Why You Shouldn’t Buy A Home In 2024

What's up, Graham? It's guys here, and uh, this is really bad. Even though I didn't think it could actually be possible, a new survey just found that 90% of millennial home buyers have regrets about their first home purchase. Unlike previous years, I have a feeling these regrets will only continue to happen, especially with the housing market facing an affordability crisis, an inventory shortage, and record high mortgage rates. That makes everybody wonder, is buying a house even worth it in 2024?

That's why we really got to discuss exactly what's happening, why so many home buyers now regret their home purchase, what you could do to make sure you don't lose money, and then finally, the five most common home buying mistakes that almost everybody makes that you could easily avoid. Because trust me, as someone who's worked full-time in real estate since 2008, these next 15 minutes could easily save you a lot of money and a lot of headache if you just pay attention.

Although, before we go into that, if you find this video helpful, all I ask in return is that you hit the like button or subscribe. I know it sounds silly to ask, but just mentioning it makes a huge difference. As a thank you for doing that, I will do my best to reply to as many of your comments as possible. So thanks so much, and also a big thank you to Incog for sponsoring today's video, but more on that later.

All right, so as a little bit of background, here's what you need to understand about the housing market because this is going to explain a lot. So far, year-over-year national housing prices are up 5%, and active listings have barely risen from 616 to 665,000 units, which for context, is still just one-third of the number of homes that were available back in 2016. This is creating a very challenging market for both buyers and sellers.

Because one, no seller wants to move and give up their existing mortgage interest rates, leading to low inventory; and two, the average buyer now needs to make $115,000 a year to afford the typical home. It's almost become like this chicken-or-the-egg scenario where prices won't come down without interest rates being low enough to incentivize sellers to sell, but low interest rates could also fuel more demand, causing prices to go even higher.

This is why a whopping 83% of people surveyed said that now is a bad time to buy a home, and 60% said that it's a good time to sell a home. Even worse, 75% of people believe that the economy is on the wrong track, which is the highest amount reported since 2021. Just to put that into perspective, home buying sentiment has not been this low since 2012 when the real estate market was barely crawling out of the Great Recession.

This is only worsened by the fact that 81% of workers don't believe their current wage has kept up with the rising cost of living. Plus, in today's market, to a certain degree, sacrifices need to be made, especially when demand is high and inventory is low. Like, just take a look at these statistics: 39% said that they expect to pay a higher interest rate than they'd like, 36% are prepared to make multiple offers, 30% plan to max out their budget, and 29% are ready to pay more than a home's asking price.

So, with all of this weighing down on the market, why does it seem like almost every buyer has regrets about purchasing a home? Most importantly, what could you do about this to make sure you don't fall victim to the same mistakes? Well, the first home buying regret according to 33% of respondents was that my home requires too much maintenance.

Now, first of all, it's important to mention that home maintenance was never quite the regret that it is today. Last year, only 25% of homeowners said that they regretted the overwhelming cost of maintenance. Although recently, it's not just in your imagination; home repairs are costing a lot more money. For instance, Zillow revealed that homeowners could expect to pay $1,155 a year, or almost $1,200 a month, in hidden costs related to owning a home.

This estimate includes changes in property taxes and utilities, as well as maintenance costs, and in terms of specifics, from the third quarter of 2022 to the third quarter of 2023, average home maintenance increased by $400, now coming in at $654 a year. Why is this happening? Well, just consider that labor costs, materials, and inflation are still driving up the cost of everything, and that means repairing your home is not going to be as cheap as it once was.

For example, a second study found that costs rose in all 31 categories both quarterly and annually. Even worse, at a 6.6% annual rate of increase, repair and remodeling costs are outpacing inflation, which is currently running at about 3.2%. So, with all of that said, here's what you need to keep in mind: anytime that you go and buy a property, your payment does not stop with just the mortgage.

In fact, there's a saying out there that goes something like; rent is the most you're going to pay every month, and a mortgage is the least you're going to pay every month. And that is very true. When you go and purchase a property, you are fully responsible for paying the property taxes, insurance, city assessments, repairs, maintenance, and the strong likelihood that something will break the moment it goes out of warranty.

Not to mention, everything in a property has a lifespan until it'll eventually need to be repaired or replaced. For example, roofs generally last anywhere from 15 to 25 years, water heaters last 10 to 15 years, AC units could last 12 to 15 years, garbage disposals break every few weeks, and when you begin to average those costs over the course of your home ownership, you'll begin to realize that it quickly begins to add up.

