Aces High Bulletin Board
General Forums => The O' Club => Topic started by: 68Wooley on August 12, 2009, 08:05:28 PM
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I'm in the enviable position of being in a household with two relatively secure incomes and next to no debt.
We live in Southern California and house prices have now dropped to the point where we can actually look to buy in areas we'd consider living. As little as six months ago, that would have been fantasy. We have enough savings to put 20% down without completely wiping ourselves out.
We've been renting since moving to the States 4 years ago and whilst initially not owning any property worried me, it now looks like a very shrewd move. However time is getting on and I don't want to be paying off a mortgage forever so we're starting to get itchy about buying a place. The question is - is now a good time to buy, or should we hold out a little bit longer?
Anyone have any views / insights into the property market (particularly SoCal) or are we so far in to untested waters no-one knows what's going to happen?
Cheers,
Wooley.
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I would bet on the untested waters, but from what I'm starting to see in the stock market, things are starting to fluctuate. For the most part, it's been a slow, snails climb up, but still up. I would say if you feel secure enough with your income, and you can put that 20% down without taking too much of a blow, I don't see why not. Intrest rates are low, prices are down, to be honest, I believe that (at least around here), now's the time to buy.
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In Ohio, things are starting to turn around and the housing prices are starting to go up. If you can, then right now would be great time to buy. Just keep in mind that in 5 years, when the economy is back in full swing, the taxes will be a lot higher than they are right now, so leave a bit of a cushion.
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I'm working on one project that's $170K on the tax rolls, but we prolly couldn't sell for more than $150K when the remodel is done. This is a nice house in a great neighborhood too. So, it's a buyer's market.
Check Austin, Texas if you're looking for investment property. We have many nice houses that have been on the market since '08. The best property here is the in the "hill country" west of downtown, but there's opportunities all over.
They say here in Austin it's the closest you can get to a California lifestyle in Texas.
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if you are getting a loan, and lets say that you qualified for a $150,000.00 home but the banker tells you qualified for a $225,000.00 home. i would strongly take the $150,000.00. the reason for this is because a lot of loan officers did this, and they are the reason for the meltdown in the financial area this past fall-winter. they got to greedy, gave more money to people then what they really should have gotten and now many people lives are screwed up as well as the housing market crashed. Play it smart and save your self money for a rainy day.
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if you are getting a loan, and lets say that you qualified for a $150,000.00 home but the banker tells you qualified for a $225,000.00 home. i would strongly take the $150,000.00. the reason for this is because a lot of loan officers did this, and they are the reason for the meltdown in the financial area this past fall-winter. they got to greedy, gave more money to people then what they really should have gotten and now many people lives are screwed up as well as the housing market crashed. Play it smart and save your self money for a rainy day.
Rodger that - our own calculations on what we can afford are far more conservative than the bank's. Even in the current credit market, what they'd be prepared to lend us is crazy.
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Also consider that if you're renting you're giving your money away. Literally.
Most people that rent pay about the same as a house mortage but never own the house nor build equity, etc. The money, and all the hours you put on your job to pay it with, are lost.
If you can buy a house BUY it. My only suggestion is to avoid the pitfall of 'oh this is my dreamhouse and I can pay it with my & my wife's income' because if crap hits the fan and one or both of you get laid off or have a medical emergency you'll be stuck with a mortage you suddenly cant afford and you'll lose the home.
Start with a home you like but is not very expensive and start from there. The worst thing you can do at any time is buy a 200k home and end up spending most of your income to pay for the home....when you could have purchased an 80k home, paid it off in a third of the time to secure the investment and then spent a decade or so with a secured home, debt free and able to enjoy that disposable income on your kids, vacations, etc. Dont slave your family to a mortage.
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Wooley this is absolutely a perfect time for you guys to buy. Great Rate and reduced home prices make this your market. Good luck.
ReDhAwK
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Wooley this is absolutely a perfect time for you guys to buy. Great Rate and reduced home prices make this your market. Good luck.
ReDhAwK
Absolutely.
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Wooley this is absolutely a perfect time for you guys to buy. Great Rate and reduced home prices make this your market. Good luck.
ReDhAwK
Don't disagree - only question is will it be even better in 6 months? I'm hearing rumours of a second wave of foreclosures as many Alt-A (not-quite sub-prime, but not prime either) mortgages reset later this year and through 2011.
