[quote=Russell]Temeculaguy,
If you are right about the bottom in Temecula, you might want to remember this thread? For practical purposes the “bottom” is when net benefit from a well negotiated purchase approximates optimal benefits compared to other entry points for the same target property.
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Thanks for digging this one up, it was fun to read and I researched some of the properties and comps for the places we talked about. Matt was right about the mid level paloma property hitting 160k, not that exact one but similars and model matches did. This caused me to look up my first house in town, which was similar and in a similar neighborhood. I couldn’t find a model match listed or recently sold so I used my old next door neighbors house and it was telling. He has a 1850 sq ft sfr on a big lot that he paid 165k for in 1992. Interest rates were something like 8% back then (I went to a website with historical interest rates and it said 9% but some reason I remember 8%, maybe that was with points, I was young and dumb, I don’t remember). He had a VA zero down loan. I found a bunch of model matches and recent closings for 200-220.
Just for fun, I ran the P&I on 165 at 8% and it is 1,210. Then I ran 220 at 5% and it turns out it is lower, 1,181. I’m guessing at the rate he had but it’s in the wheelhouse of what it was and that 220 is on the high side or the asking price side. The point is, the payment is 1992, not in inflation adjusted dollars but in real dollars, my hourly pay is almost 5 times what is was when I bought that first house and I could buy it today for the same payment, you only need about about 65k income to qualify for that house and it is a decent sized sfr. In those days I bought that house because I could afford it and it wasn’t much more than I was paying in rent, that’s what most people do, they aren’t like us, they don’t read global economic analysis, they think about it for ten minutes and if it makes sense to them, they do it, affordability matters. That is why I called bottom for this area.
