The thing about SD is there The thing about SD is there are quite a bit of Biotech, and wireless High Tech jobs etc… as well as it is a tourist destination and believe it or not it’s not a secret (most of the USA and world knows it’s a nice place to live).
So trying to go by what the local workers make and justify a TOP probably is not going to work for coastal SD.
Inland maybe it gets a little easier but that most likely will be distorted somewhat as well.
It’s like trying to figure what the house price should be in Hawaii, it’s probably not going to == what the local workers can afford.
UCGal
February 24, 2014 @
11:17 AM
The-Shoveler wrote:The thing [quote=The-Shoveler]The thing about SD is there are quite a bit of Biotech, and wireless High Tech jobs etc… as well as it is a tourist destination and believe it or not it’s not a secret (most of the USA and world knows it’s a nice place to live).
So trying to go by what the local workers make and justify a TOP probably is not going to work for coastal SD.
Inland maybe it gets a little easier but that most likely will be distorted somewhat as well.
It’s like trying to figure what the house price should be in Hawaii, it’s probably not going to == what the local workers can afford.[/quote]
I agree with this to an extent. But there are neighborhoods where stuff is more affordable. In central San Diego city, Clairemont, Linda Vista, areas around SDSU. Piggington tends to forget the parts of the city that aren’t sought after for schools/coastal location, etc.
Biotech and Wireless jobs are not going to make Linda Vista pop in price or Encanto. But will impact the areas commonly discussed here on Piggington – North county coastal, beach communities, North county inland (4S, scripps, poway), etc.
spdrun
February 26, 2014 @
2:45 PM
I vote for #4 — here’s I vote for #4 — here’s hoping for a slowdown.
Coronita
February 24, 2014 @
11:23 AM
buy a 1/1 condo to live buy a 1/1 condo to live in….
kev374
February 24, 2014 @
12:57 PM
People are still buying at People are still buying at prices 30-40% over last year which to me is absolute insanity..however, it’s not what I think, it’s what people are doing.
I think people are betting home prices will go up, all the realtors are saying it, the media is saying it and most people just believe those sources like it’s gospel and fail to do any independent thinking on the matter.
Most people are also impatient and want what they want now, if they want a home they will see how they can stretch to make it happen and I think the government has made it extremely easy these days to overbuy – super low downpayments, super low interest rates, low credit scores and DTIs upto 50%.
People are also getting used to lowered expectations. Half million for a tiny 1100 sqft condo with high HOAs does not seem insane to them. They just shrug their shoulders and say “it is what it is”…
(former)FormerSanDiegan
February 24, 2014 @
1:11 PM
It is what it is.
You gotta It is what it is.
You gotta live somewhere.
scaredyclassic
February 24, 2014 @
4:47 PM
FormerSanDiegan wrote:It is [quote=FormerSanDiegan]It is what it is.
You gotta live somewhere.[/quote]
A homeless man doesnt.
(former)FormerSanDiegan
February 25, 2014 @
9:55 AM
scaredyclassic [quote=scaredyclassic][quote=FormerSanDiegan]It is what it is.
You gotta live somewhere.[/quote]
A homeless man doesnt.[/quote]
Sure he does … tt may be a tent, a cardboard box, under a tree or a doorway, but he’s gotta live somewhere.
scaredyclassic
February 25, 2014 @
10:23 AM
Nowhere specific. He could be Nowhere specific. He could be anywhrre.
flyer
February 25, 2014 @
4:09 PM
Based on all of the different Based on all of the different opinions here, I guess the definitive answer is that there is no definitive answer–it’s whatever works for you and/or your family.
Since my wife and I don’t plan to sell any of our properties (primary or investment) in our lifetimes, and since we purchased the properties at very low prices, (by today’s standards) we’ll pass them along to our kids, and they can decide if they want to keep them or sell them.
In the meantime, whether prices rise or fall, we all have great places to live and enjoy life, and, IMO, that’s what a “home” is really all about.
spdrun
February 24, 2014 @
3:22 PM
The good news is that banks The good news is that banks seem to be adjusting to the California Homerenter’s Bill of Wrongs. Two short sales that I had offers on … the bank said naaaaaaah, went ahead, and is moving ahead with foreclosure. Hope to see those properties at auction in the near future…
flyer
February 24, 2014 @
3:39 PM
Also good news–in areas of Also good news–in areas of San Diego where there is the most
demand–foreclosures are way down.
spdrun
February 24, 2014 @
4:22 PM
Other than for people who Other than for people who paid bubble prices and are now regretting it because they can’t pay their mortgages, why are foreclosures being down a good thing?
The-Shoveler
February 24, 2014 @
4:46 PM
Coastal SD probably has few Coastal SD probably has few underwater homes at this point.
Maybe some Condo’s in some area’s.
They take a little longer to come back sometimes
spdrun
February 24, 2014 @
5:14 PM
Coastal SD probably has few
Coastal SD probably has few underwater homes at this point.
Maybe some Condo’s in some area’s.
They take a little longer to come back sometimes
I’d suspect there are more than you’d think. People were mortgaging to more than peak bubble value and some may not have made a payment in years.
joec
February 24, 2014 @
5:44 PM
I really think people need to I really think people need to just ask why people even buy homes. At the end of the day, you HAVE to have a place to live. Assuming you have a decent job (since no job means no home buying, OR renting), you live where you work, or where you want your kids to go to school…
All this talk of crashes, bubbles and price appreciation is a waste of time when it comes to the people who simply needs a place to live and send their kids to the neighborhood schools.
A lot of the problem IMO seems to be that rents are still going up (at least according to the article I read today in the UT and what I see around me). If you can pay less/about the same to buy vs. rent and have the down, a lot of people “WITH KIDS” would probably just buy and settle. Reason being is because the rent isn’t any cheaper. Honestly, with the tax deduction as mentioned in another post, the buying price just isn’t as crazy, IF you already pay the crazy rents of 4k / month I see everywhere.
People who buy right now just aren’t looking to make money and aren’t worried about that really, but are at a loss what to do since where they want to send their kids to those school districts. Rents of course, are sky high insane already.
A lot of the SINGLE, NO KIDS folks says to rent a condo, etc…but honestly, I think unless you’ve been there (got spouse, kids), unfortunately, you really have NO clue what it’s like to be a parent.
Just sorry to say it since reading some of these posts, I think some people are just way off.
I’m NOT saying housing is going up. My point is that for someone who needs a place to live in a better school district, they tend to not sweat the future moves in price since they are more concerned with what they are paying already in rents NOW.
kev374
February 25, 2014 @
7:03 PM
joec wrote: If you can pay [quote=joec] If you can pay less/about the same to buy vs. rent and have the down, a lot of people “WITH KIDS” would probably just buy and settle. [/quote]
The problem is that you can’t buy for anything close to rental value here in Orange County. I rent a 1100 sqft 2bd apartment with 2 car garage for $1,530 in a fairly prime area in Costa Mesa, 5 min. drive from the best beaches in Newport Beach…where can I get a mortgage including PITI, property taxes, HOA, maintenance etc. for that?
The funny part is rents are all over the place as well, the complex that I found a rental in was $1,530 but a similar apartment across the street is charging $1,800 and another similar unit down the road is $1,550 and my old 1bd apartment (just a mile away) the investor landlord jacked up the rent to $1,400 for my tiny 1bd WITHOUT a garage. It looks like landlords are just pulling rental figures out of their behind and looking for the first sucker who has not shopped around and done his homework to pay it.
Impossible… equivalent condos here are selling for $375,000 and up and that is IF you can even FIND ONE to buy, as inventory in this area is virtually zero. And if there is a remotely good deal there are about 100 people turning up to make offers and many all cash so you with your loan and 10% down are going to get laughed at unless you’re going to pay $400,000 and up.
The last open house I went to a couple months ago was a dilapidated condo, 2bd 1200 sqft in a pretty bad neighborhood (infact my GF was furious with me for even bringing her there!! yikes!) I hardly imagined that a 1200sqft property list priced at $400,000 would be in the ghetto… but even so, about 10 people showed up and the roof was leaking and the realtor had a “take it or leave it” attitude and downright laughed in my face when I asked if the price was negotiable, infact she looked at me like I was from the planet Zork.
The rental market here has softened lately with too many rentals coming on the market due to investors… some landlords are offering good deals. However, there are extremely few deals with regard to purchases, most are severely overpriced and have atrocious HOAs, I have seen listings in this area with $400/month HOAs that cover essentially nothing but fluff LOL! I seriously laugh when I think some fool is going to buy something like that.