Ultimately, this is about a roof over our heads rather than an investment so I'm not going to lose too much sleep over short to medium term losses, but I'm wondering if I hold off and we see further drops if we might end up with not just somwhere that is nice-for-now, but a place we could be in for life.
Thanks for all the advice.
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Another thing that you can do. If you find a flexable owner who has a few homes, you can talk to them and buy the house w/o getting a loan. all you have to do is pay them the monthly payments, you have the title of the house and they will have the deed of the house until it is pay off. Keep in mind, this is kind of like renting, but you are not really renting. A set up like this works well if you have bad credit, no money to paydown and bank is never in the process.
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Another thing that you can do. If you find a flexable owner who has a few homes, you can talk to them and buy the house w/o getting a loan. all you have to do is pay them the monthly payments, you have the title of the house and they will have the deed of the house until it is pay off. Keep in mind, this is kind of like renting, but you are not really renting. A set up like this works well if you have bad credit, no money to paydown and bank is never in the process.
Are you talking about rent to own? Good idea for those who are renting, but in this economy I would go for the house, plus, you're not going to find very many people willing to rent-to-own.
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Hi Wooley,
I co-own a mortgage bank and real estate firm in Irvine, California. While no one has a crystal ball, I'd like to make a couple dissenting arguments to purchasing right now.
The Federal Reserve set aside 1.25 trillion dollars several months ago to purchase mortgage backed securities in the open market. This was done in order to drive down interest rates and has been largely successful. So far $721 billion has been spent. At the current purchasing speeds these funds are projected to run out at the end of December. This creates a colossal uncertainty: what will happen to rates in December when the Fed stops buying mortgages?
The opinions vary wildly. Some analysts state the market has already priced in the Fed's exit from the mortgage backed securities purchase program. Others believe rates have a potential to skyrocket. If rates do skyrocket, you can rest assured that home prices will continue to fall as the purchasing power of potential buyers drops substantially.
Of course, there is always the potential that the Fed will add funds to the program (this already occurred once before, as it was originally funded with $500 billion). The Fed also engaged in buying 10 year treasuries in order to bring the yields down and help lower mortgage rates. As of today, the Fed announced they will not be adding funds to this program and that it will end in October. I believe a good indicator of what will happen with mortgage rates will be to watch the 10 year treasury yield at the end of October. If it jumps up, then that is likely what will happen to mortgage rates at the end of December/January.
It's a tough call, and like I said no one has a magic ball! I do know there is a HUGE shadow inventory of foreclosed properties that the banks are just sitting on (so as not to flood the market). Couple that with the moratorium that California placed on foreclosures, and it doesn't become much of a stretch to see a further decline in home values when the additional homes hit the market.
My personal opinion is to purchase once you've seen 2-3 consecutive quarters of home prices increasing. Why try to catch a falling sword? At worst you'll miss out on 2-5% appreciation. On the flip side, if you bought too early you could lose 10-30% of value. The potential flaw in this strategy is that if values don't drop much further but rates skyrocket, the total cost of ownership will be more expensive long term.
For example:
Suppose you can purchase a property for $500,000 right now with a $400,000 loan at 4.875%. The payment would be $2115.61. In 30 years, you would have paid a total of $761,619 to own the home. However, if you waited and values dropped 10% in 1 year you could buy the house for $450,000 and only need a $350,000 loan (with the same downpayment). But, the rate is now 6.5% with a $2212.23 payment resulting in a total cost of $796,402 to own in 30 years. In this scenario it would have made more sense to buy when values were higher!
I could probably go on indefinitely regarding all these scenarios and the host of variables that could be taken into consideration (mortgage interest tax deduction, etc). At the end of the day, if you have the income and downpayment to comfortably afford the property and plan on keeping it long term (10 years +), then it's a pretty close call and either decision you make couldn't be frowned upon.
Good luck to you!
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Are you talking about rent to own? Good idea for those who are renting, but in this economy I would go for the house, plus, you're not going to find very many people willing to rent-to-own.
It is kind of like that, but you are not renting.
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I like the statements that mondego is making. I am looking at several different foreclosures here in Alabama...the one we just made an offer on today that we made an offer on a week ago (feel through because of an investor and his credit crashed after the offer and he couldn't put up the earnest money...big surprise there) at $180k for a 5 bedroom, 4 bath house on .70 acres corner lot. Today I offered the same financial institution $160k and want them to pay the closing costs. I have about 15% of the asking price ($201k) and I don't want to fix it up and move out...I want to stay there for several years. Anyway we will see where this goes because the others I am looking at here at are similar listing price and similar size 4+ bedrooms and all are around 200-225k listed but either in foreclosure or about to be in foreclosure.
