GET REAL About San Diego Rental and Real Estate Prices (Chula Vista: sale, condos)

[RosieSD]

Originally Posted by metoque

Do people feel buying a house right now isn't the best idea? I'm still renting and have saved a bunch for a downpayment, but I'm sort of nervous to take the plunge and overpay for a house here in the Poway School District. I'm fine renting for another year or two to see what happens, but I don't want prices to keep skyrocketing. All of the logic in my head says this market is overpriced...especially in the 700-900K range.

Yeah, people said that in 2007 too, right before the crash, when the same homes in Poway selling for 700,000 today were selling for 500,000.

No one can predict what is going to happen with the real estate market. I think the question to ask is, is this a home you can afford over the long term, regardless of what the market is going to do? If not, it's never the right time to buy.

Mortgage rates are very good right now.

[metoque]

Originally Posted by RosieSD

No one can predict what is going to happen with the real estate market. I think the question to ask is, is this a home you can afford over the long term, regardless of what the market is going to do? If not, it's never the right time to buy.

Mortgage rates are very good right now.

It's less about affordability and more about getting screwed on over-paying by $200K. I won't buy the house unless I can truly afford it, which I can in many cases. But, I'm also fine renting until prices are better aligned. It just seems that the rent vs buy equation is out of whack right now...meaning buying houses today for rental income is a losing proposition.

Regarding mortgage rates, the fact that they're so low scares the hell out of me. Buying when they're low isn't necessarily a good thing. I'd MUCH rather buy when prices are low but rates are high, vs the other way around.

[someguy10]

Originally Posted by metoque

It's less about affordability and more about getting screwed on over-paying by $200K. I won't buy the house unless I can truly afford it, which I can in many cases. But, I'm also fine renting until prices are better aligned. It just seems that the rent vs buy equation is out of whack right now...meaning buying houses today for rental income is a losing proposition.

Regarding mortgage rates, the fact that they're so low scares the hell out of me. Buying when they're low isn't necessarily a good thing. I'd MUCH rather buy when prices are low but rates are high, vs the other way around.

IMO rent:buy ratios are low right now. That is, I don't think you could buy a home now and rent it out truly cash flow positive. Or, for the most part, even rent it out "new/green landlord cash flow positive" -- that is, where your gross rent >= PITI mortgage payment.

That doesn't address the long-term crystal ball question of where home prices are headed. Despite the low rent:buy ratios, it's possible home prices are going to continue climbing by 5%+/year.

I think it boil down to non-financial considerations. Why do you want to buy a home?

[Cardiff Kook]

I wouldn't buy in Poway at that price. $.02

[metoque]

Originally Posted by someguy10

I think it boil down to non-financial considerations. Why do you want to buy a home?

I want to buy for the following reasons:
(1) I don't have to have a landlord to be beholden to anymore and rent increases.
(2) I can never be kicked out of my house and be forced to move because of someone else's decision. I currently rent an investment property, so I'm not that worried about this one.
(3) I want to tailor the house to how I want it. For example, I'd like to add a hot tub.

Given all this, I realize that buying a home won't necessarily make me any happier than I am now.

From a financial perspective, I currently pay $2,900/month in the PUSD for a 2,230 sq ft home in a good neighborhood. My 3-year lease (with rent locked in that whole time) comes due this summer, and I know the rent will get raised to probably ~$3,200/month. Rent increases suck, but buying a house that I want that costs $800K-$850K, which costs $4K/month AFTER a 20% down payment. So, I suppose I have to decide how much the 3 factors above are worth to me.

[someguy10]

Originally Posted by metoque

I want to buy for the following reasons:
(1) I don't have to have a landlord to be beholden to anymore and rent increases.
(2) I can never be kicked out of my house and be forced to move because of someone else's decision. I currently rent an investment property, so I'm not that worried about this one.
(3) I want to tailor the house to how I want it. For example, I'd like to add a hot tub.

Given all this, I realize that buying a home won't necessarily make me any happier than I am now.

From a financial perspective, I currently pay $2,900/month in the PUSD for a 2,230 sq ft home in a good neighborhood. My 3-year lease (with rent locked in that whole time) comes due this summer, and I know the rent will get raised to probably ~$3,200/month. Rent increases suck, but buying a house that I want that costs $800K-$850K, which costs $4K/month AFTER a 20% down payment. So, I suppose I have to decide how much the 3 factors above are worth to me.

I think you are looking at it from an intelligent perspective. To make it truly level, you should probably compare true expenses to expenses. Rent is all expense. In a mortgage payment, the principal repayment is technically not an expense. So that should be subtracted out. But you need to add in maintenance/upkeep since that is your responsibility -- typically 1-1.25% of the home value per year. I would also include an opportunity cost on the down payment -- say 3-7%/year, depends on your market outlook and risk tolerance. Often times it ends up pretty close to the full mortgage payment, but I like to know for sure.

I've found this http://www.nytimes.com/interactive/2...alculator.html to be a very thorough analysis tool.

[bloom]

Originally Posted by Cardiff Kook

I wouldn't buy in Poway at that price. $.02

why

[Cardiff Kook]

Originally Posted by bloom

why

I'd want to be a lot closer to the ocean if I was spending the better part of a million on a house. And if there is a market correction you can bet the eastern reaches of the county will be affected the most. Just my opinion though.

[BizrulesSD]

I'll play the flip side of this:
(1) I don't have to have a landlord to be beholden to anymore and rent increases.
You also don't have to deal with major upkeep costs (roof, sewer, water lines, etc)

(2) I can never be kicked out of my house and be forced to move because of someone else's decision. I currently rent an investment property, so I'm not that worried about this one.
I hear this one a lot but don't get it. By buying a house you are tied to it for at least 5 years to hopefully break even once you factor in all of the buying costs. What if you end up wanting to move out of SD? Also, like another poster mentioned, you better be damn sure that your job is very secure for a significant amount of time.

(3) I want to tailor the house to how I want it. For example, I'd like to add a hot tub.
This is the only reason that I have heard that makes sense. Now you just need to weigh the costs of home ownership to the desire to tailor the house.

I think housing is over priced. I am a current owner and thinking about selling and renting with the homes that prices fall. A 15% "dip" would make a 800K home worth 680K.

Good luck.

[Compuhi]

Originally Posted by Cardiff Kook

I'd want to be a lot closer to the ocean if I was spending the better part of a million on a house. And if there is a market correction you can bet the eastern reaches of the county will be affected the most. Just my opinion though.

Agreed and is one of the reasons i am holding off on buying for now. I know it could be years before a potential correction, but it is too much of a sellers market at the moment to pay high prices for homes in eastern SD.