Not sure about San Diego but it’s a similar story all over Los Angeles and Orange County. Riverside and San Bernadino counties are still affordable but seriously who the heck wants to live in those ghettos? LOL!
joec
February 26, 2014 @
5:54 AM
kev374 wrote:joec wrote: If [quote=kev374][quote=joec] If you can pay less/about the same to buy vs. rent and have the down, a lot of people “WITH KIDS” would probably just buy and settle. [/quote]
The problem is that you can’t buy for anything close to rental value here in Orange County. I rent a 1100 sqft 2bd apartment with 2 car garage for $1,530 in a fairly prime area in Costa Mesa, 5 min. drive from the best beaches in Newport Beach…where can I get a mortgage including PITI, property taxes, HOA, maintenance etc. for that?
Not sure about San Diego but it’s a similar story all over Los Angeles and Orange County. Riverside and San Bernadino counties are still affordable but seriously who the heck wants to live in those ghettos? LOL![/quote]
Again, and I keep harping about this all the time, real estate is always local and why I keep saying you need to run your own numbers to see if it makes sense. There was another thread where I posted numbers for someone with an avg home buying income (150-200k, maybe that’s high, but people aren’t buying 600-800k homes with < 100k incomes really)...I was also using a single family home as an example) and the numbers were lower renting vs. buying. I know about LA having lived there in the past and yeah, LA (like the bay area), is IMO, more expensive than buying in San Diego overall in terms of prices. This is probably also why you have these debates so strongly one way or the other and why one side feels the other side is crazy to posts the things we do if the numbers don't work in your case...Maybe in your case, the numbers don't work so you keep on renting, but what tends to happen eventually and a lot is 1 spouse REALLY REALLY wants a home and at that point, you buy because it's less painful to argue with the spouse than to overpay and move on with life...(refer to thread with economist)...People who didn't buy in the recent crash are now stuck with no housing price control (landlords raising rents at will) vs. people who bought and now don't have to waste time worrying about it really. It is a load off your mind and maybe cheaper than the high rent increases lately, but depending on your life situation, maybe buying is not the solution since your rent is low (a good deal) and since you're not married, you have no kids, etc...
I assume since you and your g/f are both working, maybe in terms of taxes, this doesn't help a home purchase as much neither since you have separate tax returns and don't need the deduction as much...
Also, you HAVE to compare the standard deduction vs. the mortgage deduction so if your loan is small, you would actually do better with the standard deduction making a mortgage NOT helpful...
That said, if you were watching Bloomberg this morning as well, they posted a map where it was cheaper in various markets to buy vs. rent such as Austin (30% less), SF (12% less), NY (forgot %, don't really care since I don't live there) were less. Again, it's general and not really helpful for anyone's specific situation, but there are markets where it's cheaper to rent vs. buy, just do your own numbers.
Also, with rents, you may be renting a great place with a GREAT deal currently and since it affects only you, assume that every place out there is the same price. As you've noticed in your search, this is not the case more often than now. Similar to buying, if you run the numbers and it works, make a move, if not, continue to rent perhaps...
Bottom line I always go back to though is buying a place to live (primary home) isn't the worst thing since the tax advantages are huge (immediate ~20k tax deduction assuming regular mortgage vs ~10k for standard deduction) assuming a loan and you've now given yourself full control of your housing cost over the next, possibly 30 years...You can't do that in a rental if your landlord decides to raise your rent or is a dick to begin with.
Lastly, you're shopping for a condo/th where lower priced homes have been selling much faster since that's all people can afford now. Only so many people qualify for 1 mil+ mortgages so you simply have more competition in the sub 500k market...
There's nothing you can do, and this is why it's "nice" to have a known fixed housing cost. It's a benefit that isn't purely financial when in initial comparison, but after a few years, it's funny you pay less to own than to rent (nearly anyone who bought in 2009-2011).
Most articles lately have also state housing isn't crashing (due to the rent vs. buy equation) and supply, but will appreciate slowly now (which is perfectly fine) 1-4% appreciation is sorta like inflation and what real estate used to do.
flyer
February 24, 2014 @
9:47 PM
spdrun wrote:Other than for [quote=spdrun]Other than for people who paid bubble prices and are now regretting it because they can’t pay their mortgages, why are foreclosures being down a good thing?[/quote]
Personally, I don’t know one person who doesn’t have a huge amount of equity in his or her home or homes, (myself included) and none of us have used our homes as ATM’s.
That said, I have recently seen stats that reveal foreclosure activity is down to record lows in San Diego (at least for now) which, IMO, is a good thing for homeowners and their families here–since more people are able to stay in their homes.
That could result in less inventory, and continued price increases–which is a good thing for those of us who own property here.
spdrun
February 25, 2014 @
9:04 AM
^^^
If you’re a homeowner, ^^^
If you’re a homeowner, why are price increases good unless you’re planning to sell or use the home as an ATM? Home price increases are only good for flipper c*nts. It’s like buying a car — unless you’re a dealer, you’re unlikely to think that price increases are a good thing.
And BTW, home price increases will make people more likely to overpay, raise property taxes, and generally make people LESS likely to stay in their homes in the future.
If you’re actually living in a house, more expensive home prices and a dollar buy you a cup of coffee.
Jazzman
February 25, 2014 @
9:30 AM
I would add that increased I would add that increased property prices can lead to stretched budgets, which encourages lax lending and so the frenetic cycle begins again. The key points, however, are that low rates have pushed up demand, and low inventory has been the driver of prices. Everyone wants to see their homes appreciate in value, but when they accelerate at the same pace as the housing bubble, it should be cause for concern. At what point will you be happy for prices increases to stop? Now, never, another 2%? The statement “It is what it is”, is completely meaningless and illustrates the denial that characterizes the typical home owner mindset. That mindset may be understandably shaped by concerns over having enough to retire on, but home price increases only makes people feel richer so they spend more and the economy grows. But too much of a good thing is never good.
scaredyclassic
February 25, 2014 @
9:44 AM
I never say it is what it is I never say it is what it is in real life because it is so irritating.
But it does have a certain resignation to it that is soothing.
It doesn’t mean it’s good or bad.
Just completely beyond changing.
Personally I don’t care about price anymore so long as I could sell without losing too much money. It’s vaguely nice to see a new development going in down the road with houses starting at nearly 2x what we paid in a way but that means nothing really. Earthquake. Fire. Inflation. Deflation. This is not a way to make money. I conclude the only good reason to buy a house is like marriage; to lock in a fairly good situation at a reasonable price longterm.
It’s not likely to end ptofitably. Indeed it will likely end in destruction. .
joec
February 25, 2014 @
5:57 PM
spdrun wrote:^^^
If you’re a [quote=spdrun]^^^
If you’re a homeowner, why are price increases good unless you’re planning to sell or use the home as an ATM? Home price increases are only good for flipper c*nts. It’s like buying a car — unless you’re a dealer, you’re unlikely to think that price increases are a good thing.
And BTW, home price increases will make people more likely to overpay, raise property taxes, and generally make people LESS likely to stay in their homes in the future.
If you’re actually living in a house, more expensive home prices and a dollar buy you a cup of coffee.[/quote]
Prices going up doesn’t really affect most people since you can’t do anything with it, but unlike say stocks in a retirement account, people do real estate transactions FAR FAR less so price appreciation after a purchase has a far bigger impact than other things.
Higher prices, if you don’t plan to buy anything else soon gives some flexibility so say if you suddenly are in a divorce, you can sell easily. If prices stayed flat or down, you LOSE FLEXIBILITY. If you want to move up to another home in an area, you can as well…Nothing says you have to stay in CA or the same area.
This was widely apparent when people delayed divorce during the crash since they couldn’t get out of a home mortgage…
Higher prices also allows you to move…Say, if you want to retire in a tax free state or whatever, having a higher price on an asset you own helps a lot.
All that said, most of the time, you won’t or shouldn’t be able to tap it, but since a real estate transaction is done so rarely in most people’s lives, if you already bought, it is a benefit for you if that home is worth more than you paid. Simple as that.
On reverse, if it drops in value, you’re screwed so most people who own would probably rather see their house go up since they don’t tend to have mountains of cash to buy MORE real estate if it falls down.
This is why people who bought are happier if it goes up since I’d guess, they aren’t buying anything anytime soon.
Lastly, if you don’t plan to sell your homes and pass it on to the kids, appreciation helps you a lot since once you die, there is an auto step up in basis so your kids can sell that same home instantly for no taxes. Not many other ways to get tax free gains. There are estate taxes overall from the death, but you’d need enough homes for it to be over the 5 mil or whatever the rules are now.
Hope that explains it pretty simply…
Housing ownership, tax wise is also very beneficial and gives you more flexibility to manage taxes and wealth…
A lot of non-home owners just sound bitter.
