[23109VC]

temecula is NOT the same place it was 10 years ago. I’m not saying it has an economy as diverse and vibrant as San Diego…and it will always have a large proportrion of people who are commuting to San diego or OC jobs… but it is a much much larger place than it was a decade ago.

the standard infrastructure needed to support all the homes/people is one factor. there must be more police stations = more cops. more firestatiosn – more fireman. there is a great big new courthouse up near the airport = judges/attorneys/jail staff/other county workers. there are more little medical clinics/ dentists/etc to cater to the people who live here.

yes a lot of the jobs are probably retail…and pay garbage…but there are also probably quite a few “good” jobs that have been added over the years… i have no idea what the ratio of local workers vs. commuters are…but there must be more local people than 10 years ago.

that’s not to say that the housing crash here won’t happen…but to say that Temecula is mostly commuters who will leave when prices get cheaper in SD is perhaps a bit simplistic. one would need to know the real numbers.

i live/work in temecula. i’ve got a good local job. my job only was created here in the past 5 years due to all the growth. if SD prices went down, i would NOT move down there and then commute to work up here. i like it here, and i like living close to work and being able to go home at lunch to see the family.

it would be nice to see the housing values come crashing down… but part o fme wonders if we will see bigger price crashes in the “nasty” parts of the inland empire – lke Perris, hemet, San jacinto…and the areas like Redhawk, North Temecula near the Mall, and nice parts of Murrieta may be more insulated.

isn’t it true that the more desirable areas may be hit less – partly b/c the owners thee tend on average to be more affluent…so tey are less likely to have ARMS that are resetting… and b/c the area itself is in more demand relative to the crummy areas where low income people took out toxic loans and now will lose their homes?

i’ve seen foreclosures in nice areas, i’m not saying it won’t happen..but i wonder if the foreclosures and real price hits will be concentrated more in the crappy areas…. it will still happen in the nicer spots, but to less of a degree???

[23109VC]

I agree there are more jobs now in Temecula than their were years ago…but i have no clue how many.

i can remember about 8-10 years ago when I would drive on the 79 out to the palm springs area…and the only thing there..the ONLY thing there was that jack int he box….

now there are minimalls as far as the eye can see, and houses, houses, houses..and even more houses. the place is unrecognizalbe to someone who saw it a decade ago.

there must be a decent number of professionals and businesses to service the multitude of “locals” but I would agree.. there aren’t any mega firms here hiring lots of highly paid professionals..

you have the doctors, dentists, lawyers, and other “professionals” to service the local people..but you don’t see Microsoft, or any other huge corp making Temecula their “headquarters” and then bringing in hundreds of people making six figures….

I don’t necessarily care if I hit the absolute rock bottom, i just don’t want to get the shaft and buy, then watch my house bomb another 100k…

i really feel sorry for the guy who bought a 500k house on my street in 2005….now that my landlord wants to sell to me for 350k.

boy will my neighbors hate me…IF i buy, and they see the comp. 🙂

maybe i’ll counter at 300k… 🙂

i did some research on my landlord..i now know where he works, what he does..and let’s just say the dude has MONEY. he is no poor dumb flipper.. i dont’ know his net worth…but from his business connectiosn..i would dare to bet..taht gaining or losing 50-100k is nothing that will do much to change his lifestyel..it might suck..but won’t change a thing..

[23109VC]

so how long until Temecula hits rock bottom?

