Who are the buyers in this market and economy?

[nostradamus]

No, you should wait until the cost of owning is equal to or less than the cost of renting. So rents have to rise or home prices have to fall.

I bought in 1998.

[patientrenter]

[quote=Eugene]You can rent the average $500k crap shack in SD for what, $2k max per month? That’s being generous of course. In 1 year you paid $24k for rent then. Say you buy it instead. IMO you will lose at least 10% in one year.

So you should wait till your expected 10% yearly drop is less than a year worth of rent, is that your position?
[/quote]

If most buyers are only putting down 3%, and many are getting tax rebates, then what are they actually putting at risk, given the non-recourse law? They are gambling with the taxpayer’s money, not their own.

I wouldn’t be surprised if the bulk buyers paying “cash” turned out to be getting most of that cash by borrowing it. Despite all the claims to the contrary, money is cheap and easy to come by, thanks to the Fed and the FDIC (guaranteeing bank loans) etc. It’s a bit like those mislabeled “private equity” deals that we read about in the middle of the bubble: for most, the private equity was pennies on the dollar, and lenders were providing most of the money. So if home prices don’t fall very quickly, the bulk buyers will do well, and if prices fall quickly, they can leave those pennies on the table and watch as the lenders get bailed out by taxpayers for the rest. I am only speculating, but as they say, a leopard doesn’t change its spots.

[patientrenter]

[quote=Eugene]You can rent the average $500k crap shack in SD for what, $2k max per month? That’s being generous of course. In 1 year you paid $24k for rent then. Say you buy it instead. IMO you will lose at least 10% in one year.

So you should wait till your expected 10% yearly drop is less than a year worth of rent, is that your position?
[/quote]

If most buyers are only putting down 3%, and many are getting tax rebates, then what are they actually putting at risk, given the non-recourse law? They are gambling with the taxpayer’s money, not their own.

I wouldn’t be surprised if the bulk buyers paying “cash” turned out to be getting most of that cash by borrowing it. Despite all the claims to the contrary, money is cheap and easy to come by, thanks to the Fed and the FDIC (guaranteeing bank loans) etc. It’s a bit like those mislabeled “private equity” deals that we read about in the middle of the bubble: for most, the private equity was pennies on the dollar, and lenders were providing most of the money. So if home prices don’t fall very quickly, the bulk buyers will do well, and if prices fall quickly, they can leave those pennies on the table and watch as the lenders get bailed out by taxpayers for the rest. I am only speculating, but as they say, a leopard doesn’t change its spots.

[patientrenter]

[quote=Eugene]You can rent the average $500k crap shack in SD for what, $2k max per month? That’s being generous of course. In 1 year you paid $24k for rent then. Say you buy it instead. IMO you will lose at least 10% in one year.

So you should wait till your expected 10% yearly drop is less than a year worth of rent, is that your position?
[/quote]

If most buyers are only putting down 3%, and many are getting tax rebates, then what are they actually putting at risk, given the non-recourse law? They are gambling with the taxpayer’s money, not their own.

I wouldn’t be surprised if the bulk buyers paying “cash” turned out to be getting most of that cash by borrowing it. Despite all the claims to the contrary, money is cheap and easy to come by, thanks to the Fed and the FDIC (guaranteeing bank loans) etc. It’s a bit like those mislabeled “private equity” deals that we read about in the middle of the bubble: for most, the private equity was pennies on the dollar, and lenders were providing most of the money. So if home prices don’t fall very quickly, the bulk buyers will do well, and if prices fall quickly, they can leave those pennies on the table and watch as the lenders get bailed out by taxpayers for the rest. I am only speculating, but as they say, a leopard doesn’t change its spots.

[patientrenter]

[quote=Eugene]You can rent the average $500k crap shack in SD for what, $2k max per month? That’s being generous of course. In 1 year you paid $24k for rent then. Say you buy it instead. IMO you will lose at least 10% in one year.

So you should wait till your expected 10% yearly drop is less than a year worth of rent, is that your position?
[/quote]

If most buyers are only putting down 3%, and many are getting tax rebates, then what are they actually putting at risk, given the non-recourse law? They are gambling with the taxpayer’s money, not their own.

I wouldn’t be surprised if the bulk buyers paying “cash” turned out to be getting most of that cash by borrowing it. Despite all the claims to the contrary, money is cheap and easy to come by, thanks to the Fed and the FDIC (guaranteeing bank loans) etc. It’s a bit like those mislabeled “private equity” deals that we read about in the middle of the bubble: for most, the private equity was pennies on the dollar, and lenders were providing most of the money. So if home prices don’t fall very quickly, the bulk buyers will do well, and if prices fall quickly, they can leave those pennies on the table and watch as the lenders get bailed out by taxpayers for the rest. I am only speculating, but as they say, a leopard doesn’t change its spots.

[patientrenter]

[quote=Eugene]You can rent the average $500k crap shack in SD for what, $2k max per month? That’s being generous of course. In 1 year you paid $24k for rent then. Say you buy it instead. IMO you will lose at least 10% in one year.

