7 Reasons NOT TO Buy A House In This ECONOMY!

Today I'm going to give you seven reasons of why you should not buy a house in this economy and moving into 2025. And to be clear, I am not saying that no one should buy a house, but I'm going to go through a list of things that might make you realize that maybe you shouldn't buy a house because not everybody is in the same position in life or in the same financial circumstances to be able to buy a house comfortably and to be able to afford that home and not have to worry about any major issues being able to keep that home. Because the reality is the economy hasn't been good for at least a couple of years, and 2025 probably isn't going to be much better. So if this sounds like you or someone you know that is considering buying a house but maybe shouldn't, make sure you share this video with them. So the first reason not to buy in this economy is if you have no money. If you have to take on a risky financial situation to be able to buy a house, you should not buy it. Specifically, what I'm talking about here is when it comes to financing the house. There have been a lot of programs come out recently like 0% down mortgage payments and 1% down mortgages. We've had 3.5% down forever and 0% with VA and FHA loans, but these 1% and 0% down programs are now available through traditional lenders in some cases. If you meet certain qualifying income criteria, which ironically enough usually means you make well below what the median average person makes in your area. So they're giving people who don't have enough money opportunities to buy a house with essentially no money down. Now I'm not saying there's never a good time to take advantage of one of these programs because there absolutely can be. However, the thing you have to really look at and assess with your own life to see if you should be buying or not is do you need this program to buy a house? Would you be able to afford the house without the 0% down, without the FHA loan, or without the adjustable rate mortgage? If the answer to those questions is no, then you probably shouldn't be buying. Even have lenders giving out things again like all interest loans. All interest guys means that every single payment that you make is going solely towards paying interest. You're never going to pay off any principal on that home, which looks appealing to a lot of buyers who don't have money because it's like, wow, I can own my own home. The payment is going to be lower than it would be if I got a traditional mortgage. This sounds great, but the point that you're missing there is that you will never own that home because you're not paying off a single dime in terms of the principal. At that point, you're basically a renter. The only difference between renting and owning at that point is you can do whatever you want with the house just like you can when you own your own house. You can paint the walls or make modifications to the house and stuff like that, just like a property owner, and you'll never have to worry about being kicked out, but you will never get out of that loan unless you refinance at some point in the future and pay it off. Another thing you got to be careful of when it comes to financing are all the mortgage rate buy downs that are out there. This is something that can sound appealing and can make it seem like, yeah, I can afford this house, but what about three years later when that buy down is complete and your mortgage payment is $400 or $500 more per month, plus your property taxes and insurance have increased in that timeframe, and if there's an HOA, the HOA fee has gone up as well. Are you really factoring in all those costs? Are you really looking at what the future payment could potentially be in just a few years? Even a seasoned real estate veteran like me, I've been caught off guard with my own property, guys. I bought my condo. We closed in February of 2022, had it under contract, I think, in December of 2021, and I paid pre-pandemic prices for the place, so that was not an issue. The price was fantastic, but one thing I didn't anticipate is how much the monthly maintenance fees and how much the special assessments would actually be just a couple years later, which is where I'm sitting at right now. I never anticipated that my HOA fee would go up by $900 a month over the span of three or four years. I never anticipated I was going to have to pay a surprise $54,000 special assessment starting next year. Those are things you just can't account for, but the good thing was is I could afford the place when we bought it with room to breathe. It wasn't like when my wife and I bought it, we're spending every last dollar we have on this place, and if any one single hiccup goes wrong with our life, we can't afford this condo no more. No, that wasn't the case. Because we took that into consideration back then at the time of purchase, these increases, while they suck, we've been able to afford them. That's the main thing that people need to look at. If you're not in the position to be able to account for those future expenses and you need to get some kind of creative financing solution to be able to buy a house today in 2025, I say it's a bad idea. Basically, if you look at any type of financing right now that makes it look like it'll be easy to buy the house now, but