AN, I get it and I agree. I did the same thing for many years. But now I am curious if there aren’t some localized bubbles, or perhaps just bulges. And both you and FLU gave some great advice. It is appreciated.
Astrid, thanks for sharing, even you don’t care to win my respect because I’ve earned your scarlet letter you got some street cred from the other readers. I remember that case very well and I am sorry that your family suffered so much. It’s not a big town, seemed everyone knew someone directly or indirectly who was affected. I also used that case as in an argument when someone was telling me “non violent” criminals shouldn’t be incarcerated. They hurt a lot of people, their punishment still never repaired the damage.
Flyer has a point, if there is a recession and it seems like we may be due for one as far as the calendar goes certain areas fall in price more than others. I’m not sure the stars will align again the same way they did last time. I also see the prices at about 2006 levels, which was way overpriced in 2006 but in 2019 I’m not so sure. Just borrow no more than about 3X your gross household income and it won’t matter if your value goes up or down if you can ride it out. The trouble with just starting out is that is difficult to time the market because if prices tank, then jobs, income and credit will too. Young couples need all three. A nice starter SFR in Tem/Mur can be had for 500k, some starters for less. In Menifee closer to 400k. If your household income is 150k gross, spending 400-500k isn’t nuts. You aren’t going to get a giant house or one on land or in the best neighborhood but when you are starting out it works and in a decade you move up when your income and equity move up. That has backfired on me in the past but waiting it out always solved the problem (with 06 as the exception).
Or use a rent valuation, if the cost of your rent is let’s say 2500 for an SFR, if you can buy it for 375 (150x) then do it, you are just fixing your rent. I think rents in my hood are about 3k and buying is like 600k so to me that’s too much, should be closer to 500 to buy. So I personally think it’s too high right now but not like it was in 06, it’s no double the true value. Also the tax cut hurt homeowners, especially in CA. I think the market may feel it moving forward and I think SALT will be reinstated in the future. My state income tax is over 10k, so my property taxes are essentially non deductible. If I didn’t already own I’d be slightly more hesitant to do so. I’m also less inclined to move up because moving makes my property taxes go up and the increase will not be deductible. Prices can be affected by a number of factors, tax deduction used to be a big factor for many. I’m not so sure that’s the case to the extent that it once was.
