housing a sucker’s bet now?

[SD Realtor]

Housing is no more of a suckers bet then it was yesterday or last week or month. As discussed over and over again, you need to analyze why you are buying a home and where you are buying a home. Regional differences are quite staggering. If you are purchasing a property as an investment then as UR said, simply run your numbers to check out the cap rate. It is arguable that 8% is a good cap rate, however in this environment of today I would take it in a heartbeat. As pointed out by others whether that will be considered good a few years from now is an unknown.

If you are considering the home as your primary residence then that is another question altogether. If you are asking, “have we hit bottom yet” the simple answer is no, not even close.

If you are basing a decision to buy a home on proximity to market bottom then sign a multi-year lease and ignore the market another few years. How much risk have we already bled out of the market depends on where you are looking and what type of home you are looking for. Over the past year we have been given a glimpse of what sort of government backed measures will be taken to subsidize the housing market. Those efforts will indeed begin to take effect and we will ABSOLUTELY see additional steps taken. I absolutely expect a foreclosure moratorium to be put in place sometime in early 2009. Whether it will be 90 days or longer is the only question. This will be put in place while another TARP type of program will be created only this time the goal will not be to bail out lenders and businesses but more in line with racheting the cost of ownership down for the current homeowner. The goal will be to prevent foreclosures.

This will not halt the secular depreciation trend but it will indeed stem the foreclosure flow. This will also create a relatively unbalanced market where people who get to stay in thier homes will effectively be lowering comps BUT those comps will never be realized by the open market of true resales. The result will be a Japan style real estate market that should be a slow moving beast for several years.

My hope is that I am wrong. I am not saying foreclosures or distressed properties will halt. However there will indeed be a reduction, more then people care to admit. Rather then a huge second wave I think it will be more like a long drawn out rising tide, slowing and inexhaustibly washing in. Again, some markets have already hit a point where alot of risk has been washed out. What will be particularly interesting to me will be the dilema of the distressed homes in the 600k-2M range. My hope is that nothing will happen to these homes.

Adam

[ibjames]

[quote=peterb]I will add my usual comment of caution in this market. Take a quick read of this guys analysis and see if you buy his logic:

http://www.howestreet.com/articles/index.php?article_id=7871

Remember, if you’re bottom fishing, RE does not turn on a dime. So you’re safe in waiting for some reversal indicators before you buy. But, if you really want to own a house and you feel quite confident that you will keep your job in the next few years….prices are lower than they’ve been in 5 years, etc…[/quote]

psssshffft.. who’s bottom fishing.. I’m “makes sense” fishing..

[ibjames]

[quote=peterb]I will add my usual comment of caution in this market. Take a quick read of this guys analysis and see if you buy his logic:

http://www.howestreet.com/articles/index.php?article_id=7871

Remember, if you’re bottom fishing, RE does not turn on a dime. So you’re safe in waiting for some reversal indicators before you buy. But, if you really want to own a house and you feel quite confident that you will keep your job in the next few years….prices are lower than they’ve been in 5 years, etc…[/quote]

psssshffft.. who’s bottom fishing.. I’m “makes sense” fishing..

[ibjames]

[quote=peterb]I will add my usual comment of caution in this market. Take a quick read of this guys analysis and see if you buy his logic:

http://www.howestreet.com/articles/index.php?article_id=7871

Remember, if you’re bottom fishing, RE does not turn on a dime. So you’re safe in waiting for some reversal indicators before you buy. But, if you really want to own a house and you feel quite confident that you will keep your job in the next few years….prices are lower than they’ve been in 5 years, etc…[/quote]

psssshffft.. who’s bottom fishing.. I’m “makes sense” fishing..

[ibjames]

[quote=peterb]I will add my usual comment of caution in this market. Take a quick read of this guys analysis and see if you buy his logic:

http://www.howestreet.com/articles/index.php?article_id=7871

Remember, if you’re bottom fishing, RE does not turn on a dime. So you’re safe in waiting for some reversal indicators before you buy. But, if you really want to own a house and you feel quite confident that you will keep your job in the next few years….prices are lower than they’ve been in 5 years, etc…[/quote]

psssshffft.. who’s bottom fishing.. I’m “makes sense” fishing..

