the difference, whereas with more flexibility we might have held firmer, requiring the buyer to make up the difference, meet us in the middle, find a different lender/appraiser, or tell them goodbye and wait for a new buyer).

Well, I'm not sure if we got "lucky" or "unlucky" with this coronavirus thing, because I can foresee housing prices going down, which would hurt our sale, but help us on the purchasing side. Mortgage rates should be extra-low for a long while, too.

I can foresee a jump in the number of new houses on the market when the scare dies down, simply because people can't easily sell/show their house during this lockdown, and mortgage pre-approvals are probably slowed down due not only to the lockdown, but also because of the low rates with lots of people attempting to refinance their existing homes.

But also, if enough people are negatively impacted by this coronavirus (deaths or job loss), there could be an even bigger boost of new listings hitting the market. So while we've been actively following Zillow, and have found some properties we have a high interest in, I'm wondering if I might be foolish to buy this year, and could miss out on getting a nicer house for less money next year.

It's still too early to tell when the coronavirus scare will ease up, and how the housing market will be affected, but I'm curious to hear what others think.

Right now, how I'm leaning, is that we find a few houses we really like and put "low ball" offers on them. Not so low as to be insulting, keeping in mind that any negative hit to the market hasn't happened *yet*. But lower than we might otherwise. We'd still go in with no contingency, super-great credit, 20% down, and could be super-flexible with the seller in terms of the closing date. So other than our low offering price, all other aspects of our offer would be stellar.

I’ll say prices down in the near term at least.

We've been looking at houses here for five years, but my perception is that they've been selling at a premium. If we get a gully-washer recession or worse, maybe the prices will come down. My home would go down also, but it's 28 years old and much lower spec, so it's "depreciated" already. It's prime rent house candidate. Some yield-seeking investor would love it.

The plan is to put down the 20% so as to avoid PMI, but only that. Then lever up with an undoubtedly very low interest fixed rate mortgage, before the wave of inflation hits from QE, MMT, and QE-to-The-Moon. Excess cash will be put into the portfolio. Inflation will decay the mortgage away, the interest rate will be negative in real terms. Plus we would get some tax deductions once again, maybe.

That's the plan. But we're happy to stay in out paid-for house, too.

In 1987 I bought a house right after the Crash when everyone was panicked for $75k and sold it five years later for $110k. That's how we got into our present house (we built it in 1992).

I got a video update from my mortgage lender yesterday. He told all his current and former clients that a lot of homeowners are currently looking into forbearance right now. Hot topic.

So it sounds like home values may be headed down in the near-term.