If it’s more expensive for everyone else, my answer is for people who bought already, so what? You don’t have to buy anything and can stay in your existing place. If it’s sky high, you do nothing and just ride it out since your price paid was at a safe price for your income/budget…
Already, rentals all around me are more than my carrying cost…
This is why I keep stressing that when you buy your first home in to live, you shouldn’t be paralyzed worried that you find a price at the exact bottom. Once you’re in at least a place, there are a lot of financial benefits since our ‘Guvment’ sets it up this way…
fair or not…
spdrun
February 25, 2014 @
6:12 PM
^^^
You’re confusing ^^^
You’re confusing “dramatically higher prices” with “not being underwater.”
The latter is good. The former actually reduces flexibility, since it costs more money to move up.
If you can sell your 1/1 for $100k, but it costs $250k to buy a 3/1 house, the money (or loan) required is $150k.
If the same numbers are $150k and $400k, you have to come up with $250k. I’m assuming cash transactions to keep things simple.
IMHO, we should be shooting for fewer people underwater, but not necessarily higher prices. Principal mods with no strings attached for primary residences would accomplish that just fine.
sdrealtor
February 25, 2014 @
7:13 PM
x x
joec
February 26, 2014 @
5:51 AM
spdrun wrote:^^^
You’re [quote=spdrun]^^^
You’re confusing “dramatically higher prices” with “not being underwater.”
The latter is good. The former actually reduces flexibility, since it costs more money to move up.
If you can sell your 1/1 for $100k, but it costs $250k to buy a 3/1 house, the money (or loan) required is $150k.
If the same numbers are $150k and $400k, you have to come up with $250k. I’m assuming cash transactions to keep things simple.
IMHO, we should be shooting for fewer people underwater, but not necessarily higher prices. Principal mods with no strings attached for primary residences would accomplish that just fine.[/quote]
I’d say just run the numbers in your situation and see if it makes sense…hypothetical numbers are not really what anyone goes by since people buy a home because they need one to live in and it’s not only a numbers game with not only financial benefits/cost in a home purchase. There are, of course, benefits and downsides both with owning a home…
I don’t assume cash transactions since for people who buy a house to live, the tax deduction is such a large benefit. If they take it away, you re-adjust based on the new law, but no point in planning for something which isn’t there yet.
Also, people in high income tax brackets are paying over 50% taxes (39%+ in Fed, 13+? in CA with the special tax add ons) so the guv’ment is subsidizing you to have a mortgage.
If you’re lower income and shopping in the 100k market, maybe it doesn’t make as much sense, but just do your numbers and you can then make an informed decision at least.
spdrun
February 26, 2014 @
6:19 AM
joec wrote:
If you’re lower [quote=joec]
If you’re lower income and shopping in the 100k market, maybe it doesn’t make as much sense, but just do your numbers and you can then make an informed decision at least.[/quote]
The proportions I mentioned make sense at any price point. Basically, more cash or a bigger loan needed to move up.
Keep in mind that while you can enjoy the tax deduction, you’re NOT looking to spend as much money as possible on a mortgage. At a 50% tax bracket, the deduction just means you pay half of what you’d normally pay for a mortgage, but that’s still money not in your pocket!
i.e. if you’re buying a house, it makes ZERO sense to pay $1.5MM vs $1.0MM for the exact same home for “tax reasons.” If you want to spend $1.5MM and can afford it, that’s fine, but it’s better if prices are lower, since you get more bang for the buck.
Gunslinger
February 26, 2014 @
7:35 AM
You must be one of those rich You must be one of those rich kids that had everything given to them. Most people starting out have more income and potential income growth than cash for a down payment. When a condo jumps from 100 to 150k they have 50k more to use as 20% down and leverage into a nice safe low fixed rate mortgage. Rapidly escalating prices the last few years will allow the 2009 FHA buyer of a condo to become a 2014 20% down conventional buyer of a house that will meet there needs for the next 10 to 20 years instead of being trapped in a 1 BR condo with a wife and 2 kids. They have the income to pay the mortgage, income growth ahead but they didn’t have the down payment to move up without significantly higher prices. How is that bad for them?
spdrun
February 26, 2014 @
8:14 AM
You’re somehow assuming that You’re somehow assuming that someone’s income would dramatically increase over four years. Plus, with QM, underwriting standards for loans (with good rates, at least on residences or 2nd homes) have tightened, so even with a downpayment, good luck getting a loan with good terms if the income can’t support it.
Two incomes might do it, but this means that the family has to be the bank’s slave for the next 10 years. Two incomes, 40+ hours a week for both, fun times.
You’re talking about jumping from an $80k mortgage to a $280k loan (assuming $70k down). Actually likely more than $280k, since most single-family houses considered “acceptable” by folks on this board seem to be $500k plus. $400k mortgage = $2000+/mo plus $5k taxes, expenses, etc — you’re paying at least $36k/yr to live in an acceptable home. And if you lose your job, you’re out of luck.
A more moderate price increase combined with smart saving on the part of the condo resident would allow for a lower mortgage on the move-up home and generally less misery/uncertainty for the next few decades.
Gunslinger
February 26, 2014 @
8:37 AM
As I expected, lazy, spoiled As I expected, lazy, spoiled rich kid who never had to work for anything. You miss the point. Income is not and typically is not the issue for young couples around here. They are willing to work and earn a good living.
$80K loan at 5% in 2009 is $430/month and mortgage insurance.
$280K loan at 4% in 2014 is $1357/month which is below the rent for a 2/2 condo.
$400K loan at 4.125% in 2014 is $1938/month. Make it $2600 with mortgage and taxes. That is below the rental cost for a house. It is cheaper with the tax benefits.
This was likely a once in lifetime opportunity for the Millennial’s that exploited it. Those that bought a few years ago can move up to a house they can live in for 10 to 20 years at a fixed cost while everything else around them inflates.
Your smart saving and slower move up is very expensive. Selling a house is expensive and so is moving. Interest rates can only go up from here putting that possibility at risk if delayed. Sorry not everyone has a rich sugar daddy like you must have.
spdrun
February 26, 2014 @
8:52 AM
I used a 4.4% rate, slightly I used a 4.4% rate, slightly over $2 grand ($2003) per month. Taxes: $5500/yr. HOA/Mello Roos, say $2000/yr. Maintenance expenses: another $2000/yr.
$24k + $5.5k + $2k + $2k = $35.5k or almost $3k/mo Without utilities. It’s a precarious situation if you lose a job, especially if dealing with car payments and other expenses.
Assuming some gumption, neither selling a house nor moving is terribly expensive. The Internet exists. FSBO and discount brokerages are more common than ever.
Moving — if you’re moving across town, what are a van, some friends and a few cases of beer for?
Lastly … you say that everything around them will inflate, yet mortgage rates will go up. Tell me how this makes sense. Affordability is already stretched by many measures. Higher rates will worsen affordability — at some point, something has to give and there’s a downside risk in prices. Too much of an increase, too quickly.
Gunslinger
February 26, 2014 @
12:27 PM
What utter nonsense from a What utter nonsense from a lazy punk pulling facts out of his rear end. Who said anything about Mello Roos? Interest rates around 4% are widely available for conventional buyers with good credit. Selling a house IS expensive any way you cut it and so is moving. Sure a single guy like you could pack up his jeans, t shirts, beer stained couch and bong then call his imaginary friends to help him with the U-haul DIY move. But a young couple with a house full of nice things and a couple small children won’t be doing that. I lived through the WIN times of the 70’s with rising interest rates. I’m not pretending to know what I am talking about on the Internet, I am sharing actual real life examples I have experienced over my 60 years on this planet. You are just making up things as you go.
UCGal
February 26, 2014 @
1:25 PM
Gunslinger – in another Gunslinger – in another thread you mentioned you’d owned your home 25 years. So, with that said, you don’t have the day-to-day experience of mello roos.
Here in San Diego, most new developments have mello roos. So when you are doing a comparison between renting and buying you need to factor in ALL the expenses of renting, and ALL the expenses of buying. Renting you have rent. Landlord pays maintenance, HOA (if any), Mello Roos (if any), etc.
Buying you have mortgage P&I, property taxes, HOA, mello roos, maintenance.
(I’m assuming utilities are paid by occupant in either case.)
It’s true you can buy a house without mello roos or HOA – but not a new one. I’m in a 50 year old neighborhood – so I don’t pay them. Like you, I’m a long(ish) time owner who’s getting long(ish) in the tooth.
I’m not disputing that spdrun is a punk – but he’s not lazy… from what I read, he is actively managing many rental properties, works a full time job, etc. Calling names doesn’t help. (Even though I just called spdrun a punk, lol).
