Housing Advice in a Tough Market

Housing feels less affordable now than ever. So what should you do in an environment with both high prices and high interest rates? The obvious answer might be to wait for prices and rates to drop. But that’s a pretty passive approach—and not one I’m a big fan of.

I could break out a bunch of math here: when rental prices are X and mortgage rates are Y, here’s when you should rent and here’s when you should buy. But honestly, you can Google that and find plenty of formulas. I think homeownership is more than just a math equation. It really comes down to your preferences. Owning a home offers different flexibilities compared to renting, and those trade-offs are personal.

I can’t speak to your specific situation, but here’s what I did to make buying a house work during COVID—which, granted, was a different time and a different market. Still, I think some of the principles hold up.

First, I bought the house from a family friend. We skipped using agents to save money and split those savings between us. I identified the value of the home, and we settled on a price below market.

That’s how I got a house for less than market value during a time when homes were selling instantly for cash, often above asking price.

Now, the environment has changed. In San Diego, homes often sit on the market for 30+ days. That gives buyers a lot more negotiating power.

In some ways, the advice is the same: the best way to buy property is to know someone who wants to sell. And if you don’t, the next best thing is knowing someone who knows someone.

I recently went to an open house down the street. They were asking nearly $2 million—well above my budget. With current interest rates, the monthly payment would’ve been over $10K. Sure, the property had an ADU that might rent for $4K/month, but that still leaves over $6K out of pocket. That math didn’t work for me.

My agent said something might show up that fits better, so I’m somewhat in the market right now. Hopefully, that opportunity comes along.

On the financing side, I had another connection. I work at a bank, and they offer an employee loan program with excellent rates. I actually locked in a 0.86% interest rate during COVID. Granted, that was a unique moment, but the program still offers below-market rates.

I’m not saying you should come work at my company—although you could, and I’d get a referral bonus (at least that used to be a thing). What I am saying is this: just like on the buying side, the best way to make a deal work is to have a connection.