Advice for first time buyer, thanks.

[SDLaw06]

Hi, I’m new to the forum and was wondering if I could get everyone’s advice. I’m a first time home buyer and am eligible for a VA home loan. I’m kind of holding off on buying right now to see how things play out becuase from my research the amrket has kind of stalled. I’ve been reading some posts and this seems to be the general consensus on the forum. Should I continue to wait until something happens one way or the other, should I jump in as soon as possible?

I really like North county and am hoping you guys can point me in a good direction up there, maybe recommend some good agents and/or areas to look in.

My wife and I have been looking to get a condo, simply because I’m not sure we can afford a house. I’m not really interested in the exotic mortgages, VA loan is about as exotic as I get! However, I see condo prices dropping much faster than homes, so that kind of scares me off.

Any advice to first time married couple buyer would be much appreciated!!!

[SD Realtor]

Hi SDLaw06 –

As a realtor in San Diego here are some of my observations based on experience:

1 – Yes the condo market at least in many areas I have worked in is depreciating more then single family homes.

2 – I have seen depreciation across the board for low and mid level priced condos across the county. For north county I have had listings in complexes in Carlsbad, Oceanside, Encinitas and Solana Beach. I have seen depreciation in all of those spots. Smart money says this will continue.

3 – Don’t sweat renting for a awhile longer. Even if it is up to a few years. Really it is not that bad. Even if you can wait for a year that would be better then buying now.

4 – Think of it like this, if you buy NOW, then the probability of your condo depreciating 7% verses appreciating 7% is much better then 50/50.

5 – A 7% depreciation on a 300k condo is 21K!!

6 – The VA loan program will still be there in a year or even 3 loans. It is a great program and if you are qualified then DEFINITELY use it.

7 – You could see a double whammy. Prices may depreciate AND you may see a DROP in interest rates. Suppose we come into a recession next year (which is NOT a wild idea). It “could” be possible that prices depreciate AND rates rise a bit more but then drop. How happy would you be if you waited?

Again these are only guesses but when you add them up it may REALLY strengthen your buying power. Conversely NOBODY, not even NAR or other rose tinted glasses pundits are predicting rampant APPRECIATION. So virtually everyone agrees that the market will NOT appreciate and we are all arguing about how much it will depreciate.

So at least to me waiting is the smart move….

**********

More thoughts… Don’t be afraid to talk to several Realtors. Also don’t be afraid to have a realtor send you listings for a few months. I have some people who I have been sending listings to for almost 2 years now! That way they can track the market in thier favorite areas. You can do the same.
**********

Finally SDLaw06, I had posted a few tips for buyers in a previous post. Rather then repeat them if you like shoot me an email and I will send them to you, [email protected].

Be patient and you guys will do well… I think everyone on this site will tell you the same thing.

[SDLaw06]

Thanks SD Realtor, I have read your tips for buyers. It was great info!!!

I just graduated law school, taking the bar in a week, so I have time to wait for at least 6 more months before we are even close to ready to buy. I’m just trying to get as much research done as possible so I’m as educated as I can be about the market.

[powayseller]

I owned a home in San Diego since 2000, and I sold it in January 2006. My family, including 3 kids, is renting a house until the market stops depreciating. I am going to wait for signs that it turns back up. Renting has many advantages to owning a home, and in a depreciating market, why would I buy?

[SDLaw06]

I just feel like i’m throwing money away renting, but I guess I would be doing the same thing with a depreciating home.

[an]

Even if the market flat line like some optimist predicted, you’re still throwing your money away if you buy. You might not throw it away to the landlord, but you’ll be throwing it to the bank. Interest does not build equity, so it makes so difference. If rent is much cheaper than interest on a comparable home, even after all the tax deductions, I think it’s a no brainer. I’m going to be a first time home buy as well when the market makes more sense. In the mean time, I can rent and live very comfortable in a 1600+sq-ft townhouse for the same price as a tiny 1-2 bedroom condo.

[lindismith]

check out this thread too:

http://piggington.com/buy_or_dont_buy

[an]

On a side note, sdrealtor, can you post your contact info so I can keep in contact with you. That way, when it’s the right time for me to buy, I can potentially use your service? Thanks.

[SD Realtor]

Hi guys –

Please note there are two San Diego Realtors who post here (or maybe more) with similar handles.

