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My wife and I held out during the bubble. We were ready to buy in 2006/7 but just couldn't believe the prices out there. Our budget would have bought us a hell of a house in 2001, but would have bought us a shack if we were lucky at the end of 2006.
Ownership in a home should not be treated as a financial decision, but an emotional one. You have to want the house and you have to want to live there for a long time before the financial end of it will start to pay off. The idea of buying a home as an investment is one of the biggest lies readily bought by most people. Renting is a solid alternative and affords you a lot of freedom compared to a home owner that is essentially tied to their property.
With that said, my wife and I did buy recently, but we did it for what we felt were the right reasons. We have 3 young kids and we wanted a home for them and to put down roots in a community. We got a good deal on our home and it is a place that can accomodate and suit us for a long time.
I think that housing prices will continue to slide for a while (I think they have to), but in our area, I don't expect them to drop more than another 10% or so. Overall our housing market in this area is very stable. The main pressure for me to do it now, was interest rates. Interest rates will go up, in fact they already are. The ability to get a mortgage at 5% fixed is nothing to sneeze at with the tax credit just some icing on the cake. A lot of people are predicting rates are going back up to 6%+ and while that may have the effect of further driving down pricing I actually figured out that it is a wash for us even if the home loses a decent amount of value.
So, I do think that now is a good time to buy as long as you are doing it for the right reasons.
There are those who make it sound sorta 'unpatriotic' if you don't buy a home....
Homeownership isn't for everyone even if you have the wherewithall....remember, your mileage may vary....
Didn't say no such thing. All I said was if prices were that out of whack, and I was waiting 1/7 of my life to wait for prices to fall to acceptable levels, I'd probably seek a better way of life elsewhere, if it were my prerogative to buy a home.
My wife and I held out during the bubble. We were ready to buy in 2006/7 but just couldn't believe the prices out there. Our budget would have bought us a hell of a house in 2001, but would have bought us a shack if we were lucky at the end of 2006.
Ownership in a home should not be treated as a financial decision, but an emotional one. You have to want the house and you have to want to live there for a long time before the financial end of it will start to pay off. The idea of buying a home as an investment is one of the biggest lies readily bought by most people. Renting is a solid alternative and affords you a lot of freedom compared to a home owner that is essentially tied to their property.
With that said, my wife and I did buy recently, but we did it for what we felt were the right reasons. We have 3 young kids and we wanted a home for them and to put down roots in a community. We got a good deal on our home and it is a place that can accomodate and suit us for a long time.
I think that housing prices will continue to slide for a while (I think they have to), but in our area, I don't expect them to drop more than another 10% or so. Overall our housing market in this area is very stable. The main pressure for me to do it now, was interest rates. Interest rates will go up, in fact they already are. The ability to get a mortgage at 5% fixed is nothing to sneeze at with the tax credit just some icing on the cake. A lot of people are predicting rates are going back up to 6%+ and while that may have the effect of further driving down pricing I actually figured out that it is a wash for us even if the home loses a decent amount of value.
So, I do think that now is a good time to buy as long as you are doing it for the right reasons.
Good for you, man...although in John and my neck of the woods, the tax credit of 6500 (which is all I'd be able to qualify for...unless it was possible for an LLC or Corp to get the "new homebuyer" credit, which I highly doubt but haven't researched) equates to 1% of the asking price for the absolute LOWEST of the LOW end garbage. It's virtually meaningless in prime LA, unfortunately.
$750K for not-very-updated 1,000 to 1,500 sq ft post war shoeboxes on tiny lots. Simply absurd.
I'd move. Period. Find a better life elsewhere. Waiting 7+ years to buy a home? Seriously? It may or may not happen for you there.
I pay $745 a month to share a house with another person. I make almost six figures. Ability to buy a house has little to do with if I stay or go. If current patterns and indicators hold, I'll either be able to purchase all cash, or finance on a 15 year basis. Either way, a house would be fully paid off well before my retirement.