[ibjames]

[quote=peterb]I will add my usual comment of caution in this market. Take a quick read of this guys analysis and see if you buy his logic:

http://www.howestreet.com/articles/index.php?article_id=7871

Remember, if you’re bottom fishing, RE does not turn on a dime. So you’re safe in waiting for some reversal indicators before you buy. But, if you really want to own a house and you feel quite confident that you will keep your job in the next few years….prices are lower than they’ve been in 5 years, etc…[/quote]

psssshffft.. who’s bottom fishing.. I’m “makes sense” fishing..

[NotCranky]

TG,
Just curious, did you put in an average bid compared to comps or an agressive bid compared to comps? If you recall I got blasted many a time for suggesting Temecula in this timeframe and agressive bidding.How is market time going for what you want?
No, I wasn’t suggesting it would be a guaranteed bottom for every house out there that could be obtained in this manner.

[NotCranky]

TG,
Just curious, did you put in an average bid compared to comps or an agressive bid compared to comps? If you recall I got blasted many a time for suggesting Temecula in this timeframe and agressive bidding.How is market time going for what you want?
No, I wasn’t suggesting it would be a guaranteed bottom for every house out there that could be obtained in this manner.

[NotCranky]

TG,
Just curious, did you put in an average bid compared to comps or an agressive bid compared to comps? If you recall I got blasted many a time for suggesting Temecula in this timeframe and agressive bidding.How is market time going for what you want?
No, I wasn’t suggesting it would be a guaranteed bottom for every house out there that could be obtained in this manner.

[NotCranky]

TG,
Just curious, did you put in an average bid compared to comps or an agressive bid compared to comps? If you recall I got blasted many a time for suggesting Temecula in this timeframe and agressive bidding.How is market time going for what you want?
No, I wasn’t suggesting it would be a guaranteed bottom for every house out there that could be obtained in this manner.

[NotCranky]

TG,
Just curious, did you put in an average bid compared to comps or an agressive bid compared to comps? If you recall I got blasted many a time for suggesting Temecula in this timeframe and agressive bidding.How is market time going for what you want?
No, I wasn’t suggesting it would be a guaranteed bottom for every house out there that could be obtained in this manner.

[ibjames]

[quote=temeculaguy]scardey, you need to evaluate fundamentals, not stories of 1920 or 2006. Just figure out what you pay in rent, what it would cost you to buy and compare the difference after taxes. When they are almost a tie, you buy and you trade off the maintenance for the rent control. Primary houses are not an investment, look at it as a shelter that you must pay for one way or another.

I put in a bid recently and will find out probably by the close of business tomorrow if I am in escrow. My scenario is a little different because i am renting something smaller than I want because the lease terms were beneficial but I just ran the numbers to compare. Here they are

1600 sq ft rental 1500/mo 3/2/ 2 car
the purchase offer I made is 3000 sq ft 5/4/3 car 1600 mo P%I to buy if I put nothing down (i will put money down but that money costs me profit/interest elsewhere so I use 0 down to do the math). It may be as high as 1750, interest rates have been all over the map day to day.

There will be taxes, insurance, hoa and other costs but they are equal to the tax deduction so I compare the pure 0 down principal and interest using 30 fixed and make my comparison. It isn’t exactly a wash, i’m paying $100 to $200 more to buy but it is much larger place and rent would have been 2k+ for that one had I chose to rent a larger place. I could buy my exact rental for $1100 P&I. In both cases, it’s cheaper to buy than to rent. You need to run your numbers, that is what is relevent, not historical or other parts of the country, none of that matter, just your numbers matter.

Run your own numbers using this formula or post your rent and your purchse price and I’ll tell you if it makes sense, please note if your rental and your purchse are not comparable because that matters. Stop thinking of houses as an investment, purchasing merely locks your rent, nothing more. If you want to invest in r/e, then you buy rental property. [/quote]

can you make an excel doc with this? I can host it

[ibjames]

[quote=temeculaguy]scardey, you need to evaluate fundamentals, not stories of 1920 or 2006. Just figure out what you pay in rent, what it would cost you to buy and compare the difference after taxes. When they are almost a tie, you buy and you trade off the maintenance for the rent control. Primary houses are not an investment, look at it as a shelter that you must pay for one way or another.

I put in a bid recently and will find out probably by the close of business tomorrow if I am in escrow. My scenario is a little different because i am renting something smaller than I want because the lease terms were beneficial but I just ran the numbers to compare. Here they are

1600 sq ft rental 1500/mo 3/2/ 2 car
the purchase offer I made is 3000 sq ft 5/4/3 car 1600 mo P%I to buy if I put nothing down (i will put money down but that money costs me profit/interest elsewhere so I use 0 down to do the math). It may be as high as 1750, interest rates have been all over the map day to day.