Should be a good time because I do see the bottom here in my area. We will see though.
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I like the statements that mondego is making. I am looking at several different foreclosures here in Alabama...the one we just made an offer on today that we made an offer on a week ago (feel through because of an investor and his credit crashed after the offer and he couldn't put up the earnest money...big surprise there) at $180k for a 5 bedroom, 4 bath house on .70 acres corner lot. Today I offered the same financial institution $160k and want them to pay the closing costs. I have about 15% of the asking price ($201k) and I don't want to fix it up and move out...I want to stay there for several years. Anyway we will see where this goes because the others I am looking at here at are similar listing price and similar size 4+ bedrooms and all are around 200-225k listed but either in foreclosure or about to be in foreclosure.
Should be a good time because I do see the bottom here in my area. We will see though.
if he can't put up the earnest money, he has no chose but to take a lower offer or he will be stuck with that house.
If you do get that house, make sure that previous owner doesn’t do any new damage or steal any attachments to the house. There is a huge event that people that end up foreclosing their home do a lot of damages to the house. They put holes in the wall, break windows, tear up the wood work. They even go as far as taking copper wire and pipes, windows, doors, light fixtures, sinks, toilets ect. What they don’t know is that you can press charges on them for destruction of property, and thief (that is if the contract have been signed by both parites). So before the contract has been signed by both parties, you and you agent (if you have one) go through the house one more time to make sure there is nothing new in the house that been done intently.
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I do know there is a HUGE shadow inventory of foreclosed properties that the banks are just sitting on (so as not to flood the market).
I'd heard that. Whilst I kind of understand the logic and realize it doesn't do anyone any good for the housing market to be totally wiped out (taking the rest of the economy with it), it is kind of frustrating knowing there are a lot of empty properties out there being held back.
You make a great point about mortgage rates. I'll be keeping a close eye on that.
I'm thinking right now that if we find a great property in our price range, we'll go for it, but we're going to take our time looking and not feel rushed.
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Well, I'd try to put up 30% if possible, and if it won't make you go broke. In the end though, it's up to you.
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Well, I'd try to put up 30% if possible, and if it won't make you go broke. In the end though, it's up to you.
Must_Resist_Sexual_Reference_Post_Temptations.... :D
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A Save money, if you don't have at least 10k for down payment, work on that first. Ideally you should be able to put up 1/4th to 1/5 of the asking price. That will significantly lower your monthly Mortgage.
B Shop around
C Don't pay what they are asking. If you think its overpriced in the current market, chances are everyone else does also. If you see a house that you really like the looks of, make an offer of 2/3's to 3/4s of what they are asking. Then be flexible if they counteroffer.
D Don't buy so much house that if one of you has health problems, looses a job, etc that it costs you everything. Figure having to get buy one one salary, then for as long as you have 2 your in gravy.
E Figure 10% of the total is what its going to cost you in tools, changes, and fixing whats broke, or wants changing. Landscaping, lawnmowing, paint, required tools, etc, it all adds up DARN fast once you buy that first house.
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I think the real question you should look at is can you be happy paying the current market price, regardless of how much lower prices might go? Will it comfortably fit your budget? Home prices may go down, but I doubt they will go sutstantially lower. At some point will probably go up beyond the current value. For me, I'd buy. Not only are houses lower in cost, but mortgage rates are great too. Just stay away from ARM's.
Just my .02's.
Glove
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...it all adds up DARN fast once you buy that first house.
LOL - I know that alright. I have owned property before - just never in the US.
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PURCHASE NOW...are either of you titled on a house in the last 3 years? If not That person qualifies for the 1st time buyer program. Contact a Good Mortage Broker. There is a way to put that money in your pocket. Its $8,000
Kam
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Funny you say that, I've been renting for 4 years @ $1,250/month, I'm just getting this house built 20 min West of SLC:
To help you get an idea
Credit score 675 :O, income $4,300/month
$210,000 - 3,000 sq.ft including 1,000 sq.ft unfinished basement.
USDA loan $0 down, no closing costs, fixed 5.5% :x
$10,000 free in house upgrades
Free front landscaping (Lawn, sprinklers, 2 trees)
(http://photos-d.ak.fbcdn.net/hphotos-ak-snc1/hs187.snc1/6251_111726486307_790661307_2164555_7159092_n.jpg)
20 min South of SLC, same house goes for $300,000.
