How's this for a plan (golf course, building, hot)

[cw68]

Originally Posted by inpd

Okay. Let me summarize. CW68 and Tim are saying that Natomas may go down
so why buy, why not rent. But I currently pay $18K a year to rent a 1000 sqft apt
in midtown. So 3 years rent is $54K less closing costs of about $7K to buy a house
and $15K commission to sell the house I'm still $42K in front. I can get a nice 2000 sq ft
home in Natomas for $300K to live in. Even if it drops down to $256K in price I'll be better of
since I'll save money by claiming interest on my tax return and can claim a capital loss.
So I'll need some convincing that renting for 3 years is better than buying fiscally.
I always thought renting was throwing money away but some people have to do it.

Tim nailed it on the head when he said the market could drop 3%-30%. I'm just not
sure which. I don't think that those nicer areas are that isolated. I saw the pocket,
nice area, but $450K for a 1500 sq ft home versus $300K for a 2000 sq ft home
in Natomas with the same quality of schools (as per API rating)?

My entire plan rests on the assumption that Natomas has plummeted and can't
go down too much further. Those $300K homes cost $225K brand new in 2001 as per
Trulia.com. Nicer areas have not dropped but will have to. There are a lot of newer homes
on the market. Buying in an established area is always preferable, but not when it
costs $200K more for a much smaller home.

If you have the cash to put down up to 30%, buying won't cost you anymore. However, if you don't have the down payment cushion, if you need to sell anytime in the next few years (it can always happen), you'll be upside down on your loan. You don't want to get there, avoid it at all costs!

That said, you should do a little exercise on how much more per month you'll be spending with mortgage, utilities, taxes, etc. Then how much you will get to write off and how much that will save you. Then calculate how much money you would make if you were to keep renting and sock away the difference in a high-interest savings account on etrade or ING (4.8-5%) compounded. See where you end up and make your decision on there.

Regardless, I would wait six months to buy.

The nicer areas will drop some, but very little compared to the new areas with more homes on the market. Supply/demand kind of thing.

[inpd]

Originally Posted by cw68

The nicer areas will drop some, but very little compared to the new areas with more homes on the market. Supply/demand kind of thing.

I totally agree that new development areas will/have been hit hardest by
this down-turn. But saying established areas will be very little effected
I'm not convinced off.

Go back to the situation I'm facing. Three options right now:

a) $300,000 for a 2000+ sq ft home in Natomas, 2001. Opposite nice park.
Elementary schools rate 870. Move in condition, near new.
b)$420,000 for a 1500 sq ft home in Pocket. 1980's. Back streets
Elementary schools rate 700's. Liveable condition, but kitchen/bath from 1980's
c)$500,000 for a 1100 sq ft home in Lands Park. 1950's. Back streets
Elementary schools rate 920. Liveable condition, but kitchen/bath dated.

Now the b) and c) have nice street scapes since the areas are old and
the yards are bigger (8000+ sqft versus 5000+ sqft). But unless
you need the backyard space b) and c) options must come down in price,
they are completely out of whack in terms of value or am I missing something.

[DMenscha]

I would go for the cheapest home in a better area if you're looking for appreciation. I'm not familiar with the neighborhoods in Sac, but that's always been good advice no matter where you are.

[cw68]

Originally Posted by inpd

I totally agree that new development areas will/have been hit hardest by
this down-turn. But saying established areas will be very little effected
I'm not convinced off.

Go back to the situation I'm facing. Three options right now:

a) $300,000 for a 2000+ sq ft home in Natomas, 2001. Opposite nice park.
Elementary schools rate 870. Move in condition, near new.
b)$420,000 for a 1500 sq ft home in Pocket. 1980's. Back streets
Elementary schools rate 700's. Liveable condition, but kitchen/bath from 1980's
c)$500,000 for a 1100 sq ft home in Lands Park. 1950's. Back streets
Elementary schools rate 920. Liveable condition, but kitchen/bath dated.

Now the b) and c) have nice street scapes since the areas are old and
the yards are bigger (8000+ sqft versus 5000+ sqft). But unless
you need the backyard space b) and c) options must come down in price,
they are completely out of whack in terms of value or am I missing something.