Gunslinger
February 26, 2014 @
1:45 PM
Thank you UCGal but we were Thank you UCGal but we were talking about $500K homes which mean older homes not new construction with Mello Roos.
I am retired LAPD, detective to be specific, now living in San Diego proper. I mostly lurk but that punk is constantly denigrating hardworking individuals and has an obvious disdain for authority. He seems to take pride in others misfortune and his ability to work as little as possible. I doubt he has what anyone would consider many rental properties. More than likely a hovel or two. Profiling him from his posts tells me he is most likely a pathological liar too.
In my career I ran into more than a few punks like him. I’m sure he’s got a rich daddy who labored in the corporate world while he has skated along his whole life putting down good, honest and hardworking people. He’s a bad seed
spdrun
February 26, 2014 @
2:17 PM
I am not managing many I am not managing many rentals yet, but I am dealing with a few and hope to get more in the near future. I’m technically self-employed, don’t know if exactly full-time since it can be 15 hours one week, 65 the next, though I’ve been busy recently. Perhaps best to call it “odd time.”
There’s pretty good demand for someone who has sysadmin, IT, programming skills and knows their way around electronic circuits as well.
And after spending evenings demolishing a mud-built shower in a rental over the last week, I’m far from lazy. Though I am sore and really could use a (legit) massage right about now.
As far as someone who engages in ad-hominem personal attacks, I don’t consider it useful to argue with them, not really interested in debating /w Gunslinger any more.
But FYI – I do not fear work. I fear lack of flexibility and lack of stability. Being 40-50 hours a week, a few weeks of vacation, knowing they can kick me out the door with a day’s notice, and having nothing to fall back on, where’s the pleasure in that? Growing up, I was on both sides of the tracks, if you will, and I hope that when I have a family, I can do them one better.
scaredyclassic
February 26, 2014 @
2:22 PM
Sheena was a punk rocker. Sheena was a punk rocker.
UCGal
February 26, 2014 @
4:20 PM
scaredyclassic wrote:Sheena [quote=scaredyclassic]Sheena was a punk rocker.[/quote]
LOL – now I have that Ramones song going through my head. Love it.
She’s a punk punk… a punk rocker…. punk punk… a punk rocker….
FlyerInHi
February 26, 2014 @
2:54 PM
I get spdrun… he’s part of I get spdrun… he’s part of the new younger generation that is not afraid of hardwork but wants flexibility of work.
I understand that work for most people involves at-will employment, 1 week vacation the first year’ and 2 weeks vacation after 5 years. A lot of stress and putting all your money into housing in an expensive area like San Diego.
spdrun doesn’t seem afraid of work, especially DYI on real estate if the benefits accrue to himself.
I think a questioning of the establishment and authority is healthy if do it with knowledge rather than just rebelliousness. If employers can fire their at-will employees at any moment, employees should be able to tell their bosses to fu-k off also. That’s only fair.
Buying a house, getting married, paying whatever price the system demands, slowing climbing the ladder, and hoping everything works out is the old system. The new system is more based on skills and ability than seniority and paying your dues.
While I get spdrun, I don’t agree with him that house prices will crash anytime soon. I see stagnation perhaps, but not price drops unless we have another financial crisis (such as a big financial crisis in China).
House price increases alone are not good for
the economy. We want new developments, new construction, new cities, new businesses that create jobs and higher wages.
an
February 26, 2014 @
4:28 PM
House prices does not rise House prices does not rise and fall in a vacuum. Look at the last few major price increase and decrease and based on what other things happen, I would much rather have price increase than decrease.
The-Shoveler
February 26, 2014 @
5:34 PM
AN wrote:House prices does [quote=AN]House prices does not rise and fall in a vacuum. Look at the last few major price increase and decrease and based on what other things happen, I would much rather have price increase than decrease.[/quote]
LOL, now you are sounding like me…
I kept saying that, but I think few really got it.
Home prices go down, your city goes down, the whole economy goes down.
If that is what you are looking for..
The fastest way to BK a city is for Home prices to tank.
joec
February 26, 2014 @
6:44 PM
I think the problem I see is I think the problem I see is spdrun, you really aren’t the home market buyer I don’t think. You’re single (I believe) and rent currently…
If I was in your shoes, I’d feel the same way. However, I’d be smart enough to know that I am also not the guy worried about schools, area, safety as much, etc…so what I think may not be the majority of the typical home buyer.
I used to live in a ‘ghetto’ in the bay area with tons of apartments, poor folks, etc…felt safe enough even though I have witnessed multiple car break ins, theft, etc…(my car included once). Worked ok for me since rent was cheap, but I’d know that most families would prefer to live in a better area.
That said, I don’t think home buying is really for young(er) workers in general looking for work flexibility since it does tie you down. It’s a commitment to stay, I’d say for at least 5 years minimum…I’d recommend much longer…
My point and reason for all the analysis and debate is that prices have gone up because, ding ding ding, the problem is people like you or a family of 4 with 2 kids still needs a place to live or rent. The rents I’ve seen in areas which a lot of us discuss here (good/better school districts) aren’t at insane prices COMPARED TO THE SAME RENTAL HOUSE with the data and analysis of someone who actually buys these house. Again, maybe a 1/1 condo shack is good enough for you, but I see these rentals pop up all the time and know personally of a few in my area that’s more expensive to buy. Again, not all areas, but for these people, if they plan to stay longer term, buying would be a cheaper option long term.
I personally think buying ANY 1/1 condo or townhome is a waste of money/time actually…less resale market (limited families want these) and they are just higher fees with hoas, other crap tenants possibly, etc…
Oh well, not trying to convince you since I don’t think you’re the typical buyer, at least not in the areas I’m even mildlu interested in…Just that I think you’re off that buying is as crazy/bad as you say when it’s lower than rent in various areas…
Yeah, I’d be up for price increases too. I’m not tied to SD forever and if I can sell my large home and retire somewhere else, maybe a smaller place, even if it went up there too, that’s ok since I would need less space and “could” still live in the boonies perhaps worst case. Falling market isn’t good for many people other than cash rich non-asset holders.
spdrun
February 26, 2014 @
8:15 PM
(1) joec: I actually own, do (1) joec: I actually own, do not rent.
(2) The-Shoveler: city bankruptcy being a risk of lower home prices is only true in areas (like CA) where property taxes are directly tied to resale prices. In some places outside of CA, assessments are arbitrary and not tied to resale value at all. NYC ties them to market rents via a complex formula, for example. One town in NJ ties them to a purely arbitrary formula based on 1960s-era home prices. Adding a bathroom adds $x to the assessed price, land is worth $y per acre, etc.
BTW, assuming the economy of a city isn’t in Detroit-level crap, bankruptcy isn’t necessarily a bad thing. It would allow the city to smash parasitic city employee unions, for one thing.
FlyerInHi
February 26, 2014 @
7:38 PM
The-Shoveler wrote:
Home [quote=The-Shoveler]
Home prices go down, your city goes down, the whole economy goes down.
[/quote]
That’s why the Fed did what they did. Until there is full recovery of nominal prices, there is a psychological factor depressing economic activity.
For various reasons, there is a trend of housing consuming more and more do people’s incomes. It’s good for a couple decades for people who own when prices are rising. But bad for the economy long term.
The-Shoveler
February 27, 2014 @
5:38 AM
FlyerInHi wrote: It’s good [quote=FlyerInHi] It’s good for a couple decades for people who own when prices are rising. But bad for the economy long term.[/quote]
That’s only because of OER (this was instated because the TPTB determined that we did not need the American dream anymore).
an
February 26, 2014 @
9:50 PM
The-Shoveler wrote:LOL, now [quote=The-Shoveler]LOL, now you are sounding like me…
I kept saying that, but I think few really got it.
Home prices go down, your city goes down, the whole economy goes down.
If that is what you are looking for..
The fastest way to BK a city is for Home prices to tank.[/quote]It’s not just BK city. Here are two scenarios. We all know American in general can’t save. They will buy house/cars and what ever is left, the tend to spend. With that preface, if housing goes down, they might not be able to move because they won’t have enough or any equity to down for the next house, even if the next house is cheaper. So, they’re stuck. However, if prices goes up, as long as they can afford the payment, they will be able to move because they can sell and apply the equity from the previous house to the down payment of the new house. They essentially don’t have to add more $ from saving to the down payment of the new house. So, if anything, pricing going down would have a much stronger effect in making people be stuck in their house than if prices goes up.