it might not be so easy to afford later, then you need to use extreme caution because your income likely is not going to rise as fast as your payment will in the future, so keep that in mind. Now, the next reason you shouldn't buy a house in 2025 is if you are an emotional buyer, and unfortunately, pretty much everybody breaks this rule, and I get it, guys, because let's face it, buying a house is emotional, especially if it's your first time. It's an amazing accomplishment that some people might not even ever be able to realize in their life, and now you're sitting there when you're early 30s or mid 30s and you finally are able to buy a house. It's an emotional experience no matter how you want to slice it. You feel like you finally made it in life, but the problem is then this gets you starting to think more with your heart rather than your head. This is similar to how a lot of accidental pregnancies happen, and the problem with this is you might end up buying a house that might not be a good fit for you for a lot of different reasons. You might be buying a house in the wrong neighborhood. You might be buying a house too far away from your job. The house might be too much of a fixer-upper, and you can be biting off more than you can chew in terms of how much work you can realistically do yourself or how much the repair costs are really going to be. On that last point, when it comes to buying a fixer-upper, this is where people really get hung up, because they're looking at a house in a neighborhood like this like, wow, that house is $300,000 less than the house across the street, but it's practically the same size, the same size yard and all that. We can sink, you know, 40, 50 grand in it and get it to be a nice house, but that might not be the case. The cost may be far beyond what you think it actually is. I also don't forget about the time consumption that repairing and fixing up a house can be, not just the money part. And I'm not saying that nobody should ever buy a fixer-upper, but what I am saying is that if you are going to buy one, you need to have a thorough inspection done on the house by a seasoned contractor and by a licensed home inspector to make sure you understand the full scope of work and repairs that need to be done on that house and how much it's going to cost to see if you're really up to it. And I will also say, and once you are aware of how much it's going to cost to fix up that house, you need to make sure that you're going to have that money, not that you're going to have to borrow that money because you spent every dime you had to buy the house and now you have to borrow more to fix it up. That is a bad, bad financial situation to get yourself into. But the problem is a lot of people fall in love with the house and they only see a few cosmetic details that need to be fixed up. They don't look at all the major problems that need to be fixed and next thing you know, you're going $50,000 or $60,000 over budget than what you originally anticipated just to make these repairs and now you have to go into debt to do it. So the rule of thumb there is if it looks too good to be true, it probably is. Just like pretty much everything else in life. Now, the third reason not to buy in 2025 is if your credit score is too low. You know, mortgage rates are already high right now, but they will be even higher if you have a low credit score and you can say whatever you want about credit scores and how it's a scam and blah, blah, blah, blah, blah. But the reality is your interest rate is going to be based on your credit score, whether you like it or not. The reality is your lender is going to base your credit worthiness and your interest payments based on your credit score. And if your credit score is not very good, it also says something about how you handle your finances and that you might actually not be ready to buy a home. Not only does it signal that to the lender, but it should be signaling that to yourself as well because let's face it guys, there's only a few reasons why someone has a low credit score. They're all the same. Okay? It's either because you are missing payments altogether or you're making late payments. It also could be because you have too much debt relative to the amount of income that you make or you're utilizing too much of the available credit that you have, which signals to a financial institution that you don't have financial stability. So all of those things are not good for your finances and the credit score is just a measure of how well you're doing in those categories is all it really is. How much debt are you taking out? How much money do you make to pay off that debt? Are you paying off the debt? Are you paying it on time? Those are not rocket science scenarios, but a lot of people mess up and the more you mess up, then the more you are not in the position to buy a house. I would recommend if you have a credit score that is like below 650 or even 700 guys, you should be working on getting it to be higher before you buy because really you need to be at a 780 or above to be in the excellent category, which gives you access to the best and lowest mortgage rates you're going to find. Okay? Now sure, you can be between a 720 and a 780, which is the next step down and it's still not bad. I would say most people should strive