[23109VC]

assuming I did it THAT way – with the seller “gifting” me the equity… would that open the door to only do an 80% first and avoid the 100% financing rates?

i am basically seeing that if I do an 80% loan…I am looking at 6% or so.

if I go 80/20… it’s more like 6.75% for the first, and roughly 9% or more on the second. using this method, it’s way too expensive..and it makes no sense to buy.

the 80% first brings carrying costs almost in line with rental costs….

we spent the day looking at homes up here in Temecula. We looked in Murrieta too. thre i a new development in Murrieta by Lennar called Spencer’s crossing. Nice. they had a beautiful 1 story 2600 sq ft, an EI “everything’s included” plan…fully upgraded, even appliances..for $440k.

not bad. just an interesting note. as I was speaking to the agent in the Lenna prpoerty..she asked the usual BS questions about what do you like, where do you live now, when would you want to move, etc. I candidly told her I live in another Lennar property in Temcula, and am renting, but am possibly buying from the owner. she asked which one, and she knew the prpoerty – she had worked there. knew the floorplan..etc. she asked what it was offered to me at..probably hoping to tellme what a better deal SHE had there. when i told her $350k, she gasped…and said..”what?” i told her 350 and she said, i’d love to sell you one of mine but if i were you, i’d buy that for that price..not mine.

how often do you see a realtor tell you to buy from the OTHER guy??? not that she is the expert..she’s a realtor…but at least in terms of relative current pricing..i’m pretty convinced the 350k is a good deal.

it’s only NOT a good deal if you expect more drops coming..substantial drops.

geez..i wish i had a crystal ball.

are the nicer parts of temecula, and murrieta, going to fall THAT low? take Greer Ranch..where there are 800-900k homes…the averagte home up there is probably 600-750k…. or most of Harveston..which is in the 400-800s…. are these thigns going to fall 50% and be 200-400?

if only i knew….

i’m torn between holding out for a better deal, and feeling like i let a good deal get away from me.

[23109VC]

i’m not CHP. i am a car nut, and also have a lead foot, hence the 23109VC handle… 🙂

like i said, i’m not an expert in mortgages, etc..and i know enough to think that putting down a purchase price that isn’t legit is probably a bad idea… but the way he talked about it, it seemed like it was fine. i asked if it was legit and he said it was… but i still wasn’t sure.. hence the post here.

i’m not going to do anyting that isn’t 100% legal. i am a moral and ethical person. i’m all about getting a good deal.. but if it is NOT legal.. then I’m not going to do it.

basically, after running the numbers, the only way this purchase would make sense is if the house sold at or near 300k…. and I did the standard 80/20 with the higher rates…. or i got this “loan” my lender mentioned where I got 100% of the price into a first at a lower rate.

i ran more comps ont his house via zillow… by looking at the actual recorded sales and while some of the older sales were going at about 245-250/sq ft…. that was older. the more recent sales are at about 211-220/sq ft.

a very recent comp was a 2400 sq ft home..a bit larger.. but it sold for $517k. 2440 sq ft. = 211/sq ft. it’s the same tract, same builder, 200 yards away..just bigger/2 story. i know smaller homes sometimes aren’t the exact same price per sq. ft… but it’s close enough.

most of the homes seem to be selling at this price.. so even using the 220 figure.. x 1875 sq ft… (my home’s size) you get to $412k. using the $211 figure you get to $395.

my guess is that if this home listed tomorrow…a listing price would be at $420… it wouldn’t sell for over $400k. this gy will maybe pocket #375-400, minus his commissions.. hence that’s why he’s offering it to me at $350k…that’s about what he will get – which also happens to be EXACTLY what he owes. i looked it up on the property records.. he owes exactly $350k…. he bought for about $450k.. but his loan wa only $350k. he just wants to walk away fro what he owes.

at $300 it’s worth buying. at $325 it’s *maybe* worth it. at $350k i’m better off renting another year and watching the arm tsunami hit and see everyone continue to lose their A$$.