Why spdrun might be salivating at the thought of another 2008 and give him a 2nd chance at an opportunity he didn’t take full advantage of then. But me, I’m salivating at the repeat of a repeat of 70s/80s where nominal income and home price goes up drastically. If that happen, I might be able to afford my monthly payment on a minimum wage income and rent would go through the roof as well.
February 20, 2014 @ 11:47 AM
Can I vote for all 3?
Can I vote for all 3?
February 20, 2014 @ 12:19 PM
The thing about SD is there
The thing about SD is there are quite a bit of Biotech, and wireless High Tech jobs etc… as well as it is a tourist destination and believe it or not it’s not a secret (most of the USA and world knows it’s a nice place to live).
So trying to go by what the local workers make and justify a TOP probably is not going to work for coastal SD.
Inland maybe it gets a little easier but that most likely will be distorted somewhat as well.
It’s like trying to figure what the house price should be in Hawaii, it’s probably not going to == what the local workers can afford.
February 24, 2014 @ 11:17 AM
The-Shoveler wrote:The thing
[quote=The-Shoveler]The thing about SD is there are quite a bit of Biotech, and wireless High Tech jobs etc… as well as it is a tourist destination and believe it or not it’s not a secret (most of the USA and world knows it’s a nice place to live).
So trying to go by what the local workers make and justify a TOP probably is not going to work for coastal SD.
Inland maybe it gets a little easier but that most likely will be distorted somewhat as well.
It’s like trying to figure what the house price should be in Hawaii, it’s probably not going to == what the local workers can afford.[/quote]
I agree with this to an extent. But there are neighborhoods where stuff is more affordable. In central San Diego city, Clairemont, Linda Vista, areas around SDSU. Piggington tends to forget the parts of the city that aren’t sought after for schools/coastal location, etc.
Biotech and Wireless jobs are not going to make Linda Vista pop in price or Encanto. But will impact the areas commonly discussed here on Piggington – North county coastal, beach communities, North county inland (4S, scripps, poway), etc.
February 26, 2014 @ 2:45 PM
I vote for #4 — here’s
I vote for #4 — here’s hoping for a slowdown.
February 24, 2014 @ 11:23 AM
buy a 1/1 condo to live
buy a 1/1 condo to live in….
February 24, 2014 @ 12:57 PM
People are still buying at
People are still buying at prices 30-40% over last year which to me is absolute insanity..however, it’s not what I think, it’s what people are doing.
I think people are betting home prices will go up, all the realtors are saying it, the media is saying it and most people just believe those sources like it’s gospel and fail to do any independent thinking on the matter.
Most people are also impatient and want what they want now, if they want a home they will see how they can stretch to make it happen and I think the government has made it extremely easy these days to overbuy – super low downpayments, super low interest rates, low credit scores and DTIs upto 50%.
People are also getting used to lowered expectations. Half million for a tiny 1100 sqft condo with high HOAs does not seem insane to them. They just shrug their shoulders and say “it is what it is”…
February 24, 2014 @ 1:11 PM
It is what it is.
You gotta
It is what it is.
You gotta live somewhere.
February 24, 2014 @ 4:47 PM
FormerSanDiegan wrote:It is
[quote=FormerSanDiegan]It is what it is.
You gotta live somewhere.[/quote]
A homeless man doesnt.
February 25, 2014 @ 9:55 AM
scaredyclassic
[quote=scaredyclassic][quote=FormerSanDiegan]It is what it is.
You gotta live somewhere.[/quote]
A homeless man doesnt.[/quote]
Sure he does … tt may be a tent, a cardboard box, under a tree or a doorway, but he’s gotta live somewhere.
February 25, 2014 @ 10:23 AM
Nowhere specific. He could be
Nowhere specific. He could be anywhrre.
February 25, 2014 @ 4:09 PM
Based on all of the different
Based on all of the different opinions here, I guess the definitive answer is that there is no definitive answer–it’s whatever works for you and/or your family.
Since my wife and I don’t plan to sell any of our properties (primary or investment) in our lifetimes, and since we purchased the properties at very low prices, (by today’s standards) we’ll pass them along to our kids, and they can decide if they want to keep them or sell them.
In the meantime, whether prices rise or fall, we all have great places to live and enjoy life, and, IMO, that’s what a “home” is really all about.
February 24, 2014 @ 3:22 PM
The good news is that banks
The good news is that banks seem to be adjusting to the California Homerenter’s Bill of Wrongs. Two short sales that I had offers on … the bank said naaaaaaah, went ahead, and is moving ahead with foreclosure. Hope to see those properties at auction in the near future…
February 24, 2014 @ 3:39 PM
Also good news–in areas of
Also good news–in areas of San Diego where there is the most
demand–foreclosures are way down.
February 24, 2014 @ 4:22 PM
Other than for people who
Other than for people who paid bubble prices and are now regretting it because they can’t pay their mortgages, why are foreclosures being down a good thing?
February 24, 2014 @ 4:46 PM
Coastal SD probably has few
Coastal SD probably has few underwater homes at this point.
Maybe some Condo’s in some area’s.
They take a little longer to come back sometimes
February 24, 2014 @ 5:14 PM
Coastal SD probably has few
I’d suspect there are more than you’d think. People were mortgaging to more than peak bubble value and some may not have made a payment in years.
February 24, 2014 @ 5:44 PM
I really think people need to
I really think people need to just ask why people even buy homes. At the end of the day, you HAVE to have a place to live. Assuming you have a decent job (since no job means no home buying, OR renting), you live where you work, or where you want your kids to go to school…
All this talk of crashes, bubbles and price appreciation is a waste of time when it comes to the people who simply needs a place to live and send their kids to the neighborhood schools.
A lot of the problem IMO seems to be that rents are still going up (at least according to the article I read today in the UT and what I see around me). If you can pay less/about the same to buy vs. rent and have the down, a lot of people “WITH KIDS” would probably just buy and settle. Reason being is because the rent isn’t any cheaper. Honestly, with the tax deduction as mentioned in another post, the buying price just isn’t as crazy, IF you already pay the crazy rents of 4k / month I see everywhere.
People who buy right now just aren’t looking to make money and aren’t worried about that really, but are at a loss what to do since where they want to send their kids to those school districts. Rents of course, are sky high insane already.
A lot of the SINGLE, NO KIDS folks says to rent a condo, etc…but honestly, I think unless you’ve been there (got spouse, kids), unfortunately, you really have NO clue what it’s like to be a parent.
Just sorry to say it since reading some of these posts, I think some people are just way off.
I’m NOT saying housing is going up. My point is that for someone who needs a place to live in a better school district, they tend to not sweat the future moves in price since they are more concerned with what they are paying already in rents NOW.
February 25, 2014 @ 7:03 PM
joec wrote: If you can pay
[quote=joec] If you can pay less/about the same to buy vs. rent and have the down, a lot of people “WITH KIDS” would probably just buy and settle. [/quote]
The problem is that you can’t buy for anything close to rental value here in Orange County. I rent a 1100 sqft 2bd apartment with 2 car garage for $1,530 in a fairly prime area in Costa Mesa, 5 min. drive from the best beaches in Newport Beach…where can I get a mortgage including PITI, property taxes, HOA, maintenance etc. for that?
The funny part is rents are all over the place as well, the complex that I found a rental in was $1,530 but a similar apartment across the street is charging $1,800 and another similar unit down the road is $1,550 and my old 1bd apartment (just a mile away) the investor landlord jacked up the rent to $1,400 for my tiny 1bd WITHOUT a garage. It looks like landlords are just pulling rental figures out of their behind and looking for the first sucker who has not shopped around and done his homework to pay it.
Impossible… equivalent condos here are selling for $375,000 and up and that is IF you can even FIND ONE to buy, as inventory in this area is virtually zero. And if there is a remotely good deal there are about 100 people turning up to make offers and many all cash so you with your loan and 10% down are going to get laughed at unless you’re going to pay $400,000 and up.
The last open house I went to a couple months ago was a dilapidated condo, 2bd 1200 sqft in a pretty bad neighborhood (infact my GF was furious with me for even bringing her there!! yikes!) I hardly imagined that a 1200sqft property list priced at $400,000 would be in the ghetto… but even so, about 10 people showed up and the roof was leaking and the realtor had a “take it or leave it” attitude and downright laughed in my face when I asked if the price was negotiable, infact she looked at me like I was from the planet Zork.
The rental market here has softened lately with too many rentals coming on the market due to investors… some landlords are offering good deals. However, there are extremely few deals with regard to purchases, most are severely overpriced and have atrocious HOAs, I have seen listings in this area with $400/month HOAs that cover essentially nothing but fluff LOL! I seriously laugh when I think some fool is going to buy something like that.