to get there, especially if you're below a 720, but a lot of lenders will even give you a loan if you have a 620 or higher, but you are going to get a substantially worse mortgage rate and that low credit score is going to hurt you. So getting that credit score up before making the purchase not only allows you to save thousands or even hundreds of thousands of dollars in interest over the life of your future loan, but it also gives you more time to save for a down payment and to be ready for all of the things that can come up when you become a homeowner. Now the fourth reason not to buy in 2025 is because renting is cheaper than buying basically everywhere. In fact, in 50 of all of the largest metros, according to Redfin and Zillow, it is now cheaper to be a renter than a buyer. So if you're just looking at it, comparing apples to apples, how much is this going to cost me per month? You are going to be paying more practically everywhere in the 50 largest metros to buy than you are to rent. And so if budget is an issue and money is an issue like it is for many of us, then it might make more sense to remain a renter. In fact, in 21 of the 50 most popular metros in the United States, it is actually 50% more expensive to be a homeowner versus a renter. And the reality is rents have been declining over the past year and a half or so, whereas home prices have still been creeping up in many areas. The median asking rent in the 50 largest metros as of July of 2024 was $1,741 a month. That's $12 less than it was in July of 2023. Not a huge improvement, but going down, right? But on the contrary, in that same timeframe, the median home price was about $440,000. And to buy a starter home that comes in at about $2,800 per month, which factors in your monthly mortgage payments, your HOA fees, taxes, and homeowner's insurance. So we're talking about $1,700 a month versus $2,800 a month. You're talking a full $1,100 a month more expensive guys. It's not even close. Now, I know you're going to say, oh, it's not like that where I live here in the Midwest or blah, blah, blah, blah, blah, whatever. It might not be. It's not like that everywhere, just in the 50 largest metros. But that is a telling sign that it is not a good time to buy, basically in most places throughout the country. And I fully understand as a homeowner myself, that owning a home comes with intangibles that can be more important or more valuable than just the money. I get that. But look at it like this. Say you want to be a homeowner, right? But you like saving that money when it comes to how much you are spending in rent. Then my advice to you is to keep saving that money. Keep saving that $1,100 a month or whatever the differential is in your neighborhood. Say it's only $500 a month cheaper to be a renter where you live. $500 a month is six grand a year, guys. That's extra money to put towards the down payment and the future costs that you will incur as a homeowner, which I guarantee you will happen. And you can keep enjoying the freedom of being a renter in the meantime where you don't have to worry about any of the maintenance and repairs that comes up on that property. But the key to this is that you need to be saving that differential. If you are somebody who is just renting and throwing away all the extra money that you make and your aspirations are to become a homeowner, that's a big mistake. And it's never going to happen because you're not preparing for it, which ultimately means that you are not going to be a homeowner because you don't have the financial wherewithal it takes to become a homeowner. It's one thing if you don't have any extra money to save, but it's another story if you have the money and you blow it. So the reality is the most responsible people are the ones that rise to the top and become homeowners on their own. Obviously people that get help from mom and dad and get down payments handed to them or homes for free don't count because they didn't have to do anything to be able to get that house. But people who work from the ground up and save their own money to become a homeowner and eventually do it are only the ones who are the most financially responsible and financially literate in the end. Now the fifth reason not to buy a house in 2025 is because maintaining a house is not cheap. Okay? There is a laundry list of things that can happen to you as a homeowner that cost a substantial amount of money. And I'll run through a few of them right here off the top of my head. You could have a roof repair or replacement. That can literally cost you anywhere between $20,000 and $50,000 depending on the size of your house and the material you're using. Okay? We're talking an HVAC system could be needing to be replaced or repaired. That can cost you anywhere from a few hundred dollars for a repair to a replacement of $15,000. And there could be plumbing issues that come up. Those are also very expensive. You could have electrical problems that need to be fixed. And these are things that should be caught in the initial inspection when you're buying the house, by the way, like I mentioned earlier. So if you run into electrical or plumbing issues shortly after you move into your house, that means you didn't do enough due diligence to make sure that the house was in good enough shape to buy to begin