Would you buy a home in Lancaster,CA now (if you only planned to be in it 2-4 yrs)? (Santa Clarita: best neighborhoods, sales)

[fritzmt]

I recently got orders to PCS (Permanent Change of Station) from our home here in Dayton, OH to Edwards Air Force Base, CA. Since there is no military housing available on base now, due to a major base construction project, we are going to live in the local community. The question comes to the risks assocated with buying, versus renting.

We get a $2200 a month (at my current rank) housing allowance to live in the outside community. 3BR/2BA Homes that we are looking at in the Lancaster or Rosamond, CA area list around $330k. Until I came home today, my family and I were intent on buying a home.

When I got home today, my wife was sitting in front of the internet and lamenting the "bursting of the California bubble" and the declining prices of homes in the area. I would like to think that no investment in a home (versus paying money on rent) is a bad investment...however, we're only going to be stationed there four years at best (or as short as two years, if the Air Force has other plans for us). With that short period of time to build equity in a home, are we smarter to consider renting instead of buying?

I realize that there is always risk associated with owning a home. Based upon my excel spreadsheets, we can afford a VA loan with zero down and all the costs associated with purchasing up to a $340k home. As well, over the next 2-4 years we will be capable of sticking to our plans of paying down personal debts using bonus money, pay raises, etc.

My fear, however, is that the California market--more specifically, the market in Lancaster or Rosamond, CA--will continue to decline to the point where the lower value on the home, coupled with the minor amount of equity we can build in 2-4 years and the 6% commission we'll have to pay to sell it when we leave will outweigh any benefits of homeownership. And this doesn't even count any money we actually put into the place?!?

If you knowledgable gurus have any advice in this scenario, I'd love to hear it. Mainly because I'm quickly starting to agree with my wife that we should consider renting for a year or two and then moving onto base when the housing reconstruction is completed. If you have, or know of, advice on local market trends and have access to a good crystal ball, I'd sure be interested in learning.

Thanks very much for your time, efforts and comments. I look forward to anything you have to offer!

FRITZ

[Winston Smith]

My personal feeling, were I in your shoes, is that I'd buy instead of rent. The tax benefits alone mostly justify this reasoning for me.

The housing market in the Antelope Valley may continue to slide because of, to my understanding, a lot of sub-prime mortgages in the area. The upsides for you as a buyer are that you have plenty of houses to choose from, time to decide, and negotiating leverage.

Rosemond is closest to AFB, but if you don't mind a few-minutes longer commute, IMO, you're better off buying in Lancaster. You'll have more buyers looking in Lancaster than Rosemond when it comes time for you to sell.

[Mumof3]

Originally Posted by fritzmt

I recently got orders to PCS (Permanent Change of Station) from our home here in Dayton, OH to Edwards Air Force Base, CA. Since there is no military housing available on base now, due to a major base construction project, we are going to live in the local community. The question comes to the risks assocated with buying, versus renting.

We get a $2200 a month (at my current rank) housing allowance to live in the outside community. 3BR/2BA Homes that we are looking at in the Lancaster or Rosamond, CA area list around $330k. Until I came home today, my family and I were intent on buying a home.

When I got home today, my wife was sitting in front of the internet and lamenting the "bursting of the California bubble" and the declining prices of homes in the area. I would like to think that no investment in a home (versus paying money on rent) is a bad investment...however, we're only going to be stationed there four years at best (or as short as two years, if the Air Force has other plans for us). With that short period of time to build equity in a home, are we smarter to consider renting instead of buying?

I realize that there is always risk associated with owning a home. Based upon my excel spreadsheets, we can afford a VA loan with zero down and all the costs associated with purchasing up to a $340k home. As well, over the next 2-4 years we will be capable of sticking to our plans of paying down personal debts using bonus money, pay raises, etc.

My fear, however, is that the California market--more specifically, the market in Lancaster or Rosamond, CA--will continue to decline to the point where the lower value on the home, coupled with the minor amount of equity we can build in 2-4 years and the 6% commission we'll have to pay to sell it when we leave will outweigh any benefits of homeownership. And this doesn't even count any money we actually put into the place?!?

If you knowledgable gurus have any advice in this scenario, I'd love to hear it. Mainly because I'm quickly starting to agree with my wife that we should consider renting for a year or two and then moving onto base when the housing reconstruction is completed. If you have, or know of, advice on local market trends and have access to a good crystal ball, I'd sure be interested in learning.