Not sure about San Diego but it’s a similar story all over Los Angeles and Orange County. Riverside and San Bernadino counties are still affordable but seriously who the heck wants to live in those ghettos? LOL!
February 26, 2014 @ 5:54 AM
kev374 wrote:joec wrote: If
[quote=kev374][quote=joec] If you can pay less/about the same to buy vs. rent and have the down, a lot of people “WITH KIDS” would probably just buy and settle. [/quote]
The problem is that you can’t buy for anything close to rental value here in Orange County. I rent a 1100 sqft 2bd apartment with 2 car garage for $1,530 in a fairly prime area in Costa Mesa, 5 min. drive from the best beaches in Newport Beach…where can I get a mortgage including PITI, property taxes, HOA, maintenance etc. for that?
Not sure about San Diego but it’s a similar story all over Los Angeles and Orange County. Riverside and San Bernadino counties are still affordable but seriously who the heck wants to live in those ghettos? LOL![/quote]
Again, and I keep harping about this all the time, real estate is always local and why I keep saying you need to run your own numbers to see if it makes sense. There was another thread where I posted numbers for someone with an avg home buying income (150-200k, maybe that’s high, but people aren’t buying 600-800k homes with < 100k incomes really)...I was also using a single family home as an example) and the numbers were lower renting vs. buying. I know about LA having lived there in the past and yeah, LA (like the bay area), is IMO, more expensive than buying in San Diego overall in terms of prices. This is probably also why you have these debates so strongly one way or the other and why one side feels the other side is crazy to posts the things we do if the numbers don't work in your case...Maybe in your case, the numbers don't work so you keep on renting, but what tends to happen eventually and a lot is 1 spouse REALLY REALLY wants a home and at that point, you buy because it's less painful to argue with the spouse than to overpay and move on with life...(refer to thread with economist)...People who didn't buy in the recent crash are now stuck with no housing price control (landlords raising rents at will) vs. people who bought and now don't have to waste time worrying about it really. It is a load off your mind and maybe cheaper than the high rent increases lately, but depending on your life situation, maybe buying is not the solution since your rent is low (a good deal) and since you're not married, you have no kids, etc... I assume since you and your g/f are both working, maybe in terms of taxes, this doesn't help a home purchase as much neither since you have separate tax returns and don't need the deduction as much... Also, you HAVE to compare the standard deduction vs. the mortgage deduction so if your loan is small, you would actually do better with the standard deduction making a mortgage NOT helpful... That said, if you were watching Bloomberg this morning as well, they posted a map where it was cheaper in various markets to buy vs. rent such as Austin (30% less), SF (12% less), NY (forgot %, don't really care since I don't live there) were less. Again, it's general and not really helpful for anyone's specific situation, but there are markets where it's cheaper to rent vs. buy, just do your own numbers. Also, with rents, you may be renting a great place with a GREAT deal currently and since it affects only you, assume that every place out there is the same price. As you've noticed in your search, this is not the case more often than now. Similar to buying, if you run the numbers and it works, make a move, if not, continue to rent perhaps... Bottom line I always go back to though is buying a place to live (primary home) isn't the worst thing since the tax advantages are huge (immediate ~20k tax deduction assuming regular mortgage vs ~10k for standard deduction) assuming a loan and you've now given yourself full control of your housing cost over the next, possibly 30 years...You can't do that in a rental if your landlord decides to raise your rent or is a dick to begin with. Lastly, you're shopping for a condo/th where lower priced homes have been selling much faster since that's all people can afford now. Only so many people qualify for 1 mil+ mortgages so you simply have more competition in the sub 500k market... There's nothing you can do, and this is why it's "nice" to have a known fixed housing cost. It's a benefit that isn't purely financial when in initial comparison, but after a few years, it's funny you pay less to own than to rent (nearly anyone who bought in 2009-2011). Most articles lately have also state housing isn't crashing (due to the rent vs. buy equation) and supply, but will appreciate slowly now (which is perfectly fine) 1-4% appreciation is sorta like inflation and what real estate used to do.
February 24, 2014 @ 9:47 PM
spdrun wrote:Other than for
[quote=spdrun]Other than for people who paid bubble prices and are now regretting it because they can’t pay their mortgages, why are foreclosures being down a good thing?[/quote]
Personally, I don’t know one person who doesn’t have a huge amount of equity in his or her home or homes, (myself included) and none of us have used our homes as ATM’s.
That said, I have recently seen stats that reveal foreclosure activity is down to record lows in San Diego (at least for now) which, IMO, is a good thing for homeowners and their families here–since more people are able to stay in their homes.
That could result in less inventory, and continued price increases–which is a good thing for those of us who own property here.
February 25, 2014 @ 9:04 AM
^^^
If you’re a homeowner,
^^^
If you’re a homeowner, why are price increases good unless you’re planning to sell or use the home as an ATM? Home price increases are only good for flipper c*nts. It’s like buying a car — unless you’re a dealer, you’re unlikely to think that price increases are a good thing.
And BTW, home price increases will make people more likely to overpay, raise property taxes, and generally make people LESS likely to stay in their homes in the future.
If you’re actually living in a house, more expensive home prices and a dollar buy you a cup of coffee.
February 25, 2014 @ 9:30 AM
I would add that increased
I would add that increased property prices can lead to stretched budgets, which encourages lax lending and so the frenetic cycle begins again. The key points, however, are that low rates have pushed up demand, and low inventory has been the driver of prices. Everyone wants to see their homes appreciate in value, but when they accelerate at the same pace as the housing bubble, it should be cause for concern. At what point will you be happy for prices increases to stop? Now, never, another 2%? The statement “It is what it is”, is completely meaningless and illustrates the denial that characterizes the typical home owner mindset. That mindset may be understandably shaped by concerns over having enough to retire on, but home price increases only makes people feel richer so they spend more and the economy grows. But too much of a good thing is never good.
February 25, 2014 @ 9:44 AM
I never say it is what it is
I never say it is what it is in real life because it is so irritating.
But it does have a certain resignation to it that is soothing.
It doesn’t mean it’s good or bad.
Just completely beyond changing.
Personally I don’t care about price anymore so long as I could sell without losing too much money. It’s vaguely nice to see a new development going in down the road with houses starting at nearly 2x what we paid in a way but that means nothing really. Earthquake. Fire. Inflation. Deflation. This is not a way to make money. I conclude the only good reason to buy a house is like marriage; to lock in a fairly good situation at a reasonable price longterm.
It’s not likely to end ptofitably. Indeed it will likely end in destruction. .
February 25, 2014 @ 5:57 PM
spdrun wrote:^^^
If you’re a
[quote=spdrun]^^^
If you’re a homeowner, why are price increases good unless you’re planning to sell or use the home as an ATM? Home price increases are only good for flipper c*nts. It’s like buying a car — unless you’re a dealer, you’re unlikely to think that price increases are a good thing.
And BTW, home price increases will make people more likely to overpay, raise property taxes, and generally make people LESS likely to stay in their homes in the future.
If you’re actually living in a house, more expensive home prices and a dollar buy you a cup of coffee.[/quote]
Prices going up doesn’t really affect most people since you can’t do anything with it, but unlike say stocks in a retirement account, people do real estate transactions FAR FAR less so price appreciation after a purchase has a far bigger impact than other things.
Higher prices, if you don’t plan to buy anything else soon gives some flexibility so say if you suddenly are in a divorce, you can sell easily. If prices stayed flat or down, you LOSE FLEXIBILITY. If you want to move up to another home in an area, you can as well…Nothing says you have to stay in CA or the same area.
This was widely apparent when people delayed divorce during the crash since they couldn’t get out of a home mortgage…
Higher prices also allows you to move…Say, if you want to retire in a tax free state or whatever, having a higher price on an asset you own helps a lot.
All that said, most of the time, you won’t or shouldn’t be able to tap it, but since a real estate transaction is done so rarely in most people’s lives, if you already bought, it is a benefit for you if that home is worth more than you paid. Simple as that.
On reverse, if it drops in value, you’re screwed so most people who own would probably rather see their house go up since they don’t tend to have mountains of cash to buy MORE real estate if it falls down.
This is why people who bought are happier if it goes up since I’d guess, they aren’t buying anything anytime soon.
Lastly, if you don’t plan to sell your homes and pass it on to the kids, appreciation helps you a lot since once you die, there is an auto step up in basis so your kids can sell that same home instantly for no taxes. Not many other ways to get tax free gains. There are estate taxes overall from the death, but you’d need enough homes for it to be over the 5 mil or whatever the rules are now.
Hope that explains it pretty simply…
Housing ownership, tax wise is also very beneficial and gives you more flexibility to manage taxes and wealth…
A lot of non-home owners just sound bitter.