So you should wait till your expected 10% yearly drop is less than a year worth of rent, is that your position?
[/quote]

If most buyers are only putting down 3%, and many are getting tax rebates, then what are they actually putting at risk, given the non-recourse law? They are gambling with the taxpayer’s money, not their own.

I wouldn’t be surprised if the bulk buyers paying “cash” turned out to be getting most of that cash by borrowing it. Despite all the claims to the contrary, money is cheap and easy to come by, thanks to the Fed and the FDIC (guaranteeing bank loans) etc. It’s a bit like those mislabeled “private equity” deals that we read about in the middle of the bubble: for most, the private equity was pennies on the dollar, and lenders were providing most of the money. So if home prices don’t fall very quickly, the bulk buyers will do well, and if prices fall quickly, they can leave those pennies on the table and watch as the lenders get bailed out by taxpayers for the rest. I am only speculating, but as they say, a leopard doesn’t change its spots.

[SDEngineer]

[quote=nostradamus]I’ve often wondered who the heck would buy now as well.

People wouldn’t buy because homes are still overpriced. Give me as many incentives as you like, a lemon is still a lemon.

Having money or having a job does not mean you would or should throw money away buying a house.

Renting is cheaper. You can rent the average $500k crap shack in SD for what, $2k max per month? That’s being generous of course. In 1 year you paid $24k for rent then. Say you buy it instead. IMO you will lose at least 10% in one year. That’s $50k. Plus insurance, upkeep, tax, etc. etc. etc. Sure you might get a few thousand out of tax deductions (again being generous). Still doesn’t compensate for the difference.

I say if you’re on the fence, rent a house with just your *minimal* living requirements. Cheap. Re-evaluate buying in the winter. If not, wait tell next winter. Repeat. You’ll be happy you did.[/quote]

A year ago you would have been right on the money.

In coastal areas, I think you probably still are. If the areas you’re looking at buying in are places like 4S, CV, Encinitas, etc, I don’t think those areas are particularly close to bottoming out. But a 500K place in many areas now is well above 2K in rent. A lot of north and east county, mira mesa, and the other middle class areas I think are now pretty far down in terms of valuation.

The townhome we’re currently purchasing will cost us a net 360K (after incentives and tax credits are taken into account) and is just over 2200 sq. ft. Rent for a similarly sized townhome in the area would run $1/sq ft, or about 2200/mo. It’s not investment grade in terms of return, but it’s pretty much rent neutral at that price.

[SDEngineer]

[quote=nostradamus]I’ve often wondered who the heck would buy now as well.

People wouldn’t buy because homes are still overpriced. Give me as many incentives as you like, a lemon is still a lemon.

Having money or having a job does not mean you would or should throw money away buying a house.

Renting is cheaper. You can rent the average $500k crap shack in SD for what, $2k max per month? That’s being generous of course. In 1 year you paid $24k for rent then. Say you buy it instead. IMO you will lose at least 10% in one year. That’s $50k. Plus insurance, upkeep, tax, etc. etc. etc. Sure you might get a few thousand out of tax deductions (again being generous). Still doesn’t compensate for the difference.

I say if you’re on the fence, rent a house with just your *minimal* living requirements. Cheap. Re-evaluate buying in the winter. If not, wait tell next winter. Repeat. You’ll be happy you did.[/quote]

A year ago you would have been right on the money.

In coastal areas, I think you probably still are. If the areas you’re looking at buying in are places like 4S, CV, Encinitas, etc, I don’t think those areas are particularly close to bottoming out. But a 500K place in many areas now is well above 2K in rent. A lot of north and east county, mira mesa, and the other middle class areas I think are now pretty far down in terms of valuation.

The townhome we’re currently purchasing will cost us a net 360K (after incentives and tax credits are taken into account) and is just over 2200 sq. ft. Rent for a similarly sized townhome in the area would run $1/sq ft, or about 2200/mo. It’s not investment grade in terms of return, but it’s pretty much rent neutral at that price.

[SDEngineer]

[quote=nostradamus]I’ve often wondered who the heck would buy now as well.

People wouldn’t buy because homes are still overpriced. Give me as many incentives as you like, a lemon is still a lemon.

Having money or having a job does not mean you would or should throw money away buying a house.

Renting is cheaper. You can rent the average $500k crap shack in SD for what, $2k max per month? That’s being generous of course. In 1 year you paid $24k for rent then. Say you buy it instead. IMO you will lose at least 10% in one year. That’s $50k. Plus insurance, upkeep, tax, etc. etc. etc. Sure you might get a few thousand out of tax deductions (again being generous). Still doesn’t compensate for the difference.

I say if you’re on the fence, rent a house with just your *minimal* living requirements. Cheap. Re-evaluate buying in the winter. If not, wait tell next winter. Repeat. You’ll be happy you did.[/quote]

A year ago you would have been right on the money.

In coastal areas, I think you probably still are. If the areas you’re looking at buying in are places like 4S, CV, Encinitas, etc, I don’t think those areas are particularly close to bottoming out. But a 500K place in many areas now is well above 2K in rent. A lot of north and east county, mira mesa, and the other middle class areas I think are now pretty far down in terms of valuation.

