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  • October 25, 2009 at 8:17 AM #16552
    mercedes7
    Participant

    LONG time lurker here, although I rarely post. Just looking for some advice from the resident pros such as SDrealtor, temeculaguy, and others. Sold my house in ’06 and have been renting since. Am just starting to look and my head tells me it may still be too early.

    Old enough to have lived through other downturns in the economy and real estate market, and if past history is any indicator, we likely have many more years of real estate at or below where we are now. I try to evaluate the Macro economy, local trends, as well as my own personal situation.

    I don’t mind renting, although I am trying to take into consideration overall cost (including tax benefits of owning, building “equity”, and the fact that I am only getting 1.5% interest on my money – ugh). So, at some point, it will make sense for me to buy, even if prices depreciate some from here. I realize this has been discussed ad nauseam here over the last several months, so I appologize in advance if this is simply a repeat of what has already been hashed out.

    My first question relates to the fact that the value of the dollar over the last 6 months has dropped precipitously. In past times, when this has occured, hard assets have done well, including real estate. However, this is not like any other time in history. I believe the feds are fighting against deflation by printing money, thereby “attempting” to spark inflation. I am not convinced that will work, but wonder if anyone here has any thoughts about this.

    Secondly, as has already been discussed, San Diego is a desirable place to live and there will always be people with cash willing to step up and place a bid under the market, the bigger question is how long will that last? I really appreciated the thread that discussed how low real estate can realistically go. I would love to see prices much lower, but am beginning to realize that certain areas will not drop as much as I would hope (unless of course we move into a full blown depression and I am not wishing for that).

    Thirdly, I have been looking in the $400-$550 range as this would be very comfortable for me. I KNOW no one has a crystal ball, but for the realtors that visit this site, has this price range already seen the majority of it’s depreciation? Do you think we will see some price compression from here with the higher end coming down more than the lower end? Or do you see all boats going lower in the end as market parameters such as ppsf eventually evens out over time?

    Thanks in advance for any insight…

    October 25, 2009 at 4:09 PM #473336
    EconProf
    Participant

    Couple of questions:
    What is your tax bracket? Higher income folks get clear tax breaks for owning vs. renting.
    How much down can you muster? A key reason to buy for real estate now to either live in or invest in is the dreadful return on your money everywhere else.

    October 25, 2009 at 4:09 PM #473956
    EconProf
    Participant

    Couple of questions:
    What is your tax bracket? Higher income folks get clear tax breaks for owning vs. renting.
    How much down can you muster? A key reason to buy for real estate now to either live in or invest in is the dreadful return on your money everywhere else.

    October 25, 2009 at 4:09 PM #474180
    EconProf
    Participant

    Couple of questions:
    What is your tax bracket? Higher income folks get clear tax breaks for owning vs. renting.
    How much down can you muster? A key reason to buy for real estate now to either live in or invest in is the dreadful return on your money everywhere else.

    October 25, 2009 at 4:09 PM #473877
    EconProf
    Participant

    Couple of questions:
    What is your tax bracket? Higher income folks get clear tax breaks for owning vs. renting.
    How much down can you muster? A key reason to buy for real estate now to either live in or invest in is the dreadful return on your money everywhere else.

    October 25, 2009 at 4:09 PM #473516
    EconProf
    Participant

    Couple of questions:
    What is your tax bracket? Higher income folks get clear tax breaks for owning vs. renting.
    How much down can you muster? A key reason to buy for real estate now to either live in or invest in is the dreadful return on your money everywhere else.

    October 25, 2009 at 4:51 PM #473887
    mercedes7
    Participant

    Tax bracket is 28%…low six figure income. I COULD come up with 450k, but don’t know if that is the best thing for me to do since interest rates are so low. Would be nice to lock in a really low rate and hang onto some cash in the event that interest rates or other opportunities rise to put the cash I have to work. I plan on putting about 200k-300k down, but it all really depends upon the situation and the price of the house.

    If I had to, I could put more money down in order to get the deal done if I find something I really like. I also like living way below my means so that I can save money…have lived that way all my life and I like that security. Unfortunately, living that way does not really give me a great tax advantage. Would like to take advantage of some tax break but not to the point that I am stretched.

    Thoughts appreciated.

    October 25, 2009 at 4:51 PM #473346
    mercedes7
    Participant

    Tax bracket is 28%…low six figure income. I COULD come up with 450k, but don’t know if that is the best thing for me to do since interest rates are so low. Would be nice to lock in a really low rate and hang onto some cash in the event that interest rates or other opportunities rise to put the cash I have to work. I plan on putting about 200k-300k down, but it all really depends upon the situation and the price of the house.

    If I had to, I could put more money down in order to get the deal done if I find something I really like. I also like living way below my means so that I can save money…have lived that way all my life and I like that security. Unfortunately, living that way does not really give me a great tax advantage. Would like to take advantage of some tax break but not to the point that I am stretched.

    Thoughts appreciated.

