how low can it really go?

[CA renter]

Agree with TG.

If you are in a comfortable position to buy, and find a wonderful house that you can live in for the rest of your life, have at it!

However…consider that rents might go down, neighborhoods might deteriorate further, the economy could collapse, etc.

If you are looking at 2X annual income, and have a nice cash cushion (minimum 6-12 months, AFTER all purchasing costs), and you have a relatively safe job or highly-desired job skills, you could certainly consider buying when buying is cheaper than reasonable rents, IMHO.

Good luck with whatever you choose to do! 🙂

[temeculaguy]

Thanks for the support Ca renter, i was certain i would incite some bashing with my position. I made some assumptions about pd and the original post. Pd has posted in the past and from those posts I assume he/she works for the public defender’s office or alternate public defenders office, either way 100k is a fair assumption at income, which is a very stable and recession proof job not to mention the pension. A 200k purchase with a down payment puts the mortgage in the 10-20% of income bracket, which is laughable that it would even cause heartache. As long as you think of it as a living expense and not an investment, who cares what the appeciation is since it leaves so much disposable income that other true investments can be pursued.

The other issue I want to address is the fear that low prices will lead to neighborhood collapse. I think this is a flawed argument. I have driven by many of the screaming deals that I didn’t act on and I notice that these buyers of fire sale priced homes have the funds to actually improve these properties and improve the neighborhood. I think the credit crunch is having the reverse effect that people feared. Knuckleheads that have a penchant for yard appliances, monster trucks and free range pit bulls cannot buy at half the price but they could buy in 2005, those that can buy now have more disposable income than their counterparts who bought at peak. The fear that throngs of dirtbags are waiting in the wings to buy at lower prices thus far is unsubstantiated and landscaping, rennovation and improvements are underway at the bargain bought homes. 2008 buyers, or “reset buyers” are the best thing to happen to some of these streets, backyards are going in for the first time in these vintage 2005 properties. Outsiders may view these half priced homes as a potential downward pull on the hood but they are proving to have the opposite effect.

Look at the example we are presented with, will pd bring down the neighborhood or improve it? Don’t ever think that overinflated prices serve as neighborhood insurance, financially undistressed owners is the answer to that problem.

[temeculaguy]

Thanks for the support Ca renter, i was certain i would incite some bashing with my position. I made some assumptions about pd and the original post. Pd has posted in the past and from those posts I assume he/she works for the public defender’s office or alternate public defenders office, either way 100k is a fair assumption at income, which is a very stable and recession proof job not to mention the pension. A 200k purchase with a down payment puts the mortgage in the 10-20% of income bracket, which is laughable that it would even cause heartache. As long as you think of it as a living expense and not an investment, who cares what the appeciation is since it leaves so much disposable income that other true investments can be pursued.

The other issue I want to address is the fear that low prices will lead to neighborhood collapse. I think this is a flawed argument. I have driven by many of the screaming deals that I didn’t act on and I notice that these buyers of fire sale priced homes have the funds to actually improve these properties and improve the neighborhood. I think the credit crunch is having the reverse effect that people feared. Knuckleheads that have a penchant for yard appliances, monster trucks and free range pit bulls cannot buy at half the price but they could buy in 2005, those that can buy now have more disposable income than their counterparts who bought at peak. The fear that throngs of dirtbags are waiting in the wings to buy at lower prices thus far is unsubstantiated and landscaping, rennovation and improvements are underway at the bargain bought homes. 2008 buyers, or “reset buyers” are the best thing to happen to some of these streets, backyards are going in for the first time in these vintage 2005 properties. Outsiders may view these half priced homes as a potential downward pull on the hood but they are proving to have the opposite effect.

Look at the example we are presented with, will pd bring down the neighborhood or improve it? Don’t ever think that overinflated prices serve as neighborhood insurance, financially undistressed owners is the answer to that problem.

