5 ms·

I’m asking the exact same question. If we expect to find ourselves in a long financial winter, what can we do? Specifically, I’m considering buying a house and

I’m asking the exact same question. If we expect to find ourselves in a long financial winter, what can we do? Specifically, I’m considering buying a house and renting out my current house right now...to buy or not to buy. Leveraging up is great until house prices drop by 30%. Then again, the previous recession was specifically a housing crunch, so perhaps the next recession won’t create the same housing drop. No one on this thread knows the future, but it’s hard having lived through a very long bull market to anticipate the results of what looks to be a pretty severe bear market. Hussman Funds is calling for negative total returns on the S&P500 for the next 10 years, which feels like a very long time.

syntaxing 8y ago
I'm on the same boat. I have debating for the longest time if I should buy a house and everyone keeps on telling me that interests rates are going up so now is the time. But buying a house will pretty much wipe out all my savings and if I ever lose my job during a downturn, foreclosure is almost imminent.
- jrs235 8y ago
  In many states foreclosure takes a "long" time. Making partial payments can prolong the process too. Research foreclosure laws in your state. After the housing burst there was a flood of delinquent mortgage payers. The banks didn't want to hold empty houses and were slow to go to foreclosure. Not to mention the courts were/would be swamped with them. Perhaps include these factors in your risk analysis too.
scarface74 8y ago
As far as the house you live in, if you don’t plan on moving, why do you care about the value of your house? For me, getting a house with a fix rate loan was a no brainer. Rent where I was staying from 2012-2016 went up by $500 and it’s gone up another $300 since then - and I’m neither on the west coast or live in NYC. Owning a house as a primary residence is a great inflation hedge. Besides, apartments can kick you out within a matter of weeks if you don’t pay. Banks really don’t want to foreclose on a house - especially during a downturn. You have a lot more leeway on not paying your mortgage than your rent.
- deleted 8y ago
  [deleted]
frockington 8y ago
Q2 GDP growth was 4.1%, don't listen to heavily to the outlier nay-sayers. They've been predicting negative returns for the next ten years since the S&P was tracked
- Infinitesimus 8y ago
  A broken clock is right twice a day... Not saying you should assume the market is going to crash asap and panic, but long-term thinking requires you to prepare for the inevitable downturn the best you reasonably can. Let's not forget how rosy things looked before 07/08
hourislate 8y ago
Be wary of Hussman. He has been on the wrong side for at least 20 years. Eventually he may be correct but you will have missed many opportunities to grow your wealth.
- nine_k 8y ago
  As a side note, someone being consistently wrong for 20 years is a great predictor; we should just continue doing the opposite of the advice.

syntaxing 8y ago

I'm on the same boat. I have debating for the longest time if I should buy a house and everyone keeps on telling me that interests rates are going up so now is the time. But buying a house will pretty much wipe out all my savings and if I ever lose my job during a downturn, foreclosure is almost imminent.

jrs235 8y ago
In many states foreclosure takes a "long" time. Making partial payments can prolong the process too. Research foreclosure laws in your state. After the housing burst there was a flood of delinquent mortgage payers. The banks didn't want to hold empty houses and were slow to go to foreclosure. Not to mention the courts were/would be swamped with them. Perhaps include these factors in your risk analysis too.

scarface74 8y ago

As far as the house you live in, if you don’t plan on moving, why do you care about the value of your house? For me, getting a house with a fix rate loan was a no brainer. Rent where I was staying from 2012-2016 went up by $500 and it’s gone up another $300 since then - and I’m neither on the west coast or live in NYC. Owning a house as a primary residence is a great inflation hedge. Besides, apartments can kick you out within a matter of weeks if you don’t pay. Banks really don’t want to foreclose on a house - especially during a downturn. You have a lot more leeway on not paying your mortgage than your rent.

deleted 8y ago
[deleted]

frockington 8y ago

Q2 GDP growth was 4.1%, don't listen to heavily to the outlier nay-sayers. They've been predicting negative returns for the next ten years since the S&P was tracked

Infinitesimus 8y ago
A broken clock is right twice a day... Not saying you should assume the market is going to crash asap and panic, but long-term thinking requires you to prepare for the inevitable downturn the best you reasonably can. Let's not forget how rosy things looked before 07/08

hourislate 8y ago

Be wary of Hussman. He has been on the wrong side for at least 20 years. Eventually he may be correct but you will have missed many opportunities to grow your wealth.

nine_k 8y ago
As a side note, someone being consistently wrong for 20 years is a great predictor; we should just continue doing the opposite of the advice.