[23109VC]

i hope my post above wasn’t confusing..

what i meant was… i’d agree to buy the house for sasy $340k from teh owner. but we’d write it up as if i paid $430k..and somehow to the lender it looks like i’m only borrowing 80%….

i thought that if I was borrowing 80% from the bank and taking a 20% note from the owner (even a fake note) that it would still be considerted a 100% loan…

maybe i misunderstood my lender..but he seemed to imply that there was a way to only take out one loan that was considered 80% by effectively writing it up as a higher purchase price… i’d pay a bit higher property tax…but since the whole amount wqs in a first and an overall lower rate, i’d avoid a second at the high interest rate, pus have no PMI and overall…the end result is a lower monthly payment…

i’d sell in 5-10 years…so the overall extra property tax wouldn’t hurt me int he long run.

or just flame me and tell me to shut up and keep renting.

🙂

[23109VC]

you only have so much time on this Earth, and I’d rather not spend it doing lawns. To me, $80-100/month is well spent to save myself from doing it. It would take me 3 times as long, i’d make 3 times the mess. I’d rather spend my time playing with my kid. When he is older, maybe I will pay him to do it and give him a sense of responsibility, a way to earn a buck… but he’ll be 12, have 1/2 his days free, and he doesn’t have arthritis in one hip from a car crash…

my real question was whether it *makes financial sense* to buy the house. not get lectured about a gardner, or bashed for going 100%. there are a lot of people like me – professional people, who have a good hard working job, who have a family who depends on them, a large student loan debt…and to maintain a decent standard of living, can’t sock away large chunks of money by the time they are 34. I got out of school at 27, started working, started paying off my loan, wasn’t making a lot..and over the past 7-8 years, have doubled my salary..now make a nice living..but don’t have the years behind me to have put away a large nest egg. If I rented another 10 years, and lived the way I do now, yeah, I’d have a pile of dough in the bank, and I’d be 44… if i can get into ahouse now, doing 100%, and it makes sense, i’ll do it. if it doesn’ tmake sense, i won’t. i realize taht my payment will be higher b/c my rate will be higher, and i’ll be financing the whole thing.. but if the house is cheap enough… 100% or not..it *could* be a good deal.

I just want to know if it makes financial sense to do it. from an investment, rent vs. buy, where is the market going, point of view.

anyway…. i’m leaning toward NOT buying it simply b/c it’s still cheaper to rent, and prices are not going up. it’s not the hosue of my dreams. it’s nice, but if prices keep going down, i can probably do better for the same moeny. i f the landlord wants to come down on the price further to where it truly is as cheap to rent this thing, than maybe i’ll pull the trigger. right now, the price is still too high.

to those who provided sound advice, with good intentions, I sincerely appreciate your suggestions. i appreciate the time you took to respond to my post. I like to think I”m a smart guy who tries to make the best and most informed decisions, but by no means do I have all teh answers. if I thought i knew it all i wouldnt’ be posting here looking for other points of view. I value the opinions of a lot of the people here which is why I frequent this board.

thanks again!

[23109VC]

let me first say WOW. i have received a LOT of advice…and I sincerely appreciate it from all of you. this website is great.

i do think my numbers were a bit off. If I crunch the numbers to buy they are:

$3100-3200 to buy. That includes everything. the mortgage, taxes, HOAs, insurance, the gardner….

I can rent a comparable house..in fact probably a slightly larger for functional house, in a comparable area, maybe even down the street for no more than $1800. with some negotiating..maybe even a bit less 1600-1700.

I calculated the tax savings by doing my taxes via turbo tax..then manipulating the deductions to either add or remove a housing deduction. I understand that i’d lose the standard deduction, and then itemize….the bottom line is that the net change in taxes I would owe for the calendar year is less if I own…i’d have a huge writeoff…but even wih the house as a writeoff.. i would only be saving about 600-700 / month in taxes. If I also factorin principle reduction of 200-300/month… my net “benefit” of buying is NO MORE than $1000. if you strictly look at cash flow… I savre only $700 at best vs renting.

So rent the same type house for $1700-1800.
Buy at a net cost of $2400. ($2200 if you factor in principle reduction).