[temeculaguy]

Thanks for the support Ca renter, i was certain i would incite some bashing with my position. I made some assumptions about pd and the original post. Pd has posted in the past and from those posts I assume he/she works for the public defender’s office or alternate public defenders office, either way 100k is a fair assumption at income, which is a very stable and recession proof job not to mention the pension. A 200k purchase with a down payment puts the mortgage in the 10-20% of income bracket, which is laughable that it would even cause heartache. As long as you think of it as a living expense and not an investment, who cares what the appeciation is since it leaves so much disposable income that other true investments can be pursued.

The other issue I want to address is the fear that low prices will lead to neighborhood collapse. I think this is a flawed argument. I have driven by many of the screaming deals that I didn’t act on and I notice that these buyers of fire sale priced homes have the funds to actually improve these properties and improve the neighborhood. I think the credit crunch is having the reverse effect that people feared. Knuckleheads that have a penchant for yard appliances, monster trucks and free range pit bulls cannot buy at half the price but they could buy in 2005, those that can buy now have more disposable income than their counterparts who bought at peak. The fear that throngs of dirtbags are waiting in the wings to buy at lower prices thus far is unsubstantiated and landscaping, rennovation and improvements are underway at the bargain bought homes. 2008 buyers, or “reset buyers” are the best thing to happen to some of these streets, backyards are going in for the first time in these vintage 2005 properties. Outsiders may view these half priced homes as a potential downward pull on the hood but they are proving to have the opposite effect.

Look at the example we are presented with, will pd bring down the neighborhood or improve it? Don’t ever think that overinflated prices serve as neighborhood insurance, financially undistressed owners is the answer to that problem.

[temeculaguy]

Thanks for the support Ca renter, i was certain i would incite some bashing with my position. I made some assumptions about pd and the original post. Pd has posted in the past and from those posts I assume he/she works for the public defender’s office or alternate public defenders office, either way 100k is a fair assumption at income, which is a very stable and recession proof job not to mention the pension. A 200k purchase with a down payment puts the mortgage in the 10-20% of income bracket, which is laughable that it would even cause heartache. As long as you think of it as a living expense and not an investment, who cares what the appeciation is since it leaves so much disposable income that other true investments can be pursued.

The other issue I want to address is the fear that low prices will lead to neighborhood collapse. I think this is a flawed argument. I have driven by many of the screaming deals that I didn’t act on and I notice that these buyers of fire sale priced homes have the funds to actually improve these properties and improve the neighborhood. I think the credit crunch is having the reverse effect that people feared. Knuckleheads that have a penchant for yard appliances, monster trucks and free range pit bulls cannot buy at half the price but they could buy in 2005, those that can buy now have more disposable income than their counterparts who bought at peak. The fear that throngs of dirtbags are waiting in the wings to buy at lower prices thus far is unsubstantiated and landscaping, rennovation and improvements are underway at the bargain bought homes. 2008 buyers, or “reset buyers” are the best thing to happen to some of these streets, backyards are going in for the first time in these vintage 2005 properties. Outsiders may view these half priced homes as a potential downward pull on the hood but they are proving to have the opposite effect.

Look at the example we are presented with, will pd bring down the neighborhood or improve it? Don’t ever think that overinflated prices serve as neighborhood insurance, financially undistressed owners is the answer to that problem.

[temeculaguy]

Thanks for the support Ca renter, i was certain i would incite some bashing with my position. I made some assumptions about pd and the original post. Pd has posted in the past and from those posts I assume he/she works for the public defender’s office or alternate public defenders office, either way 100k is a fair assumption at income, which is a very stable and recession proof job not to mention the pension. A 200k purchase with a down payment puts the mortgage in the 10-20% of income bracket, which is laughable that it would even cause heartache. As long as you think of it as a living expense and not an investment, who cares what the appeciation is since it leaves so much disposable income that other true investments can be pursued.