    October 25, 2009 at 4:51 PM #474190
    mercedes7
    Participant

    Tax bracket is 28%…low six figure income. I COULD come up with 450k, but don’t know if that is the best thing for me to do since interest rates are so low. Would be nice to lock in a really low rate and hang onto some cash in the event that interest rates or other opportunities rise to put the cash I have to work. I plan on putting about 200k-300k down, but it all really depends upon the situation and the price of the house.

    If I had to, I could put more money down in order to get the deal done if I find something I really like. I also like living way below my means so that I can save money…have lived that way all my life and I like that security. Unfortunately, living that way does not really give me a great tax advantage. Would like to take advantage of some tax break but not to the point that I am stretched.

    Thoughts appreciated.

    October 25, 2009 at 4:51 PM #473966
    mercedes7
    Participant

    Tax bracket is 28%…low six figure income. I COULD come up with 450k, but don’t know if that is the best thing for me to do since interest rates are so low. Would be nice to lock in a really low rate and hang onto some cash in the event that interest rates or other opportunities rise to put the cash I have to work. I plan on putting about 200k-300k down, but it all really depends upon the situation and the price of the house.

    If I had to, I could put more money down in order to get the deal done if I find something I really like. I also like living way below my means so that I can save money…have lived that way all my life and I like that security. Unfortunately, living that way does not really give me a great tax advantage. Would like to take advantage of some tax break but not to the point that I am stretched.

    Thoughts appreciated.

    October 25, 2009 at 4:51 PM #473526
    mercedes7
    Participant

    Tax bracket is 28%…low six figure income. I COULD come up with 450k, but don’t know if that is the best thing for me to do since interest rates are so low. Would be nice to lock in a really low rate and hang onto some cash in the event that interest rates or other opportunities rise to put the cash I have to work. I plan on putting about 200k-300k down, but it all really depends upon the situation and the price of the house.

    If I had to, I could put more money down in order to get the deal done if I find something I really like. I also like living way below my means so that I can save money…have lived that way all my life and I like that security. Unfortunately, living that way does not really give me a great tax advantage. Would like to take advantage of some tax break but not to the point that I am stretched.

    Thoughts appreciated.

    October 25, 2009 at 4:54 PM #473971
    SD Realtor
    Participant

    Mercedes things are really tough to predict right now because of the slush factor. I have coined that term because things are slushy to me and nothing really seems to be as it is. We have talked alot about the subsidized market through mechanisms such as squeezing inventory, govt incentives for homebuyers, and low interest rates. No way those things are going to abate. My money is that our esteemed leaders will follow up with another buyers incentive. I think it is a foolhearty waste of my tax dollars but that doesn’t matter. Conversely I do not see unemployment abating however I think it will flatten out. Still I know ALOT of good friends out of work. Plenty of engineers out of work right now. Lots of foreclosures coming as well but it seems like the govt and wall st have developed a methodology of being able to trickle inventory out. Can that continue?

    So this post is a rerun of course.

    Where you are looking factors into the equation. Your price range is in the think of where ALOT of other people are looking. Going back to your question, and applying it to say PQ. Will PQ drop back to where it was 9 months ago? Will it go lower? I think the answer can be yes to both HOWEVER not under current conditions. If mortgage rates are at 9% then yes it can happen.

    For sure do not overestimate the cash factor. As many cash deals as there have been on the market, overall they are still a VERY small percentage. There was another post about cash buyers or flippers swooping in on the market if prices go lower. I could not disagree more. That activity is happening here and now. About flippers, the ones that do it seriously, the big boys that are backed by serious investment money do not buy homes from realtors on the MLS. They buy them in bulk and they buy them at the trustee sales. There are people who buy homes for cash. Yes. We sold a condo in Kearny Mesa last month for cash and the couple that bought it were an Asian couple in LA who had purchased 4 already. Still though, if you look at stats of closed sales, especially 400-500k detached homes, no way are cash deals a large component.

    Anyways, sorry I cannot give you the majority of the depreciation answer. I will say yes but ONLY if interest rates can be kept tolerable and honestly I just do not see how that can happen. However to me that will not happen for awhile yet. There is still the fact that our creditors have to finally say ENOUGH TO AMERICAN DEBT!

    October 25, 2009 at 4:54 PM #473892
    SD Realtor
    Participant

    Mercedes things are really tough to predict right now because of the slush factor. I have coined that term because things are slushy to me and nothing really seems to be as it is. We have talked alot about the subsidized market through mechanisms such as squeezing inventory, govt incentives for homebuyers, and low interest rates. No way those things are going to abate. My money is that our esteemed leaders will follow up with another buyers incentive. I think it is a foolhearty waste of my tax dollars but that doesn’t matter. Conversely I do not see unemployment abating however I think it will flatten out. Still I know ALOT of good friends out of work. Plenty of engineers out of work right now. Lots of foreclosures coming as well but it seems like the govt and wall st have developed a methodology of being able to trickle inventory out. Can that continue?

    So this post is a rerun of course.

    Where you are looking factors into the equation. Your price range is in the think of where ALOT of other people are looking. Going back to your question, and applying it to say PQ. Will PQ drop back to where it was 9 months ago? Will it go lower? I think the answer can be yes to both HOWEVER not under current conditions. If mortgage rates are at 9% then yes it can happen.

