December 16, 2006 at 11:27 PM #8080
I moved to the Temcula area about six months ago. I work locally – so I want to stay in this area. I currently rent a house that I really like. The owner bought it to flip it, couldn’t sell, and turned it into a rental.
he bought it for about $450. Tried to sell it for $550k….no one bought it. It rents for $1400/month. Even being in the highest tax bracket, I’m WAY ahead by renting this thing.
owner just contacted me and wants to sell it to me..at $440k. One down the street just sold for less than that.. i got the comps… $430k..and that was with agents taking their 5-6%…. so to sell to me…and NOT use agents…it would have to be even less..
but my big fear about buying now..even if the owner gave me a “rduced” price…is that no matter what I buy it for…. there’s a big chance that it’s just going to drop more and more.
I have NO issues with renting. I’ve owned before…but rent now b/c it makes more financial sense to rent.
I’m wondering – and area like Temecula…really only grew in population as areas like San diego and Orange County became oppresively expensive..and people moved here to live..but they work in SD and OC. With gas prices high, and hosuing prices taking a dump, I wonder how long people will tolerate living so far from where they work. I work locally…so I like the area..but I wonder how long it will be until the for sale signs are more numerous than they already are……there are houses for sale all over the place….i imagine in 6montsh to a year, there will be even more..and prices will be even lower…
will an area like Temecula get hit the same as San Diego or worse? and what do you think prices will be like in 6 months? a year?
i feels sorry for the person who owns this house. they must be paying…even if it’s interst only (b/c I know they have a 100% loan) something like $2200/month in just interest. then $700-800/month in taxes (it’s 2% up here) plus $150 HOA and another $100 for the gardner…
he’s dropping over $3000/month on this place…even wih the tax writeoff… my $1400 doesn’t cover his nut. no wonder he wants to sell it so bad.
i told him i dind’t think i was interested in buying it and he gave me lip about well then he’s going to list it for sale next month.. GREAT. My lease goes for another 9 months…good luck selling a hosue with a tenant in it and a NO LOCK BOX provision in the lease. 🙂December 16, 2006 at 11:46 PM #41919PerryChaseParticipant
You would be an idiot to buy this house — but you’re not. 🙂
As much as you feel sorry for this guy, why would you succor him? Let him pay $3000/month to subsidize your lifestyle.
Keep on renting until houses in your area drop to where house carrying costs equal rent.
Temecula and other bedroom communities will be hit hardest in this downturn.
Your rental might go into foreclosure so start looking for a new rental house a few months before your lease expires.December 17, 2006 at 5:08 AM #41925powaysellerParticipant
In the last downturn, Riverside’s median dropped over twice as much as San Diego’s. I think Riverside is going to be seriously crushed for those exact reasons you mention.
When I asked tenant attorney Steven Kellman in San Diego about foreclosure/eviction of a tenant, he said that if a bank takes over the house, they can kick me out. Unless the owner refinanced after the lease was signed so that the lease predates the refinance and the bank’s rights are secondary.December 17, 2006 at 6:44 AM #41926Steve BeeboParticipant
What is the age and size of the house you’re in? The reason I am asking is that I did an appraisal on a new house a couple of days ago, in a development called Stratton Point at French Valley. It may be a little farther out than your location, but this was a new house of 3300 s.f., that’s selling for about $430,000, with $10,000 in builder concessions. This tract has been open for over a year, and of 103 homes planned, 51 have been released for sale, with 36 closed or in escrow.
I would agree with Powayseller that prices in Murrietta / Temecula are likely to fall more than San Diego County. It seems like there are an awful lot of resales of newer homes on the market right now, and I would guess that the rate of foreclosures there will be a lot higher than SD County. For someone like you that’s currently renting, I can’t see buying there now or in the new future.
The positive things I see there are that there is still a ton of commercial and retail construction, so population and retail job growth, (although not high-paying), may continue to increase. Also, builders have slowed down home construction considerably to match the slow demand.December 18, 2006 at 6:54 AM #41969
thanks for the info.
FYI – the house I’m in is pretty much brand new…maybe a year old. It’s around 2000 sq ft. Nothing close to the 3300 sq ft home you’re talking about… but it’s in a very nice community. We like the house but the owner is smoking crack based on what they think they can get for this thing.
