Modesto Ca home prices, absurd? (rent, insurance, mortgage)

[WishfulThinker06]

I have a difficult decision to make. I did the right thing, got all my ducks in a row and now I'm in the time of my life where I should be buying a home. Trouble is, the prices have gone up so quick in these past few years it worries me that this too is again just a big fat bubble. It sickens me to think if I purchase a home that in 5 years it could be potentially worth half of what I bought it for. If I buy the home I want it comes with a mortgage of ~$1,850 after taxes, insurance, assessments/bonds and melloroos. This seems like a LOT of money for a typical track home in the Modesto area. Is this a normal mortgage?! Anyone else waiting out this bubble?

I've heard that people that shouldn't be buying are again buying homes. Does anyone have first hand knowledge of this?

[expatCA]

Originally Posted by WishfulThinker06

I have a difficult decision to make. I did the right thing, got all my ducks in a row and now I'm in the time of my life where I should be buying a home. Trouble is, the prices have gone up so quick in these past few years it worries me that this too is again just a big fat bubble. It sickens me to think if I purchase a home that in 5 years it could be potentially worth half of what I bought it for. If I buy the home I want it comes with a mortgage of ~$1,850 after taxes, insurance, assessments/bonds and melloroos. This seems like a LOT of money for a typical track home in the Modesto area. Is this a normal mortgage?! Anyone else waiting out this bubble?

I've heard that people that shouldn't be buying are again buying homes. Does anyone have first hand knowledge of this?

It is highly unlikely that a bust like the last one will occur. There are many factors that caused it and the majority of them do not exist today. There might be a leveling, a very slight drop and then a slight bump up. Remember if prices dropped a lot of people who were waiting for that would buy and ...... drive the prices back up.

They key is buying long term not just as an investment to sell in a few years. Buy a home not a house. Then evaluate your finances and do not buy at the maximum but below what you can afford. to give you some room if your income gets hurt.

I am not that familiar with Modesto but from what I can see the monthly cost you list is about right with a good down payment.

https://www.zillow.com/modesto-ca/home-values/

The median home value in Modesto is $260,800. Modesto home values have gone up 9.8% over the past year and Zillow predicts they will rise 4.5% within the next year. The median list price per square foot in Modesto is $178, which is lower than the Modesto Metro average of $179.

[HappyinCali]

No one knows what will happen. But I will point out two things.

1) The reason that last drop was so jarring is because it hadn't happened in decades. It wasn't the norm - it was the exception. Everyone now thinks that the next drop will be 50%. It could be. But the likelihood is small.

2) as pointed out above, a lot of the factors that caused the previous drop are not present now. However, if the economy slows down, yes prices will fall down. But I highly doubt it will be 50%.

[GSR13]

Originally Posted by expatCA

It is highly unlikely that a bust like the last one will occur. There are many factors that caused it and the majority of them do not exist today.

Wrong. While there may not be a plethora of sub-prime buyers this time around, interest rates are bound to rise and local municipalities will have to impose special taxes on foreign property buyers (such as Vancouver's recent 15% tax on foreign property investors) or risk intense local turmoil from the native non-property owning population (riots, etc).

The 2009-era bust never corrected the imbalanced market, and since then things have gotten more imbalanced. The market will only balance when home price/income levels revert back to their pre-2000 levels.

But yeah, keep up the wishful thinking, propertytards. Whatever floats yer boat.

[expatCA]

Originally Posted by GSR13

Wrong. While there may not be a plethora of sub-prime buyers this time around, interest rates are bound to rise and local municipalities will have to impose special taxes on foreign property buyers (such as Vancouver's recent 15% tax on foreign property investors) or risk intense local turmoil from the native non-property owning population (riots, etc).

The 2009-era bust never corrected the imbalanced market, and since then things have gotten more imbalanced. The market will only balance when home price/income levels revert back to their pre-2000 levels.

But yeah, keep up the wishful thinking, propertytards. Whatever floats yer boat.

Well your own post shows you do not have any idea about it.

[Tall Traveler]

Actually Modesto hasn't returned to their peak and an average of $260K is around national average. i doubt we will see another crash quite like that 2007-2008 crash for at least 30 years. What I think could happen is stagnation or a slight drop if interest rates increase. If I was pretty sure I was going to be in Modesto for 5+ years and I had the down payment and job security, I would buy.