If it’s more expensive for everyone else, my answer is for people who bought already, so what? You don’t have to buy anything and can stay in your existing place. If it’s sky high, you do nothing and just ride it out since your price paid was at a safe price for your income/budget…
Already, rentals all around me are more than my carrying cost…
This is why I keep stressing that when you buy your first home in to live, you shouldn’t be paralyzed worried that you find a price at the exact bottom. Once you’re in at least a place, there are a lot of financial benefits since our ‘Guvment’ sets it up this way…
fair or not…
February 25, 2014 @ 6:12 PM
^^^
You’re confusing
^^^
You’re confusing “dramatically higher prices” with “not being underwater.”
The latter is good. The former actually reduces flexibility, since it costs more money to move up.
If you can sell your 1/1 for $100k, but it costs $250k to buy a 3/1 house, the money (or loan) required is $150k.
If the same numbers are $150k and $400k, you have to come up with $250k. I’m assuming cash transactions to keep things simple.
IMHO, we should be shooting for fewer people underwater, but not necessarily higher prices. Principal mods with no strings attached for primary residences would accomplish that just fine.
February 25, 2014 @ 7:13 PM
x
x
February 26, 2014 @ 5:51 AM
spdrun wrote:^^^
You’re
[quote=spdrun]^^^
You’re confusing “dramatically higher prices” with “not being underwater.”
The latter is good. The former actually reduces flexibility, since it costs more money to move up.
If you can sell your 1/1 for $100k, but it costs $250k to buy a 3/1 house, the money (or loan) required is $150k.
If the same numbers are $150k and $400k, you have to come up with $250k. I’m assuming cash transactions to keep things simple.
IMHO, we should be shooting for fewer people underwater, but not necessarily higher prices. Principal mods with no strings attached for primary residences would accomplish that just fine.[/quote]
I’d say just run the numbers in your situation and see if it makes sense…hypothetical numbers are not really what anyone goes by since people buy a home because they need one to live in and it’s not only a numbers game with not only financial benefits/cost in a home purchase. There are, of course, benefits and downsides both with owning a home…
I don’t assume cash transactions since for people who buy a house to live, the tax deduction is such a large benefit. If they take it away, you re-adjust based on the new law, but no point in planning for something which isn’t there yet.
Also, people in high income tax brackets are paying over 50% taxes (39%+ in Fed, 13+? in CA with the special tax add ons) so the guv’ment is subsidizing you to have a mortgage.
If you’re lower income and shopping in the 100k market, maybe it doesn’t make as much sense, but just do your numbers and you can then make an informed decision at least.
February 26, 2014 @ 6:19 AM
joec wrote:
If you’re lower
[quote=joec]
If you’re lower income and shopping in the 100k market, maybe it doesn’t make as much sense, but just do your numbers and you can then make an informed decision at least.[/quote]
The proportions I mentioned make sense at any price point. Basically, more cash or a bigger loan needed to move up.
Keep in mind that while you can enjoy the tax deduction, you’re NOT looking to spend as much money as possible on a mortgage. At a 50% tax bracket, the deduction just means you pay half of what you’d normally pay for a mortgage, but that’s still money not in your pocket!
i.e. if you’re buying a house, it makes ZERO sense to pay $1.5MM vs $1.0MM for the exact same home for “tax reasons.” If you want to spend $1.5MM and can afford it, that’s fine, but it’s better if prices are lower, since you get more bang for the buck.
February 26, 2014 @ 7:35 AM
You must be one of those rich
You must be one of those rich kids that had everything given to them. Most people starting out have more income and potential income growth than cash for a down payment. When a condo jumps from 100 to 150k they have 50k more to use as 20% down and leverage into a nice safe low fixed rate mortgage. Rapidly escalating prices the last few years will allow the 2009 FHA buyer of a condo to become a 2014 20% down conventional buyer of a house that will meet there needs for the next 10 to 20 years instead of being trapped in a 1 BR condo with a wife and 2 kids. They have the income to pay the mortgage, income growth ahead but they didn’t have the down payment to move up without significantly higher prices. How is that bad for them?
February 26, 2014 @ 8:14 AM
You’re somehow assuming that
You’re somehow assuming that someone’s income would dramatically increase over four years. Plus, with QM, underwriting standards for loans (with good rates, at least on residences or 2nd homes) have tightened, so even with a downpayment, good luck getting a loan with good terms if the income can’t support it.
Two incomes might do it, but this means that the family has to be the bank’s slave for the next 10 years. Two incomes, 40+ hours a week for both, fun times.
You’re talking about jumping from an $80k mortgage to a $280k loan (assuming $70k down). Actually likely more than $280k, since most single-family houses considered “acceptable” by folks on this board seem to be $500k plus. $400k mortgage = $2000+/mo plus $5k taxes, expenses, etc — you’re paying at least $36k/yr to live in an acceptable home. And if you lose your job, you’re out of luck.
A more moderate price increase combined with smart saving on the part of the condo resident would allow for a lower mortgage on the move-up home and generally less misery/uncertainty for the next few decades.
February 26, 2014 @ 8:37 AM
As I expected, lazy, spoiled
As I expected, lazy, spoiled rich kid who never had to work for anything. You miss the point. Income is not and typically is not the issue for young couples around here. They are willing to work and earn a good living.
$80K loan at 5% in 2009 is $430/month and mortgage insurance.
$280K loan at 4% in 2014 is $1357/month which is below the rent for a 2/2 condo.
$400K loan at 4.125% in 2014 is $1938/month. Make it $2600 with mortgage and taxes. That is below the rental cost for a house. It is cheaper with the tax benefits.
This was likely a once in lifetime opportunity for the Millennial’s that exploited it. Those that bought a few years ago can move up to a house they can live in for 10 to 20 years at a fixed cost while everything else around them inflates.
Your smart saving and slower move up is very expensive. Selling a house is expensive and so is moving. Interest rates can only go up from here putting that possibility at risk if delayed. Sorry not everyone has a rich sugar daddy like you must have.
February 26, 2014 @ 8:52 AM
I used a 4.4% rate, slightly
I used a 4.4% rate, slightly over $2 grand ($2003) per month. Taxes: $5500/yr. HOA/Mello Roos, say $2000/yr. Maintenance expenses: another $2000/yr.
$24k + $5.5k + $2k + $2k = $35.5k or almost $3k/mo Without utilities. It’s a precarious situation if you lose a job, especially if dealing with car payments and other expenses.
Assuming some gumption, neither selling a house nor moving is terribly expensive. The Internet exists. FSBO and discount brokerages are more common than ever.
Moving — if you’re moving across town, what are a van, some friends and a few cases of beer for?
Lastly … you say that everything around them will inflate, yet mortgage rates will go up. Tell me how this makes sense. Affordability is already stretched by many measures. Higher rates will worsen affordability — at some point, something has to give and there’s a downside risk in prices. Too much of an increase, too quickly.
February 26, 2014 @ 12:27 PM
What utter nonsense from a
What utter nonsense from a lazy punk pulling facts out of his rear end. Who said anything about Mello Roos? Interest rates around 4% are widely available for conventional buyers with good credit. Selling a house IS expensive any way you cut it and so is moving. Sure a single guy like you could pack up his jeans, t shirts, beer stained couch and bong then call his imaginary friends to help him with the U-haul DIY move. But a young couple with a house full of nice things and a couple small children won’t be doing that. I lived through the WIN times of the 70’s with rising interest rates. I’m not pretending to know what I am talking about on the Internet, I am sharing actual real life examples I have experienced over my 60 years on this planet. You are just making up things as you go.
February 26, 2014 @ 1:25 PM
Gunslinger – in another
Gunslinger – in another thread you mentioned you’d owned your home 25 years. So, with that said, you don’t have the day-to-day experience of mello roos.
Here in San Diego, most new developments have mello roos. So when you are doing a comparison between renting and buying you need to factor in ALL the expenses of renting, and ALL the expenses of buying. Renting you have rent. Landlord pays maintenance, HOA (if any), Mello Roos (if any), etc.
Buying you have mortgage P&I, property taxes, HOA, mello roos, maintenance.
(I’m assuming utilities are paid by occupant in either case.)
It’s true you can buy a house without mello roos or HOA – but not a new one. I’m in a 50 year old neighborhood – so I don’t pay them. Like you, I’m a long(ish) time owner who’s getting long(ish) in the tooth.
I’m not disputing that spdrun is a punk – but he’s not lazy… from what I read, he is actively managing many rental properties, works a full time job, etc. Calling names doesn’t help. (Even though I just called spdrun a punk, lol).