with. Something else unexpected that can come up just like I was talking about the sinking condos is foundation and structural repairs. Okay? This is something that if it didn't show itself at the time of purchase can happen later on out of nowhere. Foundations sink. They settle. They crack. You know, the earth moves. You could be facing things like window and door replacements. Those are also very expensive, especially if you have a lot of windows in your home. You're going to have landscaping and exterior maintenance costs. You know, you're going to have things like gardening, lawn care. Say you have a tree that needs to be removed because the insurance company won't cover you if you don't do it. That can cost you a few thousand dollars. You have pest control potentially. That can eat up a couple hundred dollars a month. You could have appliance repairs or replacements that are necessary. There's another few thousand bucks you weren't expecting. And then of course the big one, the big nail in the coffin for everybody that no one can escape lately is rising property taxes and insurance. Something I have talked about extensively here on the channel. No matter where you live, you are facing this right now as a homeowner and you will face it in the future if you aspire to be a homeowner. So don't believe that myth that people always say that, oh, buying a home is always cheaper and it's always the better deal in the long run. Not necessarily, guys, especially in 2025. This may no longer be true just because of how expensive it is to become a homeowner these days. You know, with how much labor costs have gone up, material costs have gone up, inflation has completely rocked this nation to the core. A lot of these costs that used to be affordable have suddenly become unaffordable. And even if you can afford all this stuff, the sixth reason not to buy in 2025 is because the job market is on shaky ground. Okay? Earlier this year, we got a massive downward revision, 818,000 jobs that were not created in the first half of 2024. Anybody remember that? Actually, that revision only went through March 31st. For the second quarter of 2024, it turns out we're going to get another big downward revision. We don't even know how bad yet, but it's bad, guys, because during this timeframe, the original BLS data showed that we had a 1.1% gain in jobs. And now it's turning out to be that it was actually a 0.1% loss in jobs. In fact, on a state level, California is going to see the largest downward revision of over 172,000 jobs that were never actually there. Texas is going to see a downward revision of over 112,000 jobs. And we won't even know to the extent of how bad these revisions are until February of 2025. But what we do know right now is that all the jobs that were supposedly created in the second quarter of 2024 were all fake jobs. There were no net jobs created at all, which was something I was talking about on the channel even back then. And when you look at this chart here, you can see all of these jobs that are in the circle, those are jobs that they say we supposedly gained. Those are all jobs that we actually never gained and jobs were lost. This is going to be another massive downward revision, and all of this was done to make the economy look good. But now it's starting to come out of how bad it really is. So you have to ask yourself, going into 2025, when you combine how bad this jobs data is with all of the layoffs we've been seeing, every week we turn around, we see a big layoff where literally thousands of people are being fired. Do you really want to be taking on a giant financial responsibility going into 2025 in an economy that's on shaky ground like this? That's only something that you can ask yourself. That's only something you can answer, and you got to be real with yourself. Just make sure you're up to it because if you're the main breadwinner in your house, for example, and you lose your job, you have to be real with yourself and ask yourself, am I going to be able to afford this house if I'm one of these statistics sooner than later? Now, the seventh and final reason of why you might not want to buy a house in 2025 is because of the financial and housing market instability that we're seeing right now. We're seeing a lot of fluctuations in the stock market. You're seeing home values start to decrease in a lot of areas across the country as well. And buying a house in a volatile market can be a personal and financial risk to you. It's also very possible that we are in a housing bubble 2.0 right now, and only just now we're beginning to see that bubble start to burst. And even I can't tell you for sure if it's going to burst and how badly. I think it's going to burst, but how badly is going to vary widely depending on where you live. Obviously, this is something else we've talked about extensively here on the channel, and I don't have a crystal ball, guys. I can't tell you exactly how much home prices are going to come down in the area you live. That's why I've encouraged you time and time again to be your own local expert and watch your own inventory trends and watch your own pricing trends where you live to determine that for yourself. But let's face it, in 2025 probably isn't going to be the best time in history looking backwards to buy. Unless inflation