Buy or Rent in 2011 Orange county (rental, appliances, month to)

[Vascodagama]

I would rent for now ... actually that's exactly what I'm doing. Home prices will drop more and could be by 20% or more (I think more in some areas). So a $600K home could drop $120K to $480K. Renting at $1,500 will cost you 18,000 and you don't pay property tax, insurance and maintenance. You also might get trapped in a home if the value drops below your balance (upside-down) then you can't sell if you wanted or needed to. Another thing to consider is the California budget crisis and what might happen. Property taxes could dramatically increase like what just happened in Illinois (60% property tax increase in Chicago).

ROBERT SHILLER: If House Prices Keep Falling This Fast, The Economy Is Screwed

[EscapeCalifornia]

Originally Posted by Don9

Another thing to consider is the California budget crisis and what might happen. Property taxes could dramatically increase like what just happened in Illinois (60% property tax increase in Chicago).

How's that going to happen in California with Prop13? I don't see too many people voting for a 60% increase in their property taxes.

[bhcompy]

There is still a full years worth of non-subprime mortgage option arm resets on the horizon. These have a huge potential for foreclosure and the target group of those loans are the middle and uppermiddle classes, which reside in your target area. With that hitting the market, banks holding existing foreclosed inventory in Orange County, and interest rates rising, there is a good chance that prices will go down. Prices in many areas in south OC are still out of whack with traditional price to income ratios, leaving plenty of room for a correction.

[Vascodagama]

Originally Posted by EscapeCalifornia

How's that going to happen in California with Prop13? I don't see too many people voting for a 60% increase in their property taxes.

Prop 13 repeal. If you look at California news over the past two years the media is laying the groundwork to do it. Look at this forum and see how many people feel how Prop 13 caused state budget problems and feel it should be repealed. It's kool-aid on steroids.

If you think about it, the state can't increase sales and income tax much because California already has it maxed out. The property tax is ripe for the pickens ... and the California legislators have it on radar.

Do a google search for "repeal prop 13"

[EscapeCalifornia]

Originally Posted by Don9

Prop 13 repeal. If you look at California news over the past two years the media is laying the groundwork to do it. Look at this forum and see how many people feel how Prop 13 caused state budget problems and feel it should be repealed. It's kool-aid on steroids.

If you think about it, the state can't increase sales and income tax much because California already has it maxed out. The property tax is ripe for the pickens ... and the California legislators have it on radar.

Do a google search for "repeal prop 13"

There would be an exodus of biblical proportions if that ever happened.

[Vascodagama]

Originally Posted by EscapeCalifornia

There would be an exodus of biblical proportions if that ever happened.

That might be true.

[Seanak]

Thanks everyone for the responces. I think I will rent and wait on buying giving the number of forclosures to hit the market, banks not giving out loans, too much inventory and unemployment. I think the key will be unemployment. I have experienced bubbles in stock market. Usually it takes about 7-10 years to hit previous highs. Once housing prices get dirt cheap (which they are not now) we will see a spike in prices and then small increases for a few more years. At the same time I think the best place to live is USA and best place in USA in OC (location, weather, attractions,etc..), so demand will come again for these areas. Let me know if you disagree....

[Vascodagama]

Originally Posted by Seanak

Thanks everyone for the responces. I think I will rent and wait on buying giving the number of forclosures to hit the market, banks not giving out loans, too much inventory and unemployment. I think the key will be unemployment. I have experienced bubbles in stock market. Usually it takes about 7-10 years to hit previous highs. Once housing prices get dirt cheap (which they are not now) we will see a spike in prices and then small increases for a few more years. At the same time I think the best place to live is USA and best place in USA in OC (location, weather, attractions,etc..), so demand will come again for these areas. Let me know if you disagree....

Orange country is a great place and will continue to be. The housing market will improve eventually but like you said it will take several years and after more devaluation. Average homes values must be affordable to average income or else you won't have many buyers. Knowledge is the key. Don't take one source as gospel. There can be big money made in real estate and for some people it's their livelihood so keep that in mind.

[bhcompy]

Originally Posted by Don9

Orange country is a great place and will continue to be. The housing market will improve eventually but like you said it will take several years and after more devaluation. Average homes values must be affordable to average income or else you won't have many buyers. Knowledge is the key. Don't take one source as gospel. There can be big money made in real estate and for some people it's their livelihood so keep that in mind.

There is nothing that says that what happened Japan can't happen in the US(particularly overvalued areas that are already built out). Which is to say that it won't improve for more than a decade. I don't think we'll see another real estate bubble for quite some time

[bmw335xi]

You also have to consider though, you won't see interest rates like these for who knows how long...10-30 years. Interest rates are starting to go up already, but you should still be able to get around a 4% rate if you buy soon. It doesn't matter if house prices drop 10% one year from now, I'm positive interest rates will be higher. We've always bought and never rented unless it was a month to month, while we looked for a good buy. The only reasons not to buy would be if you can't afford it or you're not sure if you're going to live there for 5+ years. Good luck either way though!