Mine is SD Realtor. The other is sdrealtor (and I enjoy those posts)

My contact information is [email protected] and my brokerage is on line at http://www.1800grrealty.com.

SDLaw – Like you I am not thrilled about renting. However not paying property tax and insurance is not a bad thing. Again if you run the numbers I think you will see that in the long run it will pan out better. Usually the people who do well in this world are the ones who are patient and analyze things.

My wife is ALL OVER me to buy a home even though she acknowledges a downturn in the market. Every myopic article about a soft landing, or a “flattening out of value” gets thrown in my face. Her argument is that even if we buy and there is a depreciation it will come back and we will be better off in the long run.

She is slowly starting to see some light, that if we dont buy we will not “miss out” on a highly appreciating market. Also that we could SUBSTANTIALLY increase our purchasing power if things go as many predict.

The public has been subject to this barrage of real estate news and rhetoric for the past 15 years so it is going to take time for people to realize that it is “okay” to wait and that there are other paths to wealth.

In the meantime keep track of the market, learn about the area you want and just watch it.

[powayseller]

My friends just purchased a home because the wife was tired of renting. They had sold their other home in 2003, and rented to wait out the housing bubble. I told the husband that I predicted a drop of 50% by 2010, and he was surprised at my gloom. Anyway, she got tired of renting. I don’t know all the reasons, only what she told me: she wanted her own place, so she could paint the walls and get settled in. SD Realtor, I think this couple would have been better off just painting the rental house. I am thinking of spending a few grand on painting my rental, because I have a 2 year lease. What is it about the wives? I was more eager to rent than my husband, but I am the one who got the 15 year mortgage in Phoenix, and who really wanted to sell. To me, financial security is much much more important than who own the house that I live in.

[speedingpullet]

Sage advice SD Realtor.

SDLaw06:
I’m also going to be a first time buyer within the next year, but from the good advice I’ve gleaned from reading Pigginton’s I won’t be rushing into it.

OK, I’m in LA not SD, and the bubble doesn’t seem to have burst here just yet, but it will. It’s still more cost effective to rent and commute 30 miles a day than it is to try and buy nearer to work.

As SD Realtor says, learn about your area and watch it for a while: I’ve saved about 50 homes on ZipRealty – some are affordable now, some very unaffordable- but I’m going to track them for the next year and see what happens.

Just like your wife, we don’t want to be renters forever. What we’ve done is put a little bit aside every month into a high-interest account, so that when the time comes we’ll be able to afford a 20+% deposit, points, closing and moving fees and to swing a 15 fixed on a house that’s affordable.

Resist the hype 🙂

We had three different Realtor businesses touting thier wares on our street on sunday (everything from flags planted on our lawn to ice cream trucks giving away popsicles with a free Realtors card…).
There’s a sea-change going on, even here in LaLaLand.

Up until a few weeks ago my husband and I felt like fools for not buying in 2000, when we could just about afford it. Now, looking at some of the things our co-workers have had to do to get on the housing ladder, we’re glad we were late to the party.

Anyway, as always, I’m light on data but heavy on anecdote 😉

[waiting hawk]

Advice for first time buyer, thanks:
Easy DONT BUY!!

If you have to buy, go buy a foreclosure and try to deal with the bank directly to cut out a realtor (nothing against em. SD) and have the bank pay all closing cost if you finance through them. Try to make a deal best as possible.

[SD Realtor]

waiting hawk no offense taken!

I completely agree with your points. The best thing people can do while we are all waiting is to educate yourself and learn about alternatives.

I am going to post something on this.

[sdduuuude]

Two thougths for you – a stalled real estate market is not like a stalled car, which just sits there. It is more like a stalled airplane, which … well … you know.

Also, old business people like to say “You make as much money when you buy as when you sell.” This means – even though you really, really want to go house shopping (It is sooooo much fun, isn’t it?), don’t do it. Now is the time to build that down payment for a later purchase. This is a bad, bad, time to buy.

Don’t worry about rates rising. For the same monthly payment, it is better to buy a cheaper house with a higher rate.

[SDLaw06]

Thanks for the advice everyone, I’ll keep watching the market and saving for a down payment, even if I don’t need one with the VA loan.

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