cannot wait anymore, buying a condo now instead of a house at 4S Ranch, and wait to buy a bigger house later?

[wantobuy]

Folks, wife pressure is high. What do you think about our plan to buy a 3-bed condo at about $380K in Rancho Bernardo instead of buying a house in 4S or Del Sur or Carmel Valley at $750K?

Our reasons:

1) 0% down, 6.75% rate on $380k will make the monthly payment after tax benefit the same as the $2200 rent we’re paying now.

2) if more price reduction is coming, say 10%, we would lose $38K on paper instead of $75K if we bought at 4S.

3) The problem is that we can afford 4S and wife wants to own now after long waiting. If we buy a condo now in RB now, wife pressure will be gone, and we can wait for the good time to buy at 4S or Del Sure at maybe $630K instead of $750K, maybe in a year or two years?

4) when we buy a new bigger house later at a cheaper price which means the condo’s value is also reduced, we can keep the condo and rent it out, no real loss, only paper money loss. If we ride it out, we’ll be doing fine with the condo in the long run in RB.

Any comments on this strategy? any problems you see, any pitfalls?

[SD Realtor]

Which complex in RB? I am curious as I am real familiar with many of them….

*********

I think that condos will depreciate just as much if not more then detached homes.

I can seriously relate to the pressure so I understand. At least you will not have as much to lose equity wise. Just understand that you will not be selling that condo soon without a loss. So what you are doing is trading the rent payment for an interest payment which is not bad. So after you ran the numbers your mortgage, HOA and property tax covered your current rent?

I will not sit here and scrub all the numbers with you, however I do want to make sure you are happy with them.

Potential pitfalls include the depreciation on the condo may exceed the detached home percentage wise. Also while condo living is better then home living, you still share walls and are subject to HOA and close proximity to others. If the housing market depreciation gets delayed or slowed down by external factors that price point for 4S detached homes may not happen as fast as you like. Pray that the wife pressure doesn’t kick in earlier then you want to get out of the condo and into the home.

Other people may bash you harder for buying at all. Hang in there and do what makes your life easier and more comfortable…

After all, if you default on the condo the FHA will bail you out!!

SD Realtor

[mgubnyc1]

WAIT!!!!!!!!!!!!!!!!!! DO NOT PULL THAT TRIGGER! PRICES ARE STILL COMING DOWN, WHAT THE HELL IS WRONG WITH YOU? DO YOU NOT SEE PRICES ARE DECLINING??? tell your wife to fly a kite, you would be plain flat out stupid to buy anything yet, wait another 3 to 5 months at least you could save 50K!!

I want my cut!

[SD Realtor]

yep… that is definitely the kind of response I figured you would get.

expect many more like that.

SD Realtor

[wantobuy]

a friend passed by 11353 Avenida De Los Lobos #B.
any comments?

[JWM in SD]

Re-attach your balls…just a suggestion.

[hipmatt]

I think its a really bad plan.

[wantobuy]

seriously, what would be the right price point you think to buy a 3bed 2 bath in RB (an employment center in SD)?

[TheBreeze]

Do it. With a 0% down loan you’ve essentially got a no-risk option on the condo. If it goes down, walk away. If it somehow goes up, you can sell it and keep the profits. Plus, if you decide to walk away, you can stop paying the mortgage and it will probably take several months before the bank actually evicts you (free housing, just like in the Army!) There is also the possibility that the federal government will refinance you at a lower rate in the future. Not to mention that you get the wife off your back. I can’t see a lot of down side here.

Actually, you should talk to a lawyer before you buy to see if you would have any liability should you choose to walk away in a year or two. Good luck!

[JWM in SD]

You don’t seem to grasp what might be happening with the economy right now. The right price point is what a similar place would rent for.

Wait at least 2 to 3 years and even then be very careful because the economy may be very different than it has been for the past several years.

You need the following:

Cash Savings
A high paying job not tied to the REIC
No Debt

These might sound very simple, but may be hard to achieve in the next few years.

[mgubnyc1]

I WAS SERIOUS, if anyone gives you a number, there full of shit, no one knows!! all we know for sure is that prices in San Diego are coming down, how far how quick, you could only speculate. the point is prices are on a downward trend.

if you want to pay thousands more then you would 5 months from now then go ahead.

AMAZING even as prices are coming down people want to buy, for some reason they still think ” if i don’t buy now I’ll never be able to”

hold on there are so many homes and condo’s going into repo, in a 3 to 6 months prices will only be lower in San Diego, especially condo’s & THATS A FACT!!!

[wantobuy]

JWM, we actually meet the 3 conditions you stated. we can afford a 4S house with 30 fixed 20% down payment. It’s only me who’s against buying a 4S house now. So that’s why as a compromise, we’re thinking to buy a condo. Again, the math shows that our rent is about the same as the would-be monthly mortgage of a $380K condo. We can afford 20% down payment. But just to make buying a condo comparable to renting, we use 0% down.

[Arraya]

If you and your wife are ok with throwing lots of money away just go ahead and buy the SFR. Buying something that you do not want to spend a lot of time in will just increase the money wasted and possibly ruin your future plans. I’m sure that condo will not cash flow out if rented. You need to check your math…

[JWM in SD]

But you will have accepted the principal risk of holding a likely depreciating asset for several years.

I’m sorry to have to put is this way: There is absolutely no reason the buy anything right now. NONE. Not when you can rent a comparably desired house in the interim and bank the savings…which you will need given where the economy is headed.

Like I said earlier. Take your balls out of her purse and put them back where they belong. Then tell her NO.

I had to do it a year ago. It can be done.

[JWM in SD]

If you want to see where you are headed listen this from the HP blog:

http://housingpanic.blogspot.com/

Listen to the audio excerpt from the Dr. Laura Show. A female FB calls in about how she and her husband were fighting over a house they can’t afford because the interest rate is reseting.

Orginally From Seattle Bubble:

If you can’t listen to the audio, here’s a partial transcript:

Ryan: When my husband comes home from work today—if he comes home, ’cause he’s calling and saying he’s not going to come home—I’m wondering how, or what to say to him. He had like, a flip out last night that continued into the morning. I actually had to leave with our kids because he was actually breaking things. This is not typical behavior of his at all, and I’m just really nervous—

Dr. Laura: Was he drinking?

Ryan: He doesn’t drink, no.

Dr. Laura: What do you think caused this big flip out?

Ryan: Well, we bought a house two years ago, and ever since we bought the house it’s always been “we bought it because you wanted it,” and every time we have financial struggles, it’s my fault because we bought a house that he said we shouldn’t buy, so… that’s… I guess the stresses of the house are getting more intense because our interest is going up so it’s been sort of like the past month I’ve been hearing him talk a lot about that.

Dr. Laura: Well, wait a minute. You mean, you bought a house when you really couldn’t afford it?

Ryan: There you go. [nervous laugh] Exactly. Exactly. And I kinda pushed to buy the house because I thought we could, even though I really should have listened to him…

You should take the time to listen to the entire three-and-a-half minute call (player below). Due to the format of Dr. Laura’s show, we don’t know where Ryan was calling from, but thanks to your friendly neighborhood housing bubble, situations like this are playing out across the country with increasing frequency.

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