The other issue I want to address is the fear that low prices will lead to neighborhood collapse. I think this is a flawed argument. I have driven by many of the screaming deals that I didn’t act on and I notice that these buyers of fire sale priced homes have the funds to actually improve these properties and improve the neighborhood. I think the credit crunch is having the reverse effect that people feared. Knuckleheads that have a penchant for yard appliances, monster trucks and free range pit bulls cannot buy at half the price but they could buy in 2005, those that can buy now have more disposable income than their counterparts who bought at peak. The fear that throngs of dirtbags are waiting in the wings to buy at lower prices thus far is unsubstantiated and landscaping, rennovation and improvements are underway at the bargain bought homes. 2008 buyers, or “reset buyers” are the best thing to happen to some of these streets, backyards are going in for the first time in these vintage 2005 properties. Outsiders may view these half priced homes as a potential downward pull on the hood but they are proving to have the opposite effect.

Look at the example we are presented with, will pd bring down the neighborhood or improve it? Don’t ever think that overinflated prices serve as neighborhood insurance, financially undistressed owners is the answer to that problem.

[urbanrealtor]

Aside from being from the city of Tarantula, I think you seem like reasonably intelligent chap, TG. The point you are making is valid.
The concern about mobility becomes irrelevant once you achieve a certain minimum level of return. If I bought in Tarantula or Manatee (menifee) it would be irrelevant if I got transferred. It would mean that I have an asset that pays for itself and kicks out a check each month. In some ways, that makes it better than a primary residence.

Regarding Diego’s remarks, the mods I would make to this are that at 100x monthly rent, the property is essentially a golden goose. Think about that number. 100x monthly is the same as 8 x yearly. That means 100% return on investment in 8 years. That’s a 12% return annually. Of course there are other costs as an owner (eg: repairs, taxes, vacancy). These might be offset by the yearly rental increase. However, if one could get something at 100xmonthly (or even 150x monthly for that matter), then they probably would. One caveat: calculating that monthly means backing out the cost of any association dues.

Combine this with some of the tax credits in the works and some of those just being considered and it really adjusts the whole purchasing calculus.

[urbanrealtor]

Aside from being from the city of Tarantula, I think you seem like reasonably intelligent chap, TG. The point you are making is valid.
The concern about mobility becomes irrelevant once you achieve a certain minimum level of return. If I bought in Tarantula or Manatee (menifee) it would be irrelevant if I got transferred. It would mean that I have an asset that pays for itself and kicks out a check each month. In some ways, that makes it better than a primary residence.

Regarding Diego’s remarks, the mods I would make to this are that at 100x monthly rent, the property is essentially a golden goose. Think about that number. 100x monthly is the same as 8 x yearly. That means 100% return on investment in 8 years. That’s a 12% return annually. Of course there are other costs as an owner (eg: repairs, taxes, vacancy). These might be offset by the yearly rental increase. However, if one could get something at 100xmonthly (or even 150x monthly for that matter), then they probably would. One caveat: calculating that monthly means backing out the cost of any association dues.

Combine this with some of the tax credits in the works and some of those just being considered and it really adjusts the whole purchasing calculus.

[urbanrealtor]

Aside from being from the city of Tarantula, I think you seem like reasonably intelligent chap, TG. The point you are making is valid.
The concern about mobility becomes irrelevant once you achieve a certain minimum level of return. If I bought in Tarantula or Manatee (menifee) it would be irrelevant if I got transferred. It would mean that I have an asset that pays for itself and kicks out a check each month. In some ways, that makes it better than a primary residence.

Regarding Diego’s remarks, the mods I would make to this are that at 100x monthly rent, the property is essentially a golden goose. Think about that number. 100x monthly is the same as 8 x yearly. That means 100% return on investment in 8 years. That’s a 12% return annually. Of course there are other costs as an owner (eg: repairs, taxes, vacancy). These might be offset by the yearly rental increase. However, if one could get something at 100xmonthly (or even 150x monthly for that matter), then they probably would. One caveat: calculating that monthly means backing out the cost of any association dues.

