SD R, THANKS! Spend an extra 10 minutes with the wife or kids before you go workin on any of my questions. I would like something that can apply to more than just me. How about something like PQ (92129)? Something with an upper and lower end range that will be indicative for alot of different data points (350k-1.2mil).
My point wasnt that there arnt enough people with downs. I know there are. The accumulated wealth in San Diego is staggering, and I am from Santa Barbara (land were MM homes would be 1.1mil). I dont doubt AT ALL the presence of homes being purchased now with huge downs. Bet I could find a few with 30-40% down.
My question is more WHERE is the money coming from. You have 20% down. But HOW????
I have a feeling that it breaks down into age groups. People my age dont save. They dont know how to. My roommates idea of saving is the change from his pockets being dumped into a bottle. My office mate lives paycheck to paycheck, but lives at home with no rent ($800 purses will do that). Both want houses. So the only answer I have here is PARENTS and 401k/gov. Are there good people saving like mad? DUH, but it is hard when you are 25 making 35k year.
Those in their 30’s or so have rode out the bubble saving like mad to try to get into the game. They have promotions and raises that are more than 2-4%/yr and are finally “becoming someone”. They worked hard, saved hard, and suddenly their 5% became 10% when prices fell 20%. Raid the 401k, and their is your 20%
Those older than that prob have been saving for years, and sold a house the doubled or trippeled in value. No prob.
My thought process lies more along these lines:
Right now home builders stocks are going up, even though the buisness is the worst in decades if EVER. HOV is up 50% this year! Seems dumb huh? The idea is that itll all rebound soon, and prices look good compared to the past, so buy the dip cause it is up up up starting in Q3.
I get alot of the same idea from those I know. Prices rose longer than the collective memory of our society, so they dont understand a dip. NAR propaganda tells them it is a temporary crisis, so they pile in cause they finally can and dont want to miss their chance. To quote an early 2007 buyer “How long do you think this is gonna last?”
The problem is that we are in Housing bubble act 2. The fed is killing the dollar to get rates down to avoid depression #2. This will change. Rates will go back up. Hell, this all started cause rates went up and people couldnt refi 1% rates anymore. So when inflation eventually gets addressed, and the gov stops inflating the economy with 500billion/yr war spending the music stops all over again.
So I get the feeling that we are in a minibubble. A boomlet, a aftershock. It is a short period of time when buying looks good compared to the past, with todays rates. I dont think itll hold. To me, we are in 1993. We still have 3 years of economic junk to work through, even if we are not in recession during those years, and prices wont be going up till the junk is gone, even if they arnt going down much more either.
So can people make sound economic choices to buy today with 20+% downs. Yes. But my money is riding on the idea that I can wait till 2011, let the economic junk pass me by as a renter saving, and then buy at 10% off today’s prices, but with 2011’s dollar. Inflation takes a long time to work at 2-4% wage growth.
