Is there a property bubble in Walnut Creek & Pleasant Hill?

[irishman_irl]

Update: We found out that an identical condo in the community sold 4 weeks ago for $317k so the price we are considering has already been set by someone else.

My wife's parents have offered to gift us an extra 10k which I have to say greatly reduces the pressure on us.

The now the situation looks like this: We can put 10% down, get a 30 year fixed rate mortgage for 4.75%, the total cost of ownership for a 2 bed / 2 bath top floor condo in Pleasant Hill would be $2.45k (not taking into account any tax benefits, but including HOA's, property tax etc..) vs renting a 1 bed / 1 bath in Walnut Creek for $1.8k per month. Our savings would dip to < $10k if we pulled the trigger but if we lived really frugally for 12 months and no major changes occurred in our life, we could build our savings back up to there currently levels in that time.

It is still a major stretch for us and like many in our situation we are constantly swaying between "we should do this & start building a life" and "this might be the worse mistake of our lives".

We are concerned that if we wait to build up more savings, the increase in home prices might outpace our ability to save. Especially given the fairly limited inventory which is out there.

[ruckerz]

Going without an emergency fund (and having that much liability) is extremely shaky in my opinion.

You say that if you live frugally, you could build it up in 12 months. But a lot can happen in that time.

- One of you could lose your job / become disabled.
- One of your cars could break down.
- The numerous expenses that come with owning property (replacing appliances, maintenance, etc)

Originally Posted by irishman_irl

It is still a major stretch for us and like many in our situation we are constantly swaying between "we should do this & start building a life" and "this might be the worse mistake of our lives".

Think of it this way, it could be the worse mistake of your life if you do not have a solid foundation to fall back on.

You're stretching yourself too thin. Take a cold shower.

Personally, I'm waiting for an emergency fund (3 months at least) and looking to spend no more than 30% (25% if I can do it) of my take home pay on a mortgage.

[Still Seeking]

"What do you guys think? Bubble or market correction?"

I say bubble. Yeah, yet another bubble.
Sigh.... Things don't change. I'm stuck too and can't move up myself. I had to buy in a retirement community in Walnut Creek (in the Rossmoor Community) because I could not afford a condo anywhere in the East Bay. If I want something better, I'll have to move out of state (or to a crime-ridden area of CA).

[justinbro2002]

Originally Posted by Still Seeking

"What do you guys think? Bubble or market correction?"

I say bubble. Yeah, yet another bubble.
Sigh.... Things don't change. I'm stuck too and can't move up myself. I had to buy in a retirement community in Walnut Creek (in the Rossmoor Community) because I could not afford a condo anywhere in the East Bay. If I want something better, I'll have to move out of state (or to a crime-ridden area of CA).

you are responding to a 4 year old thread. How much has that condo from 2013 gone up now. This isn't a bubble the market over corrected a decade ago and we are just catching up.

[Still Seeking]

Originally Posted by justinbro2002

you are responding to a 4 year old thread. How much has that condo from 2013 gone up now. This isn't a bubble the market over corrected a decade ago and we are just catching up.

Yes, I responded to a 4 yr old thread. This is what all of us do. The condo has gone up ridiculously high in price these last five years and I have made very few improvements at all. The condo has almost tripled in just five yrs. Yes, you read that right. Crazy to have that much appreciation in so short a time. I disagree that the market "over" corrected a decade ago.
We are in another bubble. Yes, we are.

[bmw335xi]

When the bubble pops it will happen across the entire country, when will it pop is the real question.

[MinervaPallasAthena]

Originally Posted by bmw335xi

When the bubble pops it will happen across the entire country, when will it pop is the real question.

Yes you are right. We are starting to see the same signs that happened before the last recession... credit card debt is at an all time high - more than what it was before the last crash, banks are once again lending using 0% down programs, and real estate is at another peak - especially in the Bay Area. These things are usually in 8 year cycles so there should be a correction or bubble burst very soon.

[jeopardyd]

Originally Posted by countofmc

How is that area btw in terms of development? The thing about San Francisco and most of the peninsula that I think puts a floor on prices is the limitation on development. Some of it physical, due to the limited amount of land and being surrounded by water. And of course the NIMBY factor and all the restrictions on development.

Does that area have similar constraints?

During the housing boom I was shocked at what new homes in places like Las Vegas were going for, when they were literally being built out in the desert surrounded by more empty desert land as far as the eye could see. I just couldn't understand why homes were commanding those type of prices when thousands just like it could be built instantaneously.

There is the Concord naval weapons station redevelopment north of Walnut Creek / Pleasant Hill. Up to 12K housing units would be built.