Combine this with some of the tax credits in the works and some of those just being considered and it really adjusts the whole purchasing calculus.

[urbanrealtor]

Aside from being from the city of Tarantula, I think you seem like reasonably intelligent chap, TG. The point you are making is valid.
The concern about mobility becomes irrelevant once you achieve a certain minimum level of return. If I bought in Tarantula or Manatee (menifee) it would be irrelevant if I got transferred. It would mean that I have an asset that pays for itself and kicks out a check each month. In some ways, that makes it better than a primary residence.

Regarding Diego’s remarks, the mods I would make to this are that at 100x monthly rent, the property is essentially a golden goose. Think about that number. 100x monthly is the same as 8 x yearly. That means 100% return on investment in 8 years. That’s a 12% return annually. Of course there are other costs as an owner (eg: repairs, taxes, vacancy). These might be offset by the yearly rental increase. However, if one could get something at 100xmonthly (or even 150x monthly for that matter), then they probably would. One caveat: calculating that monthly means backing out the cost of any association dues.

Combine this with some of the tax credits in the works and some of those just being considered and it really adjusts the whole purchasing calculus.

[urbanrealtor]

Aside from being from the city of Tarantula, I think you seem like reasonably intelligent chap, TG. The point you are making is valid.
The concern about mobility becomes irrelevant once you achieve a certain minimum level of return. If I bought in Tarantula or Manatee (menifee) it would be irrelevant if I got transferred. It would mean that I have an asset that pays for itself and kicks out a check each month. In some ways, that makes it better than a primary residence.

Regarding Diego’s remarks, the mods I would make to this are that at 100x monthly rent, the property is essentially a golden goose. Think about that number. 100x monthly is the same as 8 x yearly. That means 100% return on investment in 8 years. That’s a 12% return annually. Of course there are other costs as an owner (eg: repairs, taxes, vacancy). These might be offset by the yearly rental increase. However, if one could get something at 100xmonthly (or even 150x monthly for that matter), then they probably would. One caveat: calculating that monthly means backing out the cost of any association dues.

Combine this with some of the tax credits in the works and some of those just being considered and it really adjusts the whole purchasing calculus.

[urbanrealtor]

On this topic, there are several places in my complex that pull rent of 1100/mth and are for sale for 135k. The HOAs are 233/mth. This means that the effective rent is 867/mth. At full asking that is a 7.7% return. At 110k that is a 9.4% return. The last one to close (an REDC auction) closed at 105k. This is about 10% return. While 105 seems low, I think the 110k is where we are headed.

At the current asking prices, we are seeing offers and closings happen regularly.

[urbanrealtor]

On this topic, there are several places in my complex that pull rent of 1100/mth and are for sale for 135k. The HOAs are 233/mth. This means that the effective rent is 867/mth. At full asking that is a 7.7% return. At 110k that is a 9.4% return. The last one to close (an REDC auction) closed at 105k. This is about 10% return. While 105 seems low, I think the 110k is where we are headed.

At the current asking prices, we are seeing offers and closings happen regularly.

[urbanrealtor]

On this topic, there are several places in my complex that pull rent of 1100/mth and are for sale for 135k. The HOAs are 233/mth. This means that the effective rent is 867/mth. At full asking that is a 7.7% return. At 110k that is a 9.4% return. The last one to close (an REDC auction) closed at 105k. This is about 10% return. While 105 seems low, I think the 110k is where we are headed.

At the current asking prices, we are seeing offers and closings happen regularly.

[urbanrealtor]

On this topic, there are several places in my complex that pull rent of 1100/mth and are for sale for 135k. The HOAs are 233/mth. This means that the effective rent is 867/mth. At full asking that is a 7.7% return. At 110k that is a 9.4% return. The last one to close (an REDC auction) closed at 105k. This is about 10% return. While 105 seems low, I think the 110k is where we are headed.

At the current asking prices, we are seeing offers and closings happen regularly.

[Author]

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