February 26, 2014 @ 1:45 PM
Thank you UCGal but we were
Thank you UCGal but we were talking about $500K homes which mean older homes not new construction with Mello Roos.
I am retired LAPD, detective to be specific, now living in San Diego proper. I mostly lurk but that punk is constantly denigrating hardworking individuals and has an obvious disdain for authority. He seems to take pride in others misfortune and his ability to work as little as possible. I doubt he has what anyone would consider many rental properties. More than likely a hovel or two. Profiling him from his posts tells me he is most likely a pathological liar too.
In my career I ran into more than a few punks like him. I’m sure he’s got a rich daddy who labored in the corporate world while he has skated along his whole life putting down good, honest and hardworking people. He’s a bad seed
February 26, 2014 @ 2:17 PM
I am not managing many
I am not managing many rentals yet, but I am dealing with a few and hope to get more in the near future. I’m technically self-employed, don’t know if exactly full-time since it can be 15 hours one week, 65 the next, though I’ve been busy recently. Perhaps best to call it “odd time.”
There’s pretty good demand for someone who has sysadmin, IT, programming skills and knows their way around electronic circuits as well.
And after spending evenings demolishing a mud-built shower in a rental over the last week, I’m far from lazy. Though I am sore and really could use a (legit) massage right about now.
As far as someone who engages in ad-hominem personal attacks, I don’t consider it useful to argue with them, not really interested in debating /w Gunslinger any more.
But FYI – I do not fear work. I fear lack of flexibility and lack of stability. Being 40-50 hours a week, a few weeks of vacation, knowing they can kick me out the door with a day’s notice, and having nothing to fall back on, where’s the pleasure in that? Growing up, I was on both sides of the tracks, if you will, and I hope that when I have a family, I can do them one better.
February 26, 2014 @ 2:22 PM
Sheena was a punk rocker.
Sheena was a punk rocker.
February 26, 2014 @ 4:20 PM
scaredyclassic wrote:Sheena
[quote=scaredyclassic]Sheena was a punk rocker.[/quote]
LOL – now I have that Ramones song going through my head. Love it.
She’s a punk punk… a punk rocker…. punk punk… a punk rocker….
February 26, 2014 @ 2:54 PM
I get spdrun… he’s part of
I get spdrun… he’s part of the new younger generation that is not afraid of hardwork but wants flexibility of work.
I understand that work for most people involves at-will employment, 1 week vacation the first year’ and 2 weeks vacation after 5 years. A lot of stress and putting all your money into housing in an expensive area like San Diego.
spdrun doesn’t seem afraid of work, especially DYI on real estate if the benefits accrue to himself.
I think a questioning of the establishment and authority is healthy if do it with knowledge rather than just rebelliousness. If employers can fire their at-will employees at any moment, employees should be able to tell their bosses to fu-k off also. That’s only fair.
Buying a house, getting married, paying whatever price the system demands, slowing climbing the ladder, and hoping everything works out is the old system. The new system is more based on skills and ability than seniority and paying your dues.
While I get spdrun, I don’t agree with him that house prices will crash anytime soon. I see stagnation perhaps, but not price drops unless we have another financial crisis (such as a big financial crisis in China).
House price increases alone are not good for
the economy. We want new developments, new construction, new cities, new businesses that create jobs and higher wages.
February 26, 2014 @ 4:28 PM
House prices does not rise
House prices does not rise and fall in a vacuum. Look at the last few major price increase and decrease and based on what other things happen, I would much rather have price increase than decrease.
February 26, 2014 @ 5:34 PM
AN wrote:House prices does
[quote=AN]House prices does not rise and fall in a vacuum. Look at the last few major price increase and decrease and based on what other things happen, I would much rather have price increase than decrease.[/quote]
LOL, now you are sounding like me…
I kept saying that, but I think few really got it.
Home prices go down, your city goes down, the whole economy goes down.
If that is what you are looking for..
The fastest way to BK a city is for Home prices to tank.
February 26, 2014 @ 6:44 PM
I think the problem I see is
I think the problem I see is spdrun, you really aren’t the home market buyer I don’t think. You’re single (I believe) and rent currently…
If I was in your shoes, I’d feel the same way. However, I’d be smart enough to know that I am also not the guy worried about schools, area, safety as much, etc…so what I think may not be the majority of the typical home buyer.
I used to live in a ‘ghetto’ in the bay area with tons of apartments, poor folks, etc…felt safe enough even though I have witnessed multiple car break ins, theft, etc…(my car included once). Worked ok for me since rent was cheap, but I’d know that most families would prefer to live in a better area.
That said, I don’t think home buying is really for young(er) workers in general looking for work flexibility since it does tie you down. It’s a commitment to stay, I’d say for at least 5 years minimum…I’d recommend much longer…
My point and reason for all the analysis and debate is that prices have gone up because, ding ding ding, the problem is people like you or a family of 4 with 2 kids still needs a place to live or rent. The rents I’ve seen in areas which a lot of us discuss here (good/better school districts) aren’t at insane prices COMPARED TO THE SAME RENTAL HOUSE with the data and analysis of someone who actually buys these house. Again, maybe a 1/1 condo shack is good enough for you, but I see these rentals pop up all the time and know personally of a few in my area that’s more expensive to buy. Again, not all areas, but for these people, if they plan to stay longer term, buying would be a cheaper option long term.
I personally think buying ANY 1/1 condo or townhome is a waste of money/time actually…less resale market (limited families want these) and they are just higher fees with hoas, other crap tenants possibly, etc…
Oh well, not trying to convince you since I don’t think you’re the typical buyer, at least not in the areas I’m even mildlu interested in…Just that I think you’re off that buying is as crazy/bad as you say when it’s lower than rent in various areas…
Yeah, I’d be up for price increases too. I’m not tied to SD forever and if I can sell my large home and retire somewhere else, maybe a smaller place, even if it went up there too, that’s ok since I would need less space and “could” still live in the boonies perhaps worst case. Falling market isn’t good for many people other than cash rich non-asset holders.
February 26, 2014 @ 8:15 PM
(1) joec: I actually own, do
(1) joec: I actually own, do not rent.
(2) The-Shoveler: city bankruptcy being a risk of lower home prices is only true in areas (like CA) where property taxes are directly tied to resale prices. In some places outside of CA, assessments are arbitrary and not tied to resale value at all. NYC ties them to market rents via a complex formula, for example. One town in NJ ties them to a purely arbitrary formula based on 1960s-era home prices. Adding a bathroom adds $x to the assessed price, land is worth $y per acre, etc.
BTW, assuming the economy of a city isn’t in Detroit-level crap, bankruptcy isn’t necessarily a bad thing. It would allow the city to smash parasitic city employee unions, for one thing.
February 26, 2014 @ 7:38 PM
The-Shoveler wrote:
Home
[quote=The-Shoveler]
Home prices go down, your city goes down, the whole economy goes down.
[/quote]
That’s why the Fed did what they did. Until there is full recovery of nominal prices, there is a psychological factor depressing economic activity.
For various reasons, there is a trend of housing consuming more and more do people’s incomes. It’s good for a couple decades for people who own when prices are rising. But bad for the economy long term.
February 27, 2014 @ 5:38 AM
FlyerInHi wrote: It’s good
[quote=FlyerInHi] It’s good for a couple decades for people who own when prices are rising. But bad for the economy long term.[/quote]
That’s only because of OER (this was instated because the TPTB determined that we did not need the American dream anymore).
February 26, 2014 @ 9:50 PM
The-Shoveler wrote:LOL, now
[quote=The-Shoveler]LOL, now you are sounding like me…
I kept saying that, but I think few really got it.
Home prices go down, your city goes down, the whole economy goes down.
If that is what you are looking for..
The fastest way to BK a city is for Home prices to tank.[/quote]It’s not just BK city. Here are two scenarios. We all know American in general can’t save. They will buy house/cars and what ever is left, the tend to spend. With that preface, if housing goes down, they might not be able to move because they won’t have enough or any equity to down for the next house, even if the next house is cheaper. So, they’re stuck. However, if prices goes up, as long as they can afford the payment, they will be able to move because they can sell and apply the equity from the previous house to the down payment of the new house. They essentially don’t have to add more $ from saving to the down payment of the new house. So, if anything, pricing going down would have a much stronger effect in making people be stuck in their house than if prices goes up.
Why spdrun might be salivating at the thought of another 2008 and give him a 2nd chance at an opportunity he didn’t take full advantage of then. But me, I’m salivating at the repeat of a repeat of 70s/80s where nominal income and home price goes up drastically. If that happen, I might be able to afford my monthly payment on a minimum wage income and rent would go through the roof as well.