[quote=joec][quote=bewildering]I like the second graph in the “shambling towards affordability” because it takes in to account rental payments.
We recently bought a house in Clairemont, and that decision was easy. We looked at the cost of a 3/2 rental in our area of Clairemont and found the asking price was around $2400. Obviously less for the worse areas/crappy houses, more for better areas/better houses. And the chances of actually getting a place were low because of the number of applicants, and our dog. Our previous rental in Clairemont, a 2/1 for $1800, had 17 applicants within an hour of going on Craigslist.
You can get a 3/2 house with 10% down for around 500,000. Even if interest rates go to 5% or 6% the financial decision is easy. Just use the New York Times rent/buy calculator. Even if house prices and rents stay flat you are ahead after 3* years
As long as there is demand for rentals I do not see a big fall in prices. Rents just keep climbing higher, and San Diego rent is cheaper than LA, OC or SF.[/quote]
I agree completely.
I’ve mentioned this multiple times as well. As long as rent prices don’t drop down, I see very little chance for houses to drop down much neither…Also, a lot of people here don’t care that much what happens to the national markets. Real estate has always been local and places like SF, bay area, LA is going to have pretty sticky prices.
Unlike in the 2005-2008 period, rentals were a lot cheaper in a lot of areas back then compared to what the houses were selling for so it had to revert to the mean and overshot and crashed. If you can rent the exact same place for much cheaper than buying, you’ll do that and so will other people.
Sure, it’s tough to get a loan for some people, but if people re-adjust what they can afford, it’s hard to make a case to not buy if buying is cheaper than renting…as some articles report in some areas assuming 20% down, decent mortgage rate now, etc…
I agree that if you just need a place, sometimes buying your primary residence to live in and not having to worry about it is such a load off your mind…(assuming the numbers work).
I (and many others) use to read as much about housing news/blogs daily and go to open houses, etc…such a pain and you’re free of all that after you buy. So nice.[/quote]
Also a great post, joec! Today’s first and second timers don’t seem to making buying decisions anymore based upon “need” or life stage like previous generations. Many of them seem to have to ponder the issue first and “crunch the numbers” into oblivion … some for YEARS! Overthinking the homebuying process to the ground. While these prospective buyers were engaged in looky-looing in recent years, all the while continuing to whine about rising prices, they were watching the good ones sell overnight right in front of their eyes (to people like “bewildering” who could make an “easy decision”) and mortgage rates rose while they were asleep at the switch.
Entire swaths of communities in San Diego County are full of owners who do not make their living from a W-2 job. Most of these owners could care less about what happens in the “greater economy.” You are correct that RE values and desirability are entirely local. It’s always been that way. ESPecially in coastal communities of CA coastal counties. This will never change. Buyers must accept this and deal with the current inventory as it is and the owners behind that inventory in order to consummate a deal.
“…if people re-adjust what they can afford…” Bingo, joec. Novice buyers need to adjust their expectations of the type of home and they and the location they want to REALITY. If the diehard homebuying holdout crowd continues on with their pollyanna mindset, they will still be dealing with their landlord next year. It’s as simple as that. It’s NOT “tough to qualify” for buyers who attempt to borrow what they can afford to borrow and are qualified to borrow. It is when they feel they must have a better home in a better area than what they can qualify for, that they create their own “stalemate” with the market and won’t end up with anything except possibly their lease renewed.
For the life of me, I don’t understand why SD resident parents of minor children who won’t be transferring with their jobs in the coming years, can qualify for a mortgage and have a down payment elect to sit on the sidelines indefinitely instead of purchasing for their families a single family home with a yard under this fairly balanced market and great prevailing fixed interest rates! This phenomenon is just astounding to me. What are they waiting for?