The townhome we’re currently purchasing will cost us a net 360K (after incentives and tax credits are taken into account) and is just over 2200 sq. ft. Rent for a similarly sized townhome in the area would run $1/sq ft, or about 2200/mo. It’s not investment grade in terms of return, but it’s pretty much rent neutral at that price.

[SDEngineer]

[quote=nostradamus]I’ve often wondered who the heck would buy now as well.

People wouldn’t buy because homes are still overpriced. Give me as many incentives as you like, a lemon is still a lemon.

Having money or having a job does not mean you would or should throw money away buying a house.

Renting is cheaper. You can rent the average $500k crap shack in SD for what, $2k max per month? That’s being generous of course. In 1 year you paid $24k for rent then. Say you buy it instead. IMO you will lose at least 10% in one year. That’s $50k. Plus insurance, upkeep, tax, etc. etc. etc. Sure you might get a few thousand out of tax deductions (again being generous). Still doesn’t compensate for the difference.

I say if you’re on the fence, rent a house with just your *minimal* living requirements. Cheap. Re-evaluate buying in the winter. If not, wait tell next winter. Repeat. You’ll be happy you did.[/quote]

A year ago you would have been right on the money.

In coastal areas, I think you probably still are. If the areas you’re looking at buying in are places like 4S, CV, Encinitas, etc, I don’t think those areas are particularly close to bottoming out. But a 500K place in many areas now is well above 2K in rent. A lot of north and east county, mira mesa, and the other middle class areas I think are now pretty far down in terms of valuation.

The townhome we’re currently purchasing will cost us a net 360K (after incentives and tax credits are taken into account) and is just over 2200 sq. ft. Rent for a similarly sized townhome in the area would run $1/sq ft, or about 2200/mo. It’s not investment grade in terms of return, but it’s pretty much rent neutral at that price.

[SDEngineer]

[quote=nostradamus]I’ve often wondered who the heck would buy now as well.

People wouldn’t buy because homes are still overpriced. Give me as many incentives as you like, a lemon is still a lemon.

Having money or having a job does not mean you would or should throw money away buying a house.

Renting is cheaper. You can rent the average $500k crap shack in SD for what, $2k max per month? That’s being generous of course. In 1 year you paid $24k for rent then. Say you buy it instead. IMO you will lose at least 10% in one year. That’s $50k. Plus insurance, upkeep, tax, etc. etc. etc. Sure you might get a few thousand out of tax deductions (again being generous). Still doesn’t compensate for the difference.

I say if you’re on the fence, rent a house with just your *minimal* living requirements. Cheap. Re-evaluate buying in the winter. If not, wait tell next winter. Repeat. You’ll be happy you did.[/quote]

A year ago you would have been right on the money.

In coastal areas, I think you probably still are. If the areas you’re looking at buying in are places like 4S, CV, Encinitas, etc, I don’t think those areas are particularly close to bottoming out. But a 500K place in many areas now is well above 2K in rent. A lot of north and east county, mira mesa, and the other middle class areas I think are now pretty far down in terms of valuation.

The townhome we’re currently purchasing will cost us a net 360K (after incentives and tax credits are taken into account) and is just over 2200 sq. ft. Rent for a similarly sized townhome in the area would run $1/sq ft, or about 2200/mo. It’s not investment grade in terms of return, but it’s pretty much rent neutral at that price.

[davelj]

[quote=nostradamus]No, you should wait until the cost of owning is equal to or less than the cost of renting. So rents have to rise or home prices have to fall.

I bought in 1998.[/quote]

I bet most properties selling for less than $400K these days are cheaper to buy than to rent today in SD assuming you can get sub-5.25% financing. And the $400K-$600K range is getting closer every month. Above $600K, it’s not close… yet. And above $1 million, it’s art; the prices have always been disconnected from rent.

[davelj]

[quote=nostradamus]No, you should wait until the cost of owning is equal to or less than the cost of renting. So rents have to rise or home prices have to fall.

I bought in 1998.[/quote]

I bet most properties selling for less than $400K these days are cheaper to buy than to rent today in SD assuming you can get sub-5.25% financing. And the $400K-$600K range is getting closer every month. Above $600K, it’s not close… yet. And above $1 million, it’s art; the prices have always been disconnected from rent.

[davelj]

[quote=nostradamus]No, you should wait until the cost of owning is equal to or less than the cost of renting. So rents have to rise or home prices have to fall.

I bought in 1998.[/quote]

I bet most properties selling for less than $400K these days are cheaper to buy than to rent today in SD assuming you can get sub-5.25% financing. And the $400K-$600K range is getting closer every month. Above $600K, it’s not close… yet. And above $1 million, it’s art; the prices have always been disconnected from rent.

[davelj]

[quote=nostradamus]No, you should wait until the cost of owning is equal to or less than the cost of renting. So rents have to rise or home prices have to fall.

I bought in 1998.[/quote]

I bet most properties selling for less than $400K these days are cheaper to buy than to rent today in SD assuming you can get sub-5.25% financing. And the $400K-$600K range is getting closer every month. Above $600K, it’s not close… yet. And above $1 million, it’s art; the prices have always been disconnected from rent.

[Author]

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