Right now, if I had to move out – I’d be able to find a comparable rental house as there are a ton of them on the market. I could find any number of rental houses – although maybe not as cheap as this one. this particular house was slightly smaller than the “normal” hosue in this area. A lot of the recently built homes in Temecula/Murrieta are 2500-3000 or even more. This one at just under 2000 sq ft is “small”. Although it was immaculate, had a nice yard, and came iwth all the applicances..perfect for a rental. at 1400/month..it was dirt cheap.
if I had to move to a “larger” house, I’d be able to get a house that is 2500sq ft or so for $1700-1800. $2000/month would put me in an “executive” home..huge, all the bells/whistles…but more than I really need.
I have found some websites that do a nice job of letting you plug in various variables and do a nice “rent vs. buy” comparison..but all of them assume the housing market will appreciate over time…
to “buy” this hosue would cost me around $3000/month when you factor in the mortgage, taxes, insurance, and HOAs. my guess is the owner will sell it when my lease s up b/c they are losing too much money by renting…
if i have to move, i can easily find another house like this one or one even nicer. rents here average 1700-1800. this house i’m in was on the cheap side at ony 1400 b/c it’s “small” at only 2000 sq ft…. lots of homes here are 3000+
even with the tax writeoff…renting is still cheaper.December 18, 2006 at 7:10 AM #41971
maybe he’ll walka way, the bank will take it,a nd the bank will try to sell to me…
he actually DID refi the house shortly after I movedin. from checking property records, he put down about 50k to buy the house, i rented it, then he refi’d it, and took his equity back out…
so the banks took the loans subject to my lease. so for the next 7-8 months, they are stuck with me. 🙂
I’ve got a nice window of time to watch the market go down the drain… i’ll feel sorry for friends who “own”…but I sure hope the market here goes down the toilet…December 18, 2006 at 8:32 AM #41977PerryChaseParticipant
You’re in the a great position. If I were you, I’d sit back, relax and watch the market implode. Then buy something when the time is right.
The bank might just want to sell the house to you, but my guess is that in one year, the market will still be much higher than rent.
Personally, I think that a 2000sf house is perfect. If you utilize the space well, you have plenty of room.December 18, 2006 at 8:45 AM #41978BikeRiderParticipant
Steve Beebo, it must be very difficult to do an appraisal in this type of falling market. How the heck can you really appraise something that is terribly overpriced in the first place? Seems to me that you’d be telling a lie, unless you priced it down to what it was really worth, which would really piss off the seller and the bank, cause it would never sell.December 18, 2006 at 6:20 PM #42030Steve BeeboParticipant
To do an appraisal in an area and time when prices are falling is not difficult at all. I think it’s easier than appraising is a rapidly increasing market. You have to consider the prices of current active listings, and make sure you don’t value a property to their level, no matter what properties closed at 2, 4, or 6 months ago.
Whether prices go down 2%, 6%, or 10% in this area over the next year isn’t my concern – I’m just reporting what I find in the current market. It’s up to the lender how much they want to lend. If they think, say, that prices will go down 5% in an area over the next year, you wouldn’t think they would make 100% loans – but there are still a lot of 100% loans being done right now.December 18, 2006 at 10:03 PM #42041SD RealtorParticipant
Definitely sit tight 23109VC. I think the contraction will happen faster and harder in the outlying areas such as Temecula. I would venture to say that a year from now you will see homes in the 400k range with some desperation sales in the high 300’s.
SD RealtorDecember 19, 2006 at 11:21 PM #42109
this house originally sold for $440k.
The owner landscaped the yard, did some nice shutters, and that’s about it.
Owner tried to sell it for $550k six months later, big suprise no one bought it.
Owner has told me they’ll sell to me for $440k….which is exactly what he paid.
A house down the street – exact same house – just sold for $430k. That house has a larger lot, but a less private location…all in all..let’s say they are “equal” in terms of value. Level of upgrades is virtually identical.
That house sold USING agents..so that owner “lost” 5-6% to the agents. The owner of this house wants to sell to me w/out agents…which means there is no commissions coming out…and if you ask me..in a buyer’s market with prices falling..if anyone gets that benefit it’s ME. So knock off another 5-6% which is roughly $25k.
so if the most recent comp is $430k. – $25k = $405k.
Not a bad price for a house in this area, in this location/condition….assuming things don’t drop much more…
if prices go down a ton more, then buying now means i lose.
if prices go down only a little … buying it cheap enough would basically allow me to avoid the hassle of moving…and get the house at a price where it might not go under..
but the BIG problem is that renting is cheaper now.
