To buy or rent a home, which is better? Great article (San Francisco: short sales, apartment complexes)

[Ms.MoneyPenny]

Originally Posted by TR95

BMW obviously has too much time on his hands. Funny how people really waste their time on the Internet. They are the ones with the most posts and the ones that complain the most about not owning a home. Hilarious!

You guys must have problems reading. He said he bought a condo in 2011 for ~250k or something like that.

[bmw335xi]

Originally Posted by TR95

BMW obviously has too much time on his hands. Funny how people really waste their time on the Internet. They are the ones with the most posts and the ones that complain the most about not owning a home. Hilarious!

Let me break it down because obviously first grade English and math seems to be too difficult for some...

1) I am saying to people who think it will be impossible for them to ever afford a property that they simply need to be patient and continue saving because there will be another crash, probably around 50% sometime in the future.

2) I went on to say, nobody knows when the next crash will be, it could happen in 1 year or maybe 5 years from now, nobody knows for sure, but there will be another crash at some point.

3) I also said, home prices over the long-run trend up, meaning odds are in 30 years from now, even with big crashes in between, the average home will cost more in 2046 than 2016.

4) I then mentioned, home prices could go up another 30% before crashing 50%, that does not equal the same prices as the most recent crash. Let me give a random example in simple math for you

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Scenario 1:

Past average property value (2011): $500,000
Average property value (2016): $1,000,000
Average property value (2020): $1,200,000
***Next housing crash happens***
Average property value (2022): $600,000

---

The new bottom is still higher than the previous crash bottom, but it is still lower than the price back in 2016. Oh and people with the most posts are usually regulars on city-data and less likely to be trolls who just pop in and out trying to stir the pot. And if anything, I'm the one defending property ownership, not complaining about it. I sold my property in San Francisco for more than double the price and bought a new property out of state. Where have I complained about not owning a home? Why would I complain when I already own a home? lol.

People who have this idea that "OMG PRICES WILL NEVER STOP GOING UP" is the first sign of a possible housing bubble and are the ones who then march against wall street because they were stupid paying top dollar with 3% down on a house they couldn't afford.

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Personally, I think prices will go up a bit more, but it isn't a good time to buy now because I think we are closer to the top than the bottom. Maybe prices will go up 20% more from now before the next crash, we don't know, but I wouldn't be surprised if it happens 5 years from now.

[CaliRestoration]

Originally Posted by Ms.MoneyPenny

People aren't allowed to join this forum anymore? Strange concept.

I guess because you joined 2 weeks before me that somehow makes you special?

There is a difference between 2 weeks, and joining literally 40 minutes after I made that post about the Case Shiller.

Anyway, I don't care whether you are a sock puppet or not, my point still stands, anyone who thinks Inner Richmond is suddenly going to have a glut of $650,000 2 bedroom condos/homes anytime soon (crash or not) is in for a rude awakening.

The only way that happens is if San Francisco suddenly starts becoming Detroit, and the tech industry bust big. You see that happening soon in California?

[Ms.MoneyPenny]

Originally Posted by CaliRestoration

There is a difference between 2 weeks, and joining literally 40 minutes after I made that post about the Case Shiller.

Anyway, I don't care whether you are a sock puppet or not, my point still stands, anyone who thinks Inner Richmond is suddenly going to have a glut of $650,000 2 bedroom condos/homes anytime soon (crash or not) is in for a rude awakening.

The only way that happens is if San Francisco suddenly starts becoming Detroit, and the tech industry bust big. You see that happening soon in California?

I don't know what future prices will be. If I had a crystal ball, I would be a gajillionaire.


Any real estate professional would agree with everything BMW said in his previous post (with the exception of his prediction that the drop will be 50%). That figure is too concrete. It could be more. It could be less.

[CaliRestoration]

It's not about having a crystal ball, it's about simple logic based on past market behavior. I've lived through 3 boom/bust cycles in California and it's always the same thing, even the giant bust of 2008. Prices drop a certain percentage during the bust, but never get close to the last plateau. If we accept the last plateau was 2009-2013, I don't see how places like Inner Richmond drop by 50%, even 30%. A 15%-20% drop from whatever the next peak ends up being is the most I could see and it would have to be a pretty dire crash.

Most of the new buyers post recession came in all cash or 50% down, so they would be able to hang on much better than the liar loan owners of 2002-2007. Getting bank financing is still difficult if you have ****ty credit and no long term employment history, and supply (thanks to the left anti-development policies) has not grown much since the bubble days. So people who have bought in the past 7 years are strong buyers who can likely weather a crash, which means a huge supply of homes won't be suddenly available for purchase even if it does happen.

If you really want to live in the Bay Area, and not rely on fantasy thinking, go buy in parts of Oakland, or San Leandro that aren't skyrocketing yet. I believe the rougher parts of the East Bay will end up getting gentrified in the next 10 years, it's happening already. The homes in those areas will eventually grow in value and create more middle-upper class communities.

If you want a real life example of this, look at what happened to Culver City 10 years ago. Look at what's happening to Inglewood currently.