That's why if you want to prevent any financial surprises, number one, make sure you get a comprehensive inspection report. Just knowing what equipment is near the end of its lifespan and what's likely going to need to be replaced pretty soon is going to help you better budget for those things when they do eventually come up.

And two, unless you go and buy a brand-new construction, just assume that you're going to spend anywhere from $500 to $600 a month in repairs and maintenance, or 1% of the property's value every single year for just things that come up. I know this might seem like a lot, but as a homeowner, a lot of these one-time costs begin to add up.

Now, the second home buying regret felt by 30% of respondents was the phrase, "I bought too quickly." In this case, a number of buyers simply got impatient—they jumped on something a little too soon that wasn't the ideal match. In terms of Millennials, this translates to 27% owning a home in a bad location, and 26% having bad neighbors.

Now, I will say that in a highly competitive market like this, unless you have an unlimited budget, you're not going to get everything that you want, and you're going to have to make some compromises on things like a good school district, go-kart track, shooting range, golf simulator, and movie theater. But Millennials, in particular, are more likely to buy a home near an airport, train tracks, or busy highway, and that needs to be fully considered.

Of course, in terms of what I think, home ownership is never something that you should rush into, ever. It is arguably going to be the single biggest purchase you will ever make in your lifetime. So, being impatient and jumping into something is never a good idea. It's also important to understand that as a millennial, it is highly unlikely that the home you purchased today is going to be the same home that you live in for the next 50 years, and on average, according to the data, you're probably going to be moving somewhere else in the next 13 years, if not sooner.

That's why I tend to believe that any setbacks, like a bad location, are only temporary. Most of the time you could make it work, and there's nothing that says you can't make adjustments in the future to find a home that better fits your needs. However, in terms of buying in a bad location, unless you're buying the home sight unseen, of which 85% of Millennials are open to, the location doesn't really change.

And this is up to you to get a full understanding of what you're buying into before you buy it. This is why I highly recommend visiting the home in the morning, afternoon, and evening. And if you have a chance to go and speak with the neighbors, do it. By doing this, you're going to learn a lot about the problems in the area, the neighbors that throw loud parties, the people that wake up at 5:00 in the morning with their lawnmower, and also the people who still have not hit the like button or subscribed if you haven't done that already.

Anyway, as far as the location is concerned, this is something that should be thoroughly investigated before you close on the property, and unfortunately, this is something that so many buyers overlook when they're in a rush to just buy whatever they can. After that, 28% say that they regret spending too much money.

Although, before we go into that, speaking of spending too much money, there is another problem that not enough people are considering, and that's the fact that data breaches and leaks are happening at a surprisingly alarming rate. Like, just based on statistics, you have a one in five likelihood of being a victim of identity theft, and unfortunately, I've been one of them. I've had several times in the past from my credit card is at a fraud alert with somebody trying to make a purchase in another state. It's really scary to see just how many of your personal details are floating around on the internet, potentially in the hands of people you don't want having it.

On top of that, what most people don't realize is that data brokers aggregate all of your personal information in one place, from names, aliases, location, Social Security numbers, login history, browsing activity, and more. And then it's available for purchase by businesses that can easily fall into the hands of criminals. Now, of course, when it comes to this, the good news is that you have a right to protect your privacy and request the data brokers to remove the information they have about you.

But the bad news is that this could take years to do yourself manually, which is why our sponsor Incog is there to help. They do all the work for you by reaching out to data brokers on your behalf, requesting your personal data be removed, and dealing with any objections that websites or data brokers might have. And since quite a few data brokers continue collecting your information even after they've removed it, Incog also takes care that your data stays off the market by conducting repeated removal requests.

All you have to do is create an account, grant them the right to work for you, and sit back while they keep you updated every step of the way. They're also available risk-free for 30 days, meaning anyone could try it out for themselves and get a full refund if they aren't happy with the service. So, if you're interested in having your personal data removed, check out Incog at incog.org and use the code GRAM at checkout for 0% off an annual plan, or you could use the link down below in the description.

So, thanks so much, and now let's get back to the topic at hand—spending too much money on a home. In this case, roughly 38% of home buyers said that they paid over the asking price in 2023, including 42% of first-time buyers. And to make this even more severe, one in four millennial home buyers regret that their interest rate is too high, while one in five regret that their mortgage is too expensive.