    For sure do not overestimate the cash factor. As many cash deals as there have been on the market, overall they are still a VERY small percentage. There was another post about cash buyers or flippers swooping in on the market if prices go lower. I could not disagree more. That activity is happening here and now. About flippers, the ones that do it seriously, the big boys that are backed by serious investment money do not buy homes from realtors on the MLS. They buy them in bulk and they buy them at the trustee sales. There are people who buy homes for cash. Yes. We sold a condo in Kearny Mesa last month for cash and the couple that bought it were an Asian couple in LA who had purchased 4 already. Still though, if you look at stats of closed sales, especially 400-500k detached homes, no way are cash deals a large component.

    Anyways, sorry I cannot give you the majority of the depreciation answer. I will say yes but ONLY if interest rates can be kept tolerable and honestly I just do not see how that can happen. However to me that will not happen for awhile yet. There is still the fact that our creditors have to finally say ENOUGH TO AMERICAN DEBT!

    October 25, 2009 at 4:54 PM #473531
    SD Realtor
    Participant

    Mercedes things are really tough to predict right now because of the slush factor. I have coined that term because things are slushy to me and nothing really seems to be as it is. We have talked alot about the subsidized market through mechanisms such as squeezing inventory, govt incentives for homebuyers, and low interest rates. No way those things are going to abate. My money is that our esteemed leaders will follow up with another buyers incentive. I think it is a foolhearty waste of my tax dollars but that doesn’t matter. Conversely I do not see unemployment abating however I think it will flatten out. Still I know ALOT of good friends out of work. Plenty of engineers out of work right now. Lots of foreclosures coming as well but it seems like the govt and wall st have developed a methodology of being able to trickle inventory out. Can that continue?

    So this post is a rerun of course.

    Where you are looking factors into the equation. Your price range is in the think of where ALOT of other people are looking. Going back to your question, and applying it to say PQ. Will PQ drop back to where it was 9 months ago? Will it go lower? I think the answer can be yes to both HOWEVER not under current conditions. If mortgage rates are at 9% then yes it can happen.

    For sure do not overestimate the cash factor. As many cash deals as there have been on the market, overall they are still a VERY small percentage. There was another post about cash buyers or flippers swooping in on the market if prices go lower. I could not disagree more. That activity is happening here and now. About flippers, the ones that do it seriously, the big boys that are backed by serious investment money do not buy homes from realtors on the MLS. They buy them in bulk and they buy them at the trustee sales. There are people who buy homes for cash. Yes. We sold a condo in Kearny Mesa last month for cash and the couple that bought it were an Asian couple in LA who had purchased 4 already. Still though, if you look at stats of closed sales, especially 400-500k detached homes, no way are cash deals a large component.

    Anyways, sorry I cannot give you the majority of the depreciation answer. I will say yes but ONLY if interest rates can be kept tolerable and honestly I just do not see how that can happen. However to me that will not happen for awhile yet. There is still the fact that our creditors have to finally say ENOUGH TO AMERICAN DEBT!

    October 25, 2009 at 4:54 PM #474195
    SD Realtor
    Participant

    Mercedes things are really tough to predict right now because of the slush factor. I have coined that term because things are slushy to me and nothing really seems to be as it is. We have talked alot about the subsidized market through mechanisms such as squeezing inventory, govt incentives for homebuyers, and low interest rates. No way those things are going to abate. My money is that our esteemed leaders will follow up with another buyers incentive. I think it is a foolhearty waste of my tax dollars but that doesn’t matter. Conversely I do not see unemployment abating however I think it will flatten out. Still I know ALOT of good friends out of work. Plenty of engineers out of work right now. Lots of foreclosures coming as well but it seems like the govt and wall st have developed a methodology of being able to trickle inventory out. Can that continue?

    So this post is a rerun of course.

    Where you are looking factors into the equation. Your price range is in the think of where ALOT of other people are looking. Going back to your question, and applying it to say PQ. Will PQ drop back to where it was 9 months ago? Will it go lower? I think the answer can be yes to both HOWEVER not under current conditions. If mortgage rates are at 9% then yes it can happen.

    For sure do not overestimate the cash factor. As many cash deals as there have been on the market, overall they are still a VERY small percentage. There was another post about cash buyers or flippers swooping in on the market if prices go lower. I could not disagree more. That activity is happening here and now. About flippers, the ones that do it seriously, the big boys that are backed by serious investment money do not buy homes from realtors on the MLS. They buy them in bulk and they buy them at the trustee sales. There are people who buy homes for cash. Yes. We sold a condo in Kearny Mesa last month for cash and the couple that bought it were an Asian couple in LA who had purchased 4 already. Still though, if you look at stats of closed sales, especially 400-500k detached homes, no way are cash deals a large component.

    Anyways, sorry I cannot give you the majority of the depreciation answer. I will say yes but ONLY if interest rates can be kept tolerable and honestly I just do not see how that can happen. However to me that will not happen for awhile yet. There is still the fact that our creditors have to finally say ENOUGH TO AMERICAN DEBT!

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