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I would buy before the holiday season ends. I don't see prices going up or down too much more this year unless demand porks. The stock market is making good news lately, and my experience living here in SoCal is that almost everything in relation to the "local" economy is influenced heavily by how much consumer spending is going on (shoping at the malls, day-time or late-night entertainment, eating out, etc.). So IF at the end of the holidays comming up buisnesses have a good holdiay-season, and IF the people have the money to spend this holiday-season and they spend it, I think you'll see a bit of a bounce-back in property prices next year.
I work as a drafter for a Landscape Architect here in LA (we do commercial and once in a blue-moon a high-end residential project), so I'm in touch with a bit of what's going on through our clients and consultants. The first half of this year was really ugly for everyone in the industry. Contractors were just not working because nobody had money to build stuff so there was just no work or other jobs to move on to until the old ones found the funding, and us "designers" were just getting by because of some projects that were lingering on from last year. Twords the middle of this year we're seeing contractors getting enough work to get them (those that are left) by, but it's small stuff (the shovel-ready projects our goverment has been behind), and they're itching because most don't have another project lined up to start after they're finished with this one. Us designers though are really in the process of getting thinned out right now. Those getting by until now on long on-going projects earlier this year are finding that there are no new projects to design to replace those that are disapearing and keep the payroll comming in. Some of us designers have been fortunate enough to have landed some new projects, but only in the past couple of months (mostly public-sector stuff, my office has two recreation centers being constructed soon that we landed the landscape design for, and that should get us through this year).
The bottom line currently on the design and construction front here is that we're starting to see the banks being able to put loans out there again, and some previous projects (already delayed 1-2 years) are moving again because of this, but they are still too few and far between to sustain the industry at the current pace. No new housing projects are starting up either (which if they started designing today you would see the first houses popping up in about two years), there's no demand and no banks to get the loans for the developers to build them. If the economy gets worse in the next 6 months (and the banks don't start to put some loans out there) you'll see the crash in the construction industry keeping on, with the design industry finally catching up. However things are looking up from the signs of things with the economy. IF the economy rebounds soon very strongly and quickly though you will soon (in about a year or two after the rebound and demand for housing comes back) see a huge shortage in housing out here in SoCal because there will be this 2-4 year gap in the housing construction industry.
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You make a great point about mortgage rates. I'll be keeping a close eye on that.
I'm thinking right now that if we find a great property in our price range, we'll go for it, but we're going to take our time looking and not feel rushed.
Now thats being smart,keep an eye on rates,take your time, because I dont think you'll see a bidding war anytime soon,when you find the right place you'll know!
:salute
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PURCHASE NOW...are either of you titled on a house in the last 3 years? If not That person qualifies for the 1st time buyer program. Contact a Good Mortage Broker. There is a way to put that money in your pocket. Its $8,000
Kam
Unfortunately there's an upper income limit on qualifying for that which we're just over. One of the downsides on living in SoCal is that although we earn what by any standard is a good income, the high cost of living here means we're probably not really any better off than people earning half what we do in some other parts of the country.
I often think the earning limits on these kinds of things should be regionally adjusted, but then I also understand why people in more reasonably priced parts of the country have no interest in subsidising us Californians.
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So much talk.
Yes, look now buy now. Interest rates are going up quick partly because they know people are becoming interested in owning and to cover all the low interest conversion loans they were forced to make.... , avoid the arms.
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68Wooley, your first name isn't Vladimir by chance, is it?
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68Wooley, your first name isn't Vladimir by chance, is it?
Nope
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dont move to new york state!
Youll be glad you didnt.
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Just build your own Hobbit-house. Much cheaper!
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Must_Resist_Sexual_Reference_Post_Temptations.... :D
Don't start... :mad:
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if you are getting a loan, and lets say that you qualified for a $150,000.00 home but the banker tells you qualified for a $225,000.00 home. i would strongly take the $150,000.00. the reason for this is because a lot of loan officers did this, and they are the reason for the meltdown in the financial area this past fall-winter. they got to greedy, gave more money to people then what they really should have gotten and now many people lives are screwed up as well as the housing market crashed. Play it smart and save your self money for a rainy day.
+1
When we bought ours, we calculated to not buy a house more expensive than what could be covered entirely by existing retirement check, and entirely ignored the pre-qualified amount the bank stated.