Common sense and a basic understanding of economics, particularly in terms of real estate, mortgages, and personal finance? What's next, you're going to expect us to employ logic and reason?!?
John I'm in the same boat as you - hell, we probably look at the same neighborhoods. And the current pricing is absurd and out of control. I especially love the RAGING holdouts that have had their ****box listed for 300, 400, 500+ days! Some into the 700+ days, LOL.
Hmmmm, could it be that even after hacking 50% off the asking price, YOU ARE STILL OVERPRICED???
Nah...never mind what those braindead zombie sellers are thinking, what are their agents and realtors thinking, dealing with these delusional sellers for over a year and sometimes 2 plus years.
LOL. There are some condos in Sherman Oaks/Studio City(upper middle class to extremely wealthy suburbs of Los Angeles for those unfamiliar) that are finally getting close. Generally $300-400K, 1400+ sq ft, , 3bd/3ba. Thing is, they are still about 10-15% overpriced and many have experienced a huge price drop. The worst was from $495K listed in 2008 now at $300K even and still not selling. Two freaking years on the market. Its held down by really high HOA($500 a month), and 5 other units(out of I believe 14 total) also on the market. The only thing I can think of is that several boobs bought at nearly the same time at bubble pricing.
It's probably gonna be a long while before a family of 4 in Los Angeles making $150K a year combined family income realizes they cannot afford a house that is more than $500K. When that realization hits, the feeding frenzy mentality will mercifully(and finally) come to an end.
I pay $745 a month to share a house with another person. I make almost six figures. Ability to buy a house has little to do with if I stay or go. If current patterns and indicators hold, I'll either be able to purchase all cash, or finance on a 15 year basis. Either way, a house would be fully paid off well before my retirement.
You may simply have more patience than the average person. Good for you. Meanwhile, you've spent $62,580 in rent over 7 years that would have made a hell of a downpayment in a not so bubblicious area...
You may simply have more patience than the average person. Good for you. Meanwhile, you've spent $62,580 in rent over 7 years that would have made a hell of a downpayment in a not so bubblicious area...
Just sayin'....
LOL, my down payment is much more than that. Like I said, I'm ready to pay full cash or do a 15 year when prices drop reasonably close to 2001 inflation adjusted prices. $60k is more like my remodel/furnishings budget.
Thing is its not just me. Families of four in LA that make say a combined family income of $100K SHOULD be able to afford a small home in a decent area or a larger home in a blue collar area. I mean afterall, $100K a year is more than double the average household income in Los Angeles. But right now, the only place to do that is a more rundown area like Arleta or North Hlls, where their kids are condemned to some of the most godawful high schools known to mankind(James Madison in North Hills or Polytechnic aka Gangmembersfrompacoimawillkillyou High in Sun Valley)
So I'm very certain that prices are so out of whack in Los Angeles that this is not the norm. We are not talking 3.5-4.5x income as a premium over the rest of the country. We are talking 6-10x income in mortgage costs, and roughly 2-3x rent depending on the neighborhood. Anyway, somethings gonna give...just takes a while.
You may simply have more patience than the average person. Good for you. Meanwhile, you've spent $62,580 in rent over 7 years that would have made a hell of a downpayment in a not so bubblicious area...
Just sayin'....
A person with a six figure income and a low rent payment are able to save more money than if they were buying right now, unless of course, it is a cash deal. Factor in a mortgage payment, insurance, taxes, maintenance, utilities and you're over the top, hence, 62K in rent is a cheap proposition over 7 years compared to owning in this situation.
In addition, considering that homes are not appreciating at the same pace, renting would make more $en$e, especially if the rent is cheapo.
Certain areas of the U.S. have been bubble/bust prone, since forever.
Every bust, some say home values will never ever reach the prior peaks, and yet they eventually do and then some.
Sure, but the last time the US had a RE bubble this significant, it took several generations, two world wars and a global depression before prices returned to return to peak values. Waiting it out can have many different meanings depending on how you view this bubble in the context of our history.
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