San Diego Housing Bubble News and Analysis

1) Do you have plans to walk?

2) How long have you had the loan for?

No, we don't have any plans to walk now.

We bought last year right before the stock market crashed, driven by the fear of taxing the "rich".

Sorry to delve into it but why would obama's tax on "rich" be a motivation to buy? I mean, obama's tax on rich should have motivated you not to buy, because his plan was(is) to cap the interest rate mortgage deduction for higher income families, my understanding.

Anyway what was your rate of your first loan? Me personally, I'm waiting for low 4% refi, and I will soon be at a conforming rate. And I already refinanced 1 time about 1.5 years into our loan when the rate went down from our original about 0.5%, mainly because we were just 1.5 year into the original loan. I don't have plans to default, and our reserves are such that we could probably tolerate 3-4 years without both parents not working and maintain the current quality of living.

So if let's say 2800sqft does go below 690k, is that motivation for you and your husband to walk? I don't quite get it because hopefully you didn't think about buying this home and not expect home prices to fall further. 2800sqft in CV isn't out of the real of possibility depending on locations and duration of this recession. I think there were some homes that closed low 7's around 2600-700 sqft (REO).

If there are any plans to either,

move

walk

sell

within the next few years then no you should not refi right now. If you are absolutely sure you will not be doing any of those items above within the next 4 years or so, then you can consider refinancing. There is a rumor going around that in the near future the government will be buying up more slop in an effort to force rates down as they have crept up over the past two months so you may want to sit tight for spell.

FLU/SDR

May I ask how you might suggest monitoring the refi rates? If/When they drop to 4%, we definitely want to make a move also.

Would also appreciate any info you might care to share regarding who you might suggest using for the refi, etc. I'm aware of HLS, but would also appreciate other suggestions.

Oh, so that's why it crashed? All this time I was thinking it had to do with substantially lower corporate earnings, or the write down of billions in worthless assets on company balance sheets.

It makes sense now: a small increase in the marginal tax rate at the top bracket is actually what tanked the economy. For further proof, look at the tax rates in the decades following WWII, and we can see how devastating a progressive tax is to our economy.

Agree that the comment about "buying before the crash" could be interpreted different ways. Perhaps he's claiming that he timed the stock market.

Or perhaps he chose to buy into a obviously overpriced real estate market, just to get a tax break. Should have done the math on that one. The increase in tax rate is only for the portion of income over $250K, and even that is not much of a change.

Unless they are making a lot more more than $250K (and the price/loan terms on their house suggests probably not), then the consequences of the tax changes should not prompt someone to buy.

We have a jumbo conforming loan from chase, no 2nd loan, might not be as easy to refi.

House is in an average location of Torry Hills. Using 2000 builder price with 3% annual inflation will put it around 670K. It dropping below 690K alone might not motivate me to walk. But when that happens, the probability of loosing both engineer incomes is very high, combined with no recovery in sight and possible finding jobs somewhere else … I might.

I agree whatever reason made us bought last summer probably doesn’t make any sense now. We knew house price will go down further but completely underestimated the fallout of Wall Street followed by global recession.

I guess how fast CV price drops is another factor too. When do you think it will hit 690K level, 2010, 2011?

Relax... You sound like you fit in to the Carmel Valley dinc/diwc type of family (I'm one of them myself). In times like this, you need to think. "While you might be screwed, you definitely can find other people much more screwed than you."

I assure you that having two enginerds paying bills (preferably working at different companies and different fields) is a lot better off than some of the families depending on a single income.

If you don't have large cash reserve to sustain for 2 years+, you might *consider* getting an equity line of credit (and not tapping it) "just in case"....because good luck refinancing/getting an equity line AFTER one or both of you lose your job.
Don't know if you can get an equity line in this market, but it doesn't hurt to try.

If you really wanted to save on yourself from the obama "rich tax", consider getting a divorce. You and your spouse would then have up to $400k before your marginal taxes increases and your cap gain taxes increases.

Plan on something 2600-2800 around CV hitting $650k. Not saying it will happen, but plan for the worst. Look on the bright side, if you left your money in the stock market you probably would have already lost 30-40% anyway within 1 year. Even if your home hits $650k, it probably will take a lot longer for that to happen :)

I doubt anyone would take the above suggestion seriously, but just in case...

Do your research on the actual numbers before making any decisions based upon the impact the so called "rich tax". There is a lot of misinformation out there. There are only a limited number of situations where the change in tax code would have a drastic impact on anyone's financial decisions, beyond a little tweaking here and there.

http://www.taxfoundation.org/blog/show/2...

http://www.factcheck.org/elections-2008/...

http://blogs.tnr.com/tnr/blogs/the_plank...

My intention is not to spark a partisan or even political debate. I've just noticed that the impact of tax changes under the new administration are widely misunderstood and exaggerated, and I've personally seen many people make poor choices based upon rumors and hype that are contrary to the facts.