LA County area -Best time now to rent, buy, or rent w/OB? (Needles: sales, real estate)

[12buttons]

Recent NYTimes article said that because the prices came down and have not fully recovered, and the rent to purchase ratio is below20, now is not the time to buy...friends of our did a rent with option to buy and got a pretty good deal..I sold my house in Venice about 10 years ago and am thinking about moving back to the area for work so am bascially not up to speed on the makret and don't trust what I read from all the self interest rags... also anybody know what the cutoff is for FHA in the LA area?:..think:

boy do I miss the weather, the farmer's markets, and the ocean! Thanks!

[Charles]

From this morning's LA Times:

Home buying, real estate: Now may be the time to buy a home - latimes.com

[JohnG72]

www.redfin.com

In general, its WAY more expensive to buy than rent anywhere on the westside, and also in most of the middle class and better neighborhoods in LA County.

For instance, I pay $1550 a mo rent for a loft downtown. An equivalent property, 80 sq ft larger but not quite as perfect a location in an equivalent building recently sold at $340K. After factoring in HOA and other expenses, it would cost me over $2800/mo to purchase.

Needless to say, no thank you.

My advice is to search redfin for recent sales in the area and compare to rent prices.

[JohnG72]

I'll also note that despite the newspaper articles proclaiming rising rents, I have found this NOT to be the case. My building is in the lower end of pricing for my area, with one less attractive building being cheaper. Rents HAVE been increased on the smaller units, but not by much. Around 2-3%, and in a search on craigslist it appears that there are quite a few more vacancies than there have been in the past. However, on the larger units, rents have decreased by a significant amount...as much as 10-20% since last year. This is bourne out in a search of other nearby buildings as well. Another building that is more upscale now has 2 bedroom/1100 sq ft units with external city view balconies at $2300/mo, which is down around 15% from last year. Another more downscale building across the street has 2 bedrooms at $1650 a mo which is the lowest I've ever seen in this area.

[Charles]

Originally Posted by JohnG72

For instance, I pay $1550 a mo rent for a loft downtown. An equivalent property, 80 sq ft larger but not quite as perfect a location in an equivalent building recently sold at $340K. After factoring in HOA and other expenses, it would cost me over $2800/mo to purchase.

I don't know what your other expenses would be but 30 years at 5% and 20% ($76K) down is $1400/month on a $262K mortgage.

[Vascodagama]

Originally Posted by 12buttons

Recent NYTimes article said that because the prices came down and have not fully recovered, and the rent to purchase ratio is below20, now is not the time to buy...friends of our did a rent with option to buy and got a pretty good deal..I sold my house in Venice about 10 years ago and am thinking about moving back to the area for work so am bascially not up to speed on the makret and don't trust what I read from all the self interest rags... also anybody know what the cutoff is for FHA in the LA area?:..think:

boy do I miss the weather, the farmer's markets, and the ocean! Thanks!

The problem with buying now is the values could drop much more so you might end up upside-down on your loan within a few years. That means if you must sell, for whatever reason, you might be stuck, can't sell for what you owe and you could lose the money you put into the home including your down payment if you default or short sell which will also hurt your credit.

[jrb724]

The "it's a great time to buy" speech means nothing and has been repeated over and over again for years. Don't buy if you aren't planning on living there for at least 10 years. Even if prices stay flat, you will have equity in your home after 10 years.

You will drive yourself crazy worrying about fluctuations in home values & interest rates. Everyone is saying interest rates are due to rise because they are so low but take a look at Japan - extremely low interest rates for over a decade. My personal opinion is that prices and interest rates are not going up anytime soon.

I believe the current FHA mortgage cutoff in LA is somewhere in the low 700k range.

[JohnG72]

Originally Posted by Charles

I don't know what your other expenses would be but 30 years at 5% and 20% ($76K) down is $1400/month on a $262K mortgage.

$660 HOA
Property tax not fully funded by interest deduction
$150/mo parking
Gym membership(included with rental)
Utilities(included with rental)

And oh yah, that pesky $76K that could poof into thin air.

[12buttons]

Originally Posted by JohnG72

$660 HOA
Property tax not fully funded by interest deduction
$150/mo parking
Gym membership(included with rental)
Utilities(included with rental)

And oh yah, that pesky $76K that could poof into thin air.

or that 76k pulled out of other investments...how come no zero down mortgages?

[Charles]

Originally Posted by JohnG72

that pesky $76K that could poof into thin air.

For many people

fancy car payments +
fancy car rims +
fancy car stereo +
neat haircuts every month +
Starbucks five times a week +
extra cable channels +
lunch out at work (vs brown bag) +
designer clothes +
lots of cell phone bells and whistles

= $76K