Buying a House for $660,000 CASH Was a HUGE Mistake!

fear a housing crash due to people buying homes above asking prices with little equity. If prices drop, affordability and potential foreclosures may arise, worsened by future layoffs and rising living costs. I want to invest more than $300k, but I'm not sure on how to mitigate risk.

I believe that many individuals will experience this, especially given the impending mass layoffs and rapidly rising living expenses. So many people overpaid for homes even while loan rates were low, I believe there will be a housing catastrophe because these people are in debt. If housing costs continue to drop and, for whatever reason, they can no longer afford the property and it goes into foreclosure, they have no equity since, even if they try to sell, they will not make any money.

Unless by "cash" they mean non-mortgage financing, they are not "underwater." Underwater refers to a situation where the home is worth less than the outstanding loan amount. They are in a unrealized loss situation.

This happened with the 2004 housing boom - home prices were greatly inflated, meaning people couldn't sell later because they owed more on the house than they could sell for. I know quite a few people who bought then, thinking they were making a good investment to sell later, but it's taken until the COVID housing boom for the prices to come back to those original amounts.

Its only a paper loss. The loss is only realized when you sell the house. Real estate is a long term investment. You should be thinking of holding a property for at least 10 years, before deciding to buy it.

if its their dream house why would they care about the current market value?

Isn’t the definition of “under water” when you owe more than it’s worth…?

That's not a dream home then. If it was you wouldn't be complaining. 😅

Ya not feeling sorry for People who get $600k inheritance

They are still winning. They received an inheritance and bought a house. A $600k house with no mortgage is a leg up and it’s great for them. They only have to work for the taxes and insurance. I don’t think they should beat themselves up for not waiting and timing the market. How many people can’t afford to buy now because they tried to time the market waiting for a foreclosure. They are winning. Great for them. Enjoy the place 👍

They would only take this kinda loss cause it’s “house/free/lotto money”.. no regular person would move, even for a job to loose 100k in one transaction. Because it was literally handed to him(maybe loss in family etc) it’s less meaningful and thus losing 100k or even half isnt so bad.. But the rest of us, we quit/change jobs, get extra job, sell a kidney, we not losing 100k

It sucks a little. It would suck a lot if they had a mortgage and a 7% interest rate.

Personally I’m so glad housing if finally coming down!

I know a licensed agent in AZ who did a 1031 all cash purchase and tried airbnb with it, who has lost 100k in value and the airbnb is not cash flowing. So not an isolated scenario these past few years. If you want the property address lmk

They bought it cash they don’t have a mortgage right? Once you buy any house price will go up and down. Your main residence should not be looked as an investment.

They can't be underwater if they paid cash.

Nope. Not underwater. I'm old enough to remember the 2008 housing crisis, and underwater means that you owe more than your house is worth. This person paid cash. Like Javier says, you're fine. I bought my first home less than a year ago, and I'm sure I'd lose money if I had to sell tomorrow. Prices around here are (at best) flat, and transaction costs are no joke. But because I was able to make a hefty down payment, I'm not underwater. I could easily sell for more than what I owe on my mortgage. That's the important thing.

If they factor in all the 💰 they're saving by not paying pmi insurance and 8% amortized interest... they're probably good

I found difficult to feel sorry for them, “nothing was getting in the way” of getting the house so they over spent and now want to move after a year! Seems they are loosing money but a big chunk of it it’s on them alone! House was priced at 620k not 660k

They lost nothing until they sell. If they hold until rates drop back below 4% then they will be fine, propably 5+ years. Also, this current housing down turn is only on houses over $500k, those under $500k will stay high even with 8% rates as people can still afford it. Really they need to rent that house house, not sell. It was dumb to pay cash for an expensive house with already having a plan to rent it out of you had to move in the short term.