1700 vs 2400 is quite a big spread. $700/month is a lot of money. Even though I lose the “tax deduction” I still pay more.

this is why when i would go to open houses and realtors would say “why are you renting, you’re throwing money away”..then I would explain the numbers to them,a nd they looked at me like i was crazy… renting = throwing money away. obviously that’s not the case.

as to whether the landlord is sincere in his offer to sell at $350k… i don’t know. i told him i thought a good deal for me was 300-325. he then called and said $350k. i told him to fax his proposal in writing and I would discuss with my wife and get back to him. 2 days and no fax is forthcoming..so maybe he’s not for real..who knows.

in my opinion, given the costs… if he would actually sell at 300k… or perhaps 325k and agree to covera ll my closing costs..the numbers would in fact be so close taht buying makes sense. at 350k…. i think i’m still better off renting. it’s certainly a huge price drop from where things were at a year ago…but by passing on what looks lke a good deal, i think i have a good chance to do better…and will more than likely be no worse off.

any one else care to chime in with another point of view???

[23109VC]

I’m not trying to talk myself into buying it. However, I have to admit…given where prices WERE… 325k-350k for this house is not bad given the current prices…of course it may go down even more.

I’m not fooling myself into thinking I can afford it. I earn about $140k/year…full gov’t benefits, plus a pension system that would put most 401k plans to shame. I have a student loan that sucks up a good $1000/month….and one car payment. Other than that, my only expenses are the wife and two kids. I drive a POS to work and back. but do have a nice new family car for the wife/kids. it’s safe reliable..but it was a splurge…but i’m sure my ONE car payment is probably less than most of my co-workers who both drive 3 series BMWs or Lexus’.

so affording a $3000/month nut is not a stretch. I did it for several years on my last house when i was earning less than I do now.

I focus on the rent/buy pricing b/c if it is honestly cheaper to buy or the same – then it makes sense. Sure, i could maybe ride the market out and get more for my money…but while we all predict prices will go down…no one knows for sure..and no one knows how much.

i would NEVER buy this house if the prices were far more expensive than renting. that’s why i never bought here in this area when i moved here…renting was FAR cheaper than buying. now that prices have come down,t hat margin/gap is shrinking..and renting..while perhaps a bit cheaper. is by no means a HUGE savings.

100% financing and all costs comes to:

$2200-2300 for the mortgage.
$600 property taxes
$150 HOA
$150 insurance
$100 Gardner
Total = $3200-3300.
Tax savings is roughly $700-800/month.
$300/month to principle.

Net costs come out to roughly $2000ish. Rent cost $1800.

so i’m paying an extra $200.

there won’t be many if any trips to home depot on a brand new home that has every upgrade you need already in it. it’s totally done. i’m sure my wife could find a thing to do here or there…what wife wouldn’t.. but it needs no “projects”.

bottom line – i just want advice. it seems like a good deal..but again, that’s all relative.

[23109VC]

if it’s under $300k in a few years..that’s a big drop. big.

if prices fall…but not TOO MUCH…then buyign now before it’s harder to get 100% financing is a decent idea.

my big questions are:
where do you think rates will be in 3 eyars?
where do you think temecula prices will be in 3 years?
where do you think 100% financing will be in 3 years?

do you think temecula houses will fall to 2001-2002 prices?? ….in which case this house will sell for 250-275k max. i’d be bummed to be that much upside down.

if rates are up a lot – payment may not be much different. rents will be up..and the whole rent/buy thing may be the same.

if 100% financing is totally gone…i could be in trouble. while i make good money, i readily admit i’m a poor saver. i can afford the 325-350k mortgage at 100%. that’s not hard. it’s at the upper end of what i consider comfortable…which is why i’m in NO rush to run out and buy the houses I LOVE that are priced at 450-500k… just too much money to bite off. 350k is less than my last mortgage. my last one was 375k…and it was no sweat. i just suck at saving money. shame on me.. 🙂 i admit it. anyway..if 100% financing goes belly up in 3 years..i worry that i may not have put away enough to then qualify for the laon i will want/need to get into a comparable house.

if i get in now..at a price taht is under current values…i could be insulated aginast a lot of the future price drops, still get a good rate, nd take advantage of 100% financing while it still there to get.

i still thin prices will go down. ij ust don’t know how much. part of me wants to think they will go down..way down…like to 2002 levels…but part of me thinks it just won’t go down *THAT* much… no one really knows.

what do you all think about:

future price drops in temecula
future int rates
availability of 100% financing in the future?