[Mr5150]

Originally Posted by WishfulThinker06

I have a difficult decision to make. I did the right thing, got all my ducks in a row and now I'm in the time of my life where I should be buying a home. Trouble is, the prices have gone up so quick in these past few years it worries me that this too is again just a big fat bubble. It sickens me to think if I purchase a home that in 5 years it could be potentially worth half of what I bought it for. If I buy the home I want it comes with a mortgage of ~$1,850 after taxes, insurance, assessments/bonds and melloroos. This seems like a LOT of money for a typical track home in the Modesto area. Is this a normal mortgage?! Anyone else waiting out this bubble?

I've heard that people that shouldn't be buying are again buying homes. Does anyone have first hand knowledge of this?

With that kind of mortgage payment it sounds like you are buying a big and expensive home.

With that said just buy now. Prices will be higher next year. And a future bubble only matters if you plan to sell. We bought our home 15 years ago. No plan to sell. The bubble came and went and had no effect on us.

[RosieSD]

Originally Posted by WishfulThinker06

I have a difficult decision to make. I did the right thing, got all my ducks in a row and now I'm in the time of my life where I should be buying a home. Trouble is, the prices have gone up so quick in these past few years it worries me that this too is again just a big fat bubble. It sickens me to think if I purchase a home that in 5 years it could be potentially worth half of what I bought it for. If I buy the home I want it comes with a mortgage of ~$1,850 after taxes, insurance, assessments/bonds and melloroos. This seems like a LOT of money for a typical track home in the Modesto area. Is this a normal mortgage?! Anyone else waiting out this bubble?

I've heard that people that shouldn't be buying are again buying homes. Does anyone have first hand knowledge of this?

Questions you've left blank:

How much are you paying in rent right now? How much has your rent increased over the last few years? How much might it increase in the next five years?

Have you factored in the mortgage tax deduction you'll receive in your monthly costs? Do you understand the terms of your mortgage, and any built in costs (like points, etc.)? Are you confident you've gotten the best mortgage rate and deal? Did you shop around and compare deals?

Is the house in a decent neighborhood and in decent shape? Is it a home you can see yourself and your family living in for more than a year or two?

Do you have a stable job? Do you anticipate that your salary and other income will continue to increase over the next 10 years, or will it stay exactly the same as it is now?

Have you already started saving for retirement? If you have kids, have you started saving for their education?

Can you realistically afford $1850 a month? By realistic, I mean you or your family won't be eating ramen every night or having your utilities shut off because you can't pay the bills. I'm not talking about having to make some adjustments in your discretionary spending to afford it, such as skipping that Starbucks habit or taking less fancy vacations.

And, the last question: Is this particular house the right choice for you and your family at the present time?

No need to answer these questions here -- they are just some things to think about, if you haven't already.

That said, it is perfectly NORMAL to feel scared when making a major life decision like buying a home. Those types of decisions usually are not cut and dry; they don't come with guarantees and they are scary because no one else can really make the decision for you.

Only you (and your spouse if you have one) can decide if this is the right house based on the information you have available to you today.

In life, there really are no guarantees that ANY decision is going to work out exactly the way we hope. But, it sounds like you aren't buying this house on a whim. You said you've planned and gotten your ducks in a row. You have weighed the benefits and risks.

So, really, at this point, the only question is: is buying this particular house seem like a reasonable risk based on the information you have at the present time?

Pause for a moment. Now, before you answer that question try to put your fear aside.

If the answer is yes -- not because you are afraid to say no, but because based on the available information you've decided it is the right choice at the present time -- move forward and don't second guess yourself.

If the answer is no -- not because you are afraid to say yes, but because based on the available information, you've decided it is not the right choice at the present time -- do the same: move forward and don't look back.

But, don't let fear (or strangers on the internet) make the decision for you. Life is too short to let fear control your life.

Good luck with your decision!

[sav858]

Originally Posted by Mr5150

With that kind of mortgage payment it sounds like you are buying a big and expensive home.

With that said just buy now. Prices will be higher next year. And a future bubble only matters if you plan to sell. We bought our home 15 years ago. No plan to sell. The bubble came and went and had no effect on us.

With 20% down that's like a $375Kish house, hardly big and expensive.

[tickyul]

Even dumpy fixers, in undesirable areas, are seeing price-leaps.

Many of these dumps are very competitive, because the very lower-end is all MANY can afford....this dynamic creates its own little frenzy.