There will be taxes, insurance, hoa and other costs but they are equal to the tax deduction so I compare the pure 0 down principal and interest using 30 fixed and make my comparison. It isn’t exactly a wash, i’m paying $100 to $200 more to buy but it is much larger place and rent would have been 2k+ for that one had I chose to rent a larger place. I could buy my exact rental for $1100 P&I. In both cases, it’s cheaper to buy than to rent. You need to run your numbers, that is what is relevent, not historical or other parts of the country, none of that matter, just your numbers matter.

Run your own numbers using this formula or post your rent and your purchse price and I’ll tell you if it makes sense, please note if your rental and your purchse are not comparable because that matters. Stop thinking of houses as an investment, purchasing merely locks your rent, nothing more. If you want to invest in r/e, then you buy rental property. [/quote]

can you make an excel doc with this? I can host it

[ibjames]

[quote=temeculaguy]scardey, you need to evaluate fundamentals, not stories of 1920 or 2006. Just figure out what you pay in rent, what it would cost you to buy and compare the difference after taxes. When they are almost a tie, you buy and you trade off the maintenance for the rent control. Primary houses are not an investment, look at it as a shelter that you must pay for one way or another.

I put in a bid recently and will find out probably by the close of business tomorrow if I am in escrow. My scenario is a little different because i am renting something smaller than I want because the lease terms were beneficial but I just ran the numbers to compare. Here they are

1600 sq ft rental 1500/mo 3/2/ 2 car
the purchase offer I made is 3000 sq ft 5/4/3 car 1600 mo P%I to buy if I put nothing down (i will put money down but that money costs me profit/interest elsewhere so I use 0 down to do the math). It may be as high as 1750, interest rates have been all over the map day to day.

There will be taxes, insurance, hoa and other costs but they are equal to the tax deduction so I compare the pure 0 down principal and interest using 30 fixed and make my comparison. It isn’t exactly a wash, i’m paying $100 to $200 more to buy but it is much larger place and rent would have been 2k+ for that one had I chose to rent a larger place. I could buy my exact rental for $1100 P&I. In both cases, it’s cheaper to buy than to rent. You need to run your numbers, that is what is relevent, not historical or other parts of the country, none of that matter, just your numbers matter.

Run your own numbers using this formula or post your rent and your purchse price and I’ll tell you if it makes sense, please note if your rental and your purchse are not comparable because that matters. Stop thinking of houses as an investment, purchasing merely locks your rent, nothing more. If you want to invest in r/e, then you buy rental property. [/quote]

can you make an excel doc with this? I can host it

[ibjames]

[quote=temeculaguy]scardey, you need to evaluate fundamentals, not stories of 1920 or 2006. Just figure out what you pay in rent, what it would cost you to buy and compare the difference after taxes. When they are almost a tie, you buy and you trade off the maintenance for the rent control. Primary houses are not an investment, look at it as a shelter that you must pay for one way or another.

I put in a bid recently and will find out probably by the close of business tomorrow if I am in escrow. My scenario is a little different because i am renting something smaller than I want because the lease terms were beneficial but I just ran the numbers to compare. Here they are

1600 sq ft rental 1500/mo 3/2/ 2 car
the purchase offer I made is 3000 sq ft 5/4/3 car 1600 mo P%I to buy if I put nothing down (i will put money down but that money costs me profit/interest elsewhere so I use 0 down to do the math). It may be as high as 1750, interest rates have been all over the map day to day.

There will be taxes, insurance, hoa and other costs but they are equal to the tax deduction so I compare the pure 0 down principal and interest using 30 fixed and make my comparison. It isn’t exactly a wash, i’m paying $100 to $200 more to buy but it is much larger place and rent would have been 2k+ for that one had I chose to rent a larger place. I could buy my exact rental for $1100 P&I. In both cases, it’s cheaper to buy than to rent. You need to run your numbers, that is what is relevent, not historical or other parts of the country, none of that matter, just your numbers matter.

Run your own numbers using this formula or post your rent and your purchse price and I’ll tell you if it makes sense, please note if your rental and your purchse are not comparable because that matters. Stop thinking of houses as an investment, purchasing merely locks your rent, nothing more. If you want to invest in r/e, then you buy rental property. [/quote]

can you make an excel doc with this? I can host it

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