Renting at $1400/month… a house that would cost me $400k…at 100% financing.. (which i’d do) i’m looking at a large house payment, 2% property taxes, $150 HOA, and another $100 for the gardner. plus other upkeep. even with the tax writeoff…renting is cheaper.
i do like th ehouse and the thought of moving is a pain in the you know what..but to save thousands and thousands of dollars..i’ll hire a moving company to move my stuff to another rental if i have to get out of this one….December 20, 2006 at 12:12 AM #42112hipmattParticipant
Dude, sit tight and rent. I also rent in Tem, lived here since 90. I’m a former r.e. agent myself. If you ask me, this valley is one of the most overpriced in the country. Temecula now is a joke. All new homes are a 2% tax, built on little lots right next to each other, its sad. To feel special they all pimp out their homes with fancy blinds, flooring, granite, stainless steel this and that, stamped concrete here and there, maybe a pool if they have some equity and the lot is big enough. But it still ends up looking like the guy next door which makes keeping up with the Jones’ even more important. Some software guy that works in SD, but had to buy here, and now thinks his home is a gold mine, and now he’s his own Bill gates. They’re all over the place here. You can’t talk logic either. They don’t believe there could be a prob with the economy, housing, gas prices, people are just blind. I’m just a doom and gloomer for mentioning it.
You are right about the gas/commute dilemma many are facing. Eventually, gas will go even higher and it will affect everyone. I still can tolerate the city, but I can’t believe these prices today.
Some houses have quadrupled in price in the last 11 years, no joke. Now, they all think its gonna continue.
Traffic here is now completely out of control. People are rude, impatient, and materialistic. Paid for plastic soccer moms now run rampant, truly believing that they are living the life of a desperate house wife, mowing over anything that gets in the way of their lifted SUVs. They all look the same. We really did have a woman run over an old man in the Costco parking lot with a lifted Excursion, because she was on the cell phone. The nicest parts of town now are the older parts, where things move a bit slower, and people seem more down to earth.
But over at the mall/Costco area, and its a war zone. Its only getting worse, I’m afraid.
My advice is to save on that nice rent you have. I would also recommend putting down at least 10% or more an any home purchases. I’d stay away from 100% financing. Good luck.December 20, 2006 at 9:26 AM #42127tlefortParticipant
I rent a 2400 sf home on five acres in Temecula for 1800 a month. It would sell now for maybe 6-700k. Out in Wine country near lake skinner. So I rent for less than 1/2 of owning. I say wait for another 20% drop. How long? Depends on how desperate people like your landlord get. I have just started to see the drop in pices. Check zipreality.com and search for the lowered listings and you will see what I mean. People who were asking 500k 6 months ago now asking 400k and still no sales. Shows you how insain it was and how much it has to drop. I like Temecula and I really like the countryside east of Temecula. I plan on buying in the next 2-3 years. Till then I am a happy renter…December 20, 2006 at 9:34 AM #42128blahblahblahParticipant
Temecula isn’t all bad. The wineries are nice. That Vail Lake resort has some awesome mountain biking and great scenery. But yeah, the housing developments are definitely of the cookie-cutter variety.December 20, 2006 at 8:03 PM #42174FormerOwnerParticipant
I wouldn’t even consider buying anything in Temecula/Murrieta until prices get into line with market rents. That’s about a 200K-300K price drop for a lot of the tract homes! The property taxes/mello-roos and HOA’s in some tracts are so high that it’s really a liability to own one. The price I’d be willing to pay to commit to those fixed monthly costs is far lower than current prices. I strongly agree with other posters here that rising gas prices will also push down prices in this area.
I’ve lived up here for a number of years. This year, I’ve noticed that a lot of the people who couldn’t sell their homes are now renting them out. I suspect some of them refinanced to some sort of inerest-only or teaser rate loan so that their monthly cash flow is not too negative. They’re hoping the market will “bounce back” and they can sell before anything hits the fan. I think a lot of them are going to end up foreclosing within a couple years. I think situations like this will continue to flood the market with rental houses, keeping rents down. Prices have nowhere to go but down, down, down. Patience is a virtue. If prices don’t go down enough, just keep renting!
A lot of the houses around here are either rentals with negative cash flow, vacant, or are in some stage of foreclosure already. The shortage of housing supply up here was an illusion caused by speculators, flippers, and over-extended home debtors living above their means. We’re just starting to see the fallout now. It will be a long way down in my view.
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