[Ms.MoneyPenny]

Originally Posted by CaliRestoration

It's not about having a crystal ball, it's about simple logic based on past market behavior. I've lived through 3 boom/bust cycles in California and it's always the same thing, even the giant bust of 2008. Prices drop a certain percentage during the bust, but never get close to the last plateau. If we accept the last plateau was 2009-2013, I don't see how places like Inner Richmond drop by 50%, even 30%. A 15%-20% drop from whatever the next peak ends up being is the most I could see and it would have to be a pretty dire crash.

Most of the new buyers post recession came in all cash or 50% down, so they would be able to hang on much better than the liar loan owners of 2002-2007. Getting bank financing is still difficult if you have ****ty credit and no long term employment history, and supply (thanks to the left anti-development policies) has not grown much since the bubble days. So people who have bought in the past 7 years are strong buyers who can likely weather a crash, which means a huge supply of homes won't be suddenly available for purchase even if it does happen.

If you really want to live in the Bay Area, and not rely on fantasy thinking, go buy in parts of Oakland, or San Leandro that aren't skyrocketing yet. I believe the rougher parts of the East Bay will end up getting gentrified in the next 10 years, it's happening already. The homes in those areas will eventually grow in value and create more middle-upper class communities.

If you want a real life example of this, look at what happened to Culver City 10 years ago. Look at what's happening to Inglewood currently.

So long as everything remains vaguely "normal" I don't disagree with anything you've posted here.

But the thing is who knows what's really going to happen?


Look at LA real estate in the early 90's. End of cold war -> aerospace gutted -> earthquake -> riots = huge downturn in RE market.

Honestly none of these things could have been accurately predicted.

[TheGreatCurve]

Originally Posted by Upstate67

That's the thing though, rent is seldom less than a mortgage. One more time, don't take my word for it - see for yourself. Go to a real estate website and get some estimates. Then compare them with rents for similar properties in that same area.

But it does happen.

For example, say you bought a condo or house at the peak of the last bubble in 2007, and of course, paid top dollar. Then the housing bubble bursts and the economy tanks taking the market rent along with it. Now you''re left holding an expensive property while rents have dropped significantly. You can't sell your property either in this depressed market because you would lock in a massive loss. So you have no choice but to rent it out at a rent that is much lower than your total monthly expenses. I know because I've rented a condo in this exact same scenario. So it happens more often than you think.

Your monthly expenses are pretty much fixed but market rents can fluctuate quite a bit....up OR down.

[Upstate67]

Originally Posted by TheGreatCurve

But it does happen.

For example, say you bought a condo or house at the peak of the last bubble in 2007, and of course, paid top dollar. Then the housing bubble bursts and the economy tanks taking the market rent along with it. Now you''re left holding an expensive property while rents have dropped significantly. You can't sell your property either in this depressed market because you would lock in a massive loss. So you have no choice but to rent it out at a rent that is much lower than your total monthly expenses. I know because I've rented a condo in this exact same scenario. So it happens more often than you think.

Your monthly expenses are pretty much fixed but market rents can fluctuate quite a bit....up OR down.

I bought in 2007 myself and in 2009 got a job transfer that I really wanted. Not enough equity to sell yet - plus like you said, the bubble popped and I couldn't have sold it if I wanted to. Not without taking a massive loss anyway.

So I rented it out.

I moved out in mid July, and my new tenants moved in in August. They paid the exact amount of my monthly payment - no more and no less. And that included principal, tax, and interest. One year later they moved out, and I rented it out again for the same amount plus $100.

Are landlords unable to rent for as much as what they are paying? Of course, and I never said they didn't. There are a lot of variables at play like adjustable mortgages going up, and perhaps paying more than you should have originally. Does rent fluctuate though? I haven't seen it. In fact, the only thing I've seen it do is go up.

One more time though... My intent was not to get into a pissing match with anybody. It was merely to dispel the fallacy that renters are getting over because they don't get a property tax, or insurance bill in the mail.

[TheGreatCurve]

Originally Posted by Upstate67

Does rent fluctuate though? I haven't seen it. In fact, the only thing I've seen it do is go up.

Did you live through the dot-com bubble bursting? Rents in Silicon Valley dropped by nearly 50% in its aftermath as lots of people who came here for the dot-com jobs left the area.

Rents in the area also dropped significantly from 2008-2011 with the recession and drop in home values.

[bodyforlife99]

Originally Posted by Ms.MoneyPenny

I don't know what future prices will be. If I had a crystal ball, I would be a gajillionaire.


Any real estate professional would agree with everything BMW said in his previous post (with the exception of his prediction that the drop will be 50%). That figure is too concrete. It could be more. It could be less.

Based on what BMW? Yeah, your gut feeling, got it. No rationale whatsoever. Just like the rest of these people. You can wish all you want. But do let us all know when you can apply some logic as to why housing prices would drop 50% (yes, we all know you have nothing). You've gone a bit over the deep end with all your "I think" comments. No, you really aren't thinking. Otherwise you would have never made such a ridiculous claim.