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I am a 23 year old living in Romania, currently renting an apartament. I am earning enough that I am now looking to buy an apartment of my own in the near future with a mortgage loan, but, right now, I think there is a housing bubble about to burst, at least in the area I live in.

This site shows the price graphs for apartments in my living area. It seems that the prices are reaching the values they were at before the 2008 recession. Is it reasonable to expect them to drop similarly to how they did 12 years ago? If the prices do drop within the next 3 years, is it reasonable to expect that I would be able to get the same kind of loan I am eligible for getting now from a bank?

From a purely financial perspective, does it make more sense to buy an apartment now, despite the inflated prices, or wait for the bubble to burst and buy at that point?

  • You can still make a purchase but make it so in a case where you can get through the worst case scenario. You should look into House Hacking for example. I recommend the discussions that take place on Bigger Pockets for that. They have some articles on the matter too. – Jonast92 Feb 24 at 11:00
  • How long do you plan to keep the apartment? – chepner Feb 24 at 15:05
  • @chepner As of right now, I don't intend to ever sell it. – Bogdan Ionică Feb 24 at 15:45
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You can't make a market prediction based purely on the current market value. The value is a function of supply and demand. To make any sort of reasonable prediction you would need to understand population in your area and predictions on population growth/shrinkage, demographics e.g. are the sort of people who would buy an apartment likely to increase as a proportion of the population in your area, and are there already any house building initiatives planned in your area to meet any expected population growth. These are some of the immediate local indicators which is possible to find out about. Then there may also be macro/global factors which may not be possible to predict e.g. if coronavirus suddenly wiped out 5% of global population what effect would that have on global property demand? Basically unless you can do extensive research and analysis then you are better off trying to find an expert with some relevant credentials, or not attempting to time the market at all.

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Have you weighed up all of your alternatives? What if you invest in a managed fund instead, what are your projected returns on a managed fund vs buying real estate? I sold my house and put the money into managed funds and I get better returns than I did from owing property, but more importantly, there's so much less stress and work involved. No more plastering and repainting, retiling etc. No worrying what would happen if I lost my job during a recession. You're young, so think about how much of your youth you want to waste trapped into a mortgage and fixing up your place.

Have you set aside enough money to pay your bills for at least 10 years if you are involved in an accident and can't work for a long time? Who would pay the mortgage then? There is so much more to this decision that just trying to time the market.

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    I do have the big majority of my savings (which I would use for the down payment of the apartment) in a bond-based managed fund right now. I am losing money every month if you consider rent vs. returns. And I also believe I would enjoy the flexibility and comfort of being a home-owner more than the financial gain from investments and not having to do maintenance. – Bogdan Ionică Feb 24 at 11:31
  • Well there's your answer then. If it makes you happy, then factor your happiness/ well-being into the analysis and it sounds like that is the right investment for you. – Only_me Feb 25 at 0:03
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From you question I ascertain that you live and work in Romania.

When 2008 crash, economies crashed as well. e.g. Greece. Many Greeks are trying to leave the country.

Economy turns down, you loose your job, there is little prospect for employment in your country, what are you going to do? Economy turns down, banks go under, and you are unable to obtain a mortgage with a job, what are you going to do?

Note that these questions are not about timing the market. These questions are what are your scenarios when an economic crisis hits eastern Europe?

Also, how secure is your job? Are you employed by the state (school teacher, military, bureaucrat). Much more to think about than just right time to buy.

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