Thanks very much for your time, efforts and comments. I look forward to anything you have to offer!

FRITZ

Despite what people say about Lancaster and also the 'bursting of the so-called housing bubble', in my own mind, I would consider buying in this area...if you plan on being here 4 years especially ( I wouldn't bother if it's only going to be 2 years - that isn't enough time to build equity I feel), I would buy. Mainly I feel that this area is regenerating and people look here because they cannot afford Santa Clarita as well, people no matter what will keep coming because of this reason alone. Particularly the Westside is very desirable and therefore you will also get people from the Eastside wanting to come as well. I think the future is bright for this part of Lancaster and the real estate market changes so quickly that in 4 years houses could have appreciated here substantially. This is only my opinion of course...I wish I had an effective crystal ball...LOL....but seriously renting is such a waste of money I feel...the Westside by the way I would consider being past 50th street and beyond..

[Roma]

I like your "Crystal Ball" comment. LOL (I think we all wished we had one).

I, like the rest, would say buy also. Especially if you are going to be there for 4 years. But who knows what is going to happen to the this market. It is up in the air right now. We are buyers but if it was just for 2 years in Lancaster, I also might rent. But you said it might be up to 4. Hard one. What is the market like in Lancaster? Whatever you do, make sure you are in the best location there (whatever that may be in that area) (best schools, best neighborhoods) like that.

[artichoke63]

I would rent. Your wife is right. Home prices are dropping. In 2-4 years, you'll still be making interest-only payments, which means you won't have any equity in your home.

Artie

[antelopevalleygirl]

I am selling a house in Rosamond currently. Honestly I like Rosamond way more than Lancaster, but it too is growing. Rosamond is still small with just one large grocery store/shopping center. I am certain this will soon change as people realize that they cannot even afford to live in Palmdale / Lancaster and migrate North. Your other option is California City. There is more shopping etc. there however it is quite isolated.

In my opinion I would rent if I were in your situation - hey I may be renting this house out if it doesn't sell soon! haha

[midnightbirdgirl]

fritzmt, we just got a PCS as well to DFW. We currently live on the West side of Palmdale, and are in the process of trying to sell. It is a buyers market here now. Just stick to the West side and you can find some really nice properties for decent prices.
Property has kind of leveled off here. Since you will be working and living here it would behoove you to buy. Rosamond where EAFB is, is really growing as well. Lots of new stuff there, and affordable. We have lived here 7 years and our major complaint is my husband commutes over 2 1/2 hours each way to work, he works at LAX.
MBG

[marilyn220]

I would buy. After 4 years your house will appreciate and might be able to make a profit.

If housing sales are a slump, you can always rent it out and hire a management company to look after things.

[sliverbox]

Buying versus renting comes down to one question: How much money will you have at the end of the ordeal and how much can you save based on your salary. The jury is still out on housing, but the fact that more people in CA used IO/ARM/ Subprime loans than anyone else in the country can mean that the slide in RE might potentially be at the very least cause prices to be flat for several years.
Look at it this way: if you rent and also save, then what you save is guaranteed. If you buy, then you may/may not make any money, and in some cases such as a economic, housing downturn lose some as well.

Many reports show outlying So-cal areas as being at a significantly higher risk for devaluation than most major metropolitan areas in the state.

Do your research, see what your finances will be, and decide. Personally, if I knew that I was not going to be stationed in an area permanently, I wouldn't be buying anyway.

[fritzmt]

Thanks for all of your great and insightful comments. They were very valuable and quite candid--which is great! We've been canvassing the internet and professional world for advice on our situation and have decided to rent. Along with your advice, we've also received inputs from the academic community which is forecasting some rather dire times in the future. Some have pointed to losses of 30-40% over the next four to five years, a figure which we are unable to stomach financially should it occur even to half of that level. We've consulted with academics at the Lusk Center at USC (who should definitely understand the market trends) which specializes in Real Estate Economics Forecasting. Their comments were as follows:
"Even though fixed mortgage rates are still very low, there has indeed been a price run up in LA County during the past five years. The market is cooling and further gains are likely to remain flat for the next few years. The area that you are considering in the Antelope Valley has some of the least expensive rents. Since you may be leaving in two to four years and seeling the house, it is not an ideal time to buy. These decisions are always very personal and everyone's situation is different. So, good luck with your decision."

Moderator cut: off topic for this forum

Thanks again for all of your inputs...I look forward to continuing to learn more!

FRITZ