On paper what you're saying is true. But you cannot compare the neighborhoods directly to each other. (Not to mention the difference between a 700's scoring school to a 920 scoring school. There's also a lot more violence in the Pocket compared to Land Park.)

It's like trying to compare designer clothes from Target and Nordstrom. You can get a Isaac Mizrahi cashmere sweater for $30 at Target. You could also get a Robert Rodriguez cashmere sweater for $200+ at Nordstrom. Same thing, different beasts. They each have arguments for their purchase, but they have much different clientèle.

I've bought two houses in Land Park in the last seven years. I looked at homes in the Pocket and there is a small portion of the Pocket in which I'd live (by Didion school), but IMO it's slipped since I first moved here. I wouldn't live in Natomas, though I have friends who do and they really like it. But I look at a house as real estate first, a home second. My purchases are usually driven by resale potential and I don't think Natomas is going to hold value. The flood issue is a big one, second is the mortgage crisis and third is just a gut feeling.

There is just something different about the older, upscale neighborhoods. On paper a 60+-year old 1300 sq ft 2/1 shouldn't be priced higher than a four-year old 3200 sq ft 4/3. There's just a je ne sais quo about it. I'm comparing the very first house I ever put a bid on (didn't get it, and it's since been remodeled) in Land Park to one $9k less in Natomas.

I think Natomas and the Pocket are more worth comparing. Between the two, I don't know which one I'd pick. Probably the Pocket, but again, only in certain areas. The Didion school district has a ton of resale punch.

[inpd]

I'm viewing this from a pure fiscal perspective.
Going back to my a) b) c) options. Do you really think
that the market (i.e. majority of buyers) will choose
b) or c) over a)?

[cw68]

Originally Posted by inpd

I'm viewing this from a pure fiscal perspective.
Going back to my a) b) c) options. Do you really think
that the market (i.e. majority of buyers) will choose
b) or c) over a)?

The "majority" of buyers? No. Bottom line is that there are a lot fewer people able to purchase in Land Park than Natomas, but there's a higher demand for each individual home. I think that you'll see further erosion in price in Natomas and more emotional purchases in Land Park.

If I were you, I'd pick the Pocket over Natomas. But definitely scope the area out and make sure that the streets around it all well-kept. If you can score in the Didion district, that's a bonus.

[inpd]

I poorly phrased my question. It should be, if people have the buying
power to choose a), b) or c), would the majority choose b), c) over a).

I could choose either, but though the schools in some of these areas
are great, $200K will buy a lot of things i.e. 23 years of private elementary
school at some top notch schools with teaching ratios as low as 1:10
.

[cw68]

Originally Posted by inpd

I poorly phrased my question. It should be, if people have the buying
power to choose a), b) or c), would the majority choose b), c) over a).

I could choose either, but though the schools in some of these areas
are great, $200K will buy a lot of things i.e. 23 years of private elementary
school at some top notch schools with teaching ratios as low as 1:10
.

It's too hard to say "the majority." Overall? Probably more in Natomas because there are more houses and a much larger range of price. But, I still say that houses are stronger in Land Park than Natomas. You'll never see a glut of homes in Land Park. You'll also never see competition of three other homes exactly like yours except for finishes and price, so you're competition isn't as strong.

Bottom line: I wouldn't buy in Natomas. I might buy in the Pocket. I would buy in LP.

[wbsacto]

from the CEO's of several major builders & mortgage companies indicate that real estate will take 7 to 10 years to recover & we havent seen the worst of it yet. Last year they were reporting that the market would rebound in 2 years, then it was 3 to 4 years. If you are willing to sit it out it could pay off. I live at Mather and out of the 44 homes on my street, 26 of them had for sale signs at one time. What sold for $392,000 in 2006 is now listed at $259,000 & they are not selling.

[inpd]

Originally Posted by wbsacto

from the CEO's of several major builders & mortgage companies indicate that real estate will take 7 to 10 years to recover & we havent seen the worst of it yet. Last year they were reporting that the market would rebound in 2 years, then it was 3 to 4 years. If you are willing to sit it out it could pay off. I live at Mather and out of the 44 homes on my street, 26 of them had for sale signs at one time. What sold for $392,000 in 2006 is now listed at $259,000 & they are not selling.

Thanks! Can you post the reference to the article that quotes
the CEOs.