Now, because this is technically a two-part regret, let's discuss the first one with the mortgage rate being too high. To me, this sounds like the mistake of not shopping around and making sure the rate you're being quoted is actually the most competitive rate, or if it even makes sense to buy the property to begin with. Even from my own experience buying properties, nine times out of ten, the first loan estimate you get is not going to be the lowest price. It’s up to you to shop around to make sure that you're really saving the most money you can.

All you have to do to make this happen is get a quote from one lender, take that to another, and have them beat it. Take that to a third lender and have them beat that. Then take that back to the first and start the process over again until eventually, you get the lowest price. I've even said this before, but it’s been found that buyers who do this save an average of $84,000 over the lifetime of the loan.

So, there you go, I just saved you $84,000. All I ask for in return—hit the like button and subscribe. That's it, thank you! Anyway, the second part of this is that in a market like today, it's going to be competitive. You're not going to get everything that you want, and that's a symptom of supply and demand, where unfortunately the market's dictated by what a buyer is willing to pay. The best way to deal with this and make sure you don't spend too much money is to have a budget in mind ahead of time and don't be afraid to walk away if it exceeds that amount.

It's also important to recognize that in most markets, buying doesn't make a lot of financial sense, especially when renting is the cheaper option in almost all areas. So, that needs to be taken into consideration. Next, the fourth home buying mistake is something I did not expect. 26% said that they regret buying a fixer-upper.

As they explained, fixer-uppers became a popular alternative for first-time home buyers because they could usually be purchased at a cheaper cost, with usually less competition. Although, take it from me, as somebody who's purchased almost exclusively fixer-uppers, you really need to understand what you are doing; otherwise, you will get screwed. From my experience, anytime you buy a fixer, you need to assume these two things will happen: one, it's going to cost 25% more than you assume it will, and two, it'll take twice as long as you think to complete.

I could confidently say that across every renovation I have ever seen, even if someone who worked full-time in the industry, it almost never comes in under budget and within the time frame that's originally quoted. Sure, it happens from time to time, but also people win the lottery from time to time; that doesn't mean it's going to happen to you. Plus, I will tell you a dirty little secret: once you begin remodeling your property, it becomes that much easier to take on additional work.

For example, if you want to remodel your kitchen cabinets, you may as well replace the countertops at the same time. And if you do the countertops, it's also a really good time to replace the floors. But since you're replacing the floors, it's kind of worth it to spend an extra $3 a square foot for the upgraded materials that are going to last a lot longer. And then while the contractor is there, you may as well have him redo the bathroom while he's at it.

But while they start working on the bathroom, they find some water intrusion, and that of course is going to have to be fixed. And now you've just opened up a can of worms. Of course, that's not to say that buying a fixer is a bad idea, because in my mind, it's really not. I tend to think that this is one of the best ways that you'd be able to buy a property under market value, fix it up to make it exactly as you want it, and do all of that without paying a premium.

But you also have to be very careful to properly estimate your expenses, have a realistic timeframe for when the work is going to be done, and make sure not to get taken advantage of as a first-time home buyer. I've seen so many contractors come in with first-time home buyers, and they throw out these crazy bids just because the buyers don't know what they're doing. They don't know what they're looking at, and contractors could practically write up any number they want, and as long as it seems believable, people will go for it.

So, if you just do your research, budget that it will take 35% more money than you expect, take twice as long, then if the numbers work, it might be a good idea, but you have to be very careful. And finally, number five encompasses a few regrets, but we'll start with this one: 23% say that they felt pressured to make an offer. According to the National Association of Realtors, buyers typically purchase their home for 100% of the asking price, with 28% paying more than the asking price.

It was also found that more than three in four millennial home buyers would consider accepting an interest rate that's higher than the national rate of about 7%, 65% would accept an interest rate of 10% or more, and 23% would accept the rate of 15% or more. Which, I mean, come on, we just have to call that for what it is—stupid. At this point, it just seems like people are getting so eager to buy anything they can, probably because they want to get in before prices go even higher, that they're willing to make absolutely horrible decisions to get there without any financial consideration whatsoever.

To prove my point, millennials are so desperate to own a home that 67% would buy a home with asbestos, 62% would buy a home with mold, and 58% would buy a home with foundation issues. This also feeds into another issue that 68% of millennials say that they regret not buying a home when prices were lower, to which I say, yeah, I also regret not buying Bitcoin below $1,000, but that's life.