goes parabolic, home prices double again over the next 10 years. I think the likelihood of that happening is very low considering we've already seen prices go up so substantially in such a short period of time and incomes have not been able to keep up with that. You're the second one in a row I saw. I saw a cat yesterday. Today I'm seeing you. How you doing? You know, we've already seen a lot of people who purchased back in 2022 when we had the frenzy in the housing market that are now underwater on their mortgage and owe more on that house than it's worth. So you have to ask yourself, do you see your local market continuing to go in that direction in the following year? And one thing I have to mention also here is the most recent Fed rate cut, okay? Because the Fed just cut rates again by a quarter point, which was expected. And originally they were planning on cutting rates four times in 2025 and now they're saying, you know what? Forget about all of that. Now it's probably only going to be twice. On that news, the stock market tanked immediately. A lot of financial experts are saying that maybe there won't be any rate cuts in 2025. And really what a lot of this means is that the Fed is basically admitting that they were wrong about inflation, okay? Because when we look back to September, when they did that big 50 basis point rate cut, that looks pretty bad now because they were so certain that inflation was coming down and it wasn't going to be a problem anymore, that yeah, we're in the position to cut rates by 50 basis points and now just continue our cutting cycle because the economy is so great. Well, it turns out that that's not the case because the job market is faltering like we just talked about. Inflation has been on the rise over the past few months. And so things are going in the opposite direction that the Fed is hoping for. But despite the Fed essentially being wrong about everything, they still went ahead and did another 25 basis point rate cut this week anyhow. And during the same meeting where they cut interest rates, they even admitted inflation is not falling and they believe it's even going to rise even more into 2025, more than they anticipated. So they're still sitting there cutting rates. Why would you even do that? You know, the real reason they're doing it is because the national government cannot afford these debt payments. That's the real motivation behind this. In fact, they're now predicting the PCE to be at 2.5% next year when their original forecast was 2.1%. That was their supposed soft landing and getting everything back down to 2% inflation. And now they're realizing that that's not going to happen. And so naturally, all of this makes their 50 basis point rate cut in September look like a huge mistake, which it was. It shouldn't be cutting rates at all back then. They should have never started the rate cutting cycle. They should have actually waited at least very at the very least, just hung on to those higher interest rates, kept them higher for longer until we saw the necessary results. But no, they decided to start cutting. Now they're projecting it might take until 2027 to hit the Fed's 2% inflation target. So this whole thing that they've been telling us has been a lie all along, like, oh yeah, we got it squashed. We're practically back at 2%. That's why we're starting to cut so that you're telling me you got to cut rates a whole three years ahead of schedule. Well, they didn't start raising rates three years ahead of schedule when we started seeing inflation go up during the pandemic. In fact, they were late to the game and didn't do anything for an entire year. They're saying one of the reasons they went ahead and did the 25 basis point rate cut this week is because we didn't want to have further losses in the job market, admitting that things are bad when it comes to unemployment and all the layoffs that are happening. So we wanted to at least throw the economy a small bone. There's also starting to become more and more disagreement among the Federal Reserve members of whether or not we should be cutting rates or holding steady. So as usual, the Fed has no clue what they're doing and they're just making the economy worse. And you have to decide if you want to become a nice, fresh, brand new homeowner with that going on. The only thing working in your favor, which I will 100% admit and tell you, is that if inflation continues to go up in 2025, like we're going to continue to see happen, then that is one good thing on the side of owning a home, because home prices do rise with inflation. Although they may drop in the short term, it will still continue to rise in the long term. But obviously there's so many more things to owning a house than just what your house is worth, like we already discussed in this video. So if that's the only reason you're looking at buying in 2025, well then here's an eighth bonus reason. Don't buy just because you think your house is going to be worth more in the future, because that might be the case, but you might have to go through a long period of time where it's not the case. So if you enjoyed the video, make sure you are subscribed to the channel. And if you don't want to wait for my next video to come out, check out this one on the screen right over here, and I'll see you in the next one.