The thing is, it's really easy to look back in hindsight and say, "Oh darn, I should have bought more when everything cost less money. I was an idiot," but at the time, it really could have just as easily turned in the opposite direction. We also rarely ever look back at past decisions and think, "Oh, I am glad I didn't buy all of those NFTs at peak pricing in 2021. I saved so much money not buying the Coinbase IPO at $400," because that regret should really be viewed in both ways.

Sure, it's not good you didn't buy a property when prices were cheaper, but it's great you didn't put all of your money in Save the Kids token. Anyway, because of all of the regret that millennials are experiencing to be able to own a home, they're now resorting to even more drastic measures, including getting another job, moving to a more affordable rural area, renting out a room of the house to help with the mortgage, skipping other debt payments, creating a GoFundMe, moving to a less safe developing neighborhood, delaying having kids, and delaying their wedding.

Again, all of this seems absolutely pointless when you begin looking at the numbers and realize that unless you live in the home for at least 15 years, renting is cheaper in most areas. I know we live in a society that pushes homeownership as the American dream, but it needs to be understood that it doesn't make sense in every situation, and it shouldn't be viewed as the end-all-be-all of goals, especially if you have to hold off on paying other debts or creating a GoFundMe to make that happen.

But frankly, in fairness, none of this is necessarily a new phenomenon, and buyers have had regrets since the beginning of time, or at least since 2019, when that was the case for 81% of homeowners, which sure is less than it is today, but still way higher than it ever should be. This could also be complicated by the recent National Association of Realtors settlement, which now disallows buyer agent commissions to be listed on the MLS.

As a result, some worry that the extra costs could end up getting pushed onto the buyer, who’s already going to be cash-strapped to begin with. Others say the buyer's agents were overpaid to begin with, and this is a great way to cut out the middleman to save the buyer some extra money. But I will say objectively having good representation, especially on your first few deals, is incredibly important when it comes to negotiating your offer, getting the contract accepted, inspections, and miscellaneous nuances that need to be investigated.

Obviously, only time is going to tell how this plays out, but in terms of why so many homeowners regret their purchase, here are my thoughts and the ways that you could prevent this from happening to you. To start, I generally only encourage people to buy a house that they intend on living in for at least 8 to 10 years; otherwise, the closing costs of buying and selling are going to eat away at all the benefits of being able to build equity with a mortgage.

It's also incredibly important to understand why you're buying a house in the first place, and the problems that's going to solve. Like, are you looking to save money, have more space, put down roots, or is it just a good investment that you think you could fix up? I think if it doesn't fit within one of those categories, it's probably best to be looking elsewhere or at least hold off from buying until you have a clear understanding of why you want to make the purchase.

I also recommend, anytime you buy anything, never max out what you could afford. That way, in the event of a job loss or reduction in income, you don't have to worry about making payments on unexpected repairs or being locked in at a higher amount than you would have liked. In addition to that, if you currently own a home or you're thinking about buying a home, look into putting that home in a trust.

This will allow you to keep all of your information private so that that way nobody could look you up, see how much your home is worth, and see what else you own. It also helps make sure that your assets are distributed according to your state laws, without attracting unwanted attention from outsiders. And in some situations, depending on how it's set up, there could be some substantial tax benefits along with doing so. It's also really easy to put a home in a trust even after you've already bought it, and my partner GetDynasty.com is able to help you do exactly that in just a few minutes for less than $100.

They even have a free option for those that don't want to pay any money whatsoever, and you could get 10% off by using the code GRAM at checkout. I've also personally invested in this company since all of this is something I wish I knew when I first started buying real estate. So, I hope this helps, and it's absolutely something to look into.

Anyway, when you begin putting all of this into perspective, as far as the home ownership regrets, it all boils down to problems that could have been solved with about a day's worth of work. And even more could have been solved with the evaluation of why you're buying a property in the first place and whether or not it makes the most financial sense. Even though buying a home could absolutely be a good investment under the right conditions, buying a house doesn't automatically make a good investment or even something that'll make you money.

But use this as a stepping stone to learn, get used to the idea of home ownership, and then one day, you could buy the house that you've always wanted, like this one in Arizona for 20 million bucks. If anyone has a spare 20 million they want to give me, let me know so I could go and buy it. So, with that said, you guys, thank you so much for watching. As always, make sure to hit the like button, subscribe, and I will do my best to respond to as many of your comments as possible. Thank you so much, and until next time.