[23109VC]

Yes – hipmatt is right. lots are small. this home we are in has a lot size of 5500sq ft or so. but other homes in Harveston – the cottages – have 2500-3000 sq ft lots with NO yard…. it’s not uncommon in parts of temecula/murrieta to find the ultra small lots. personally, i don’t really mind. i have a community pool, 3 LARGE parks within walking distance…so my rear yard is usally used to sit/relax with a drink or cigar, and to bbq. we don’t use our yard as a place to play ball…it’s there to relax in….so it’s just fine for what i need.

as to the property taxes…. good luck finding ANY House up in this area, built nit eh last few years that doens’ thave 1.8-2.0% property taxes. that’s the norm up here.

i’m trying to focus on teh cost to rent/buy and also to focus on whether I honestly want to stay in this house for the next decade. it’s only 3 bedrooms….and we have 2 kids, plus one more. I don’t feel compelled to give each kid their own room, but it would be nice. there’s nothign wrong with making them double up…i have one boy, one girl…so whatever comes next…there is a room waiting with a roomate of the same gender. 🙂 when they are small…my kids are 5 and 1….i don’t see being roommate to be as much of an assue for teh next 10 years..maybe when they are teenagers it will be more of a “problem”…in their eyes. 🙂 for now, a 4th bedroom would be nice..a luxury..not a need.

renting my current house at 1400 has been a steal of a deal..but if i don’t buy, an di move, i’m realistically going to be looking at 1800-2000/month for rent. now for THAT much money I probably coudl find a larger house…2500-2800sq ft… easily. lots of room…not that i need it..but for the money, i coudl get more.

the last comp for my house sold at $430k. buying at $350k would be pretty far below the comps…and my house is in a better location than the one that sold at 430k. mine backs up onto a greenbelt..no direct rear neighbors.. that one at 430k backs up on a street = noise. the house we are in sold with a 10k lot premium… i’m not sayuing it’s worth it.. but apples to apples…ours is better…to some degree. interior upgrades, they are very very very similar…so the only difference is location really…

i figure if i got the house at about 350….and he paid all my closing costs…so I effectively just walk into the mortgage (and HOAs, and property taxes, and insurance…) I’m looking at a ballpark monthly pricetag of $2700-2800. factor in another couple hundred for upkeep and the gardner…and i’m at an even $3000. i’d be saving roughly 700/month or so in taxes…at least. so i’d have a net monthly housing cost of 2200 or so. if i got a better deal on teh interest rates..maybe i could shave it down to 2000 even… if you factor in the *principle* that goes back into my loan you can sort of count that as a benefit..and on a 30yr fixed, that’s about antoher 300/month…

i figure i can rent someting comparable for about 1800…

so the spread between the cost of renting becomes very close. rent of a comparable house is about 1800/month.

cost to buy = $2800-3000/month. Minus $750-800 in tax savings, $300/month principle reduction… net housing costs = 1700-1900. almost a wash.

the big question is what will this house be worth when the market finally stops falling and begins to rebound. will it have fallen to what i paid or will it have fallen so low that i’m $50-100k upside down.

if i buy NOW at $350..and the house falls to $325… i don’t care. if it falls to $250k…i’d be pretty bummed.

if i pass this deal up…and houses like this fall to only 380-400k…i’ll feel like i missed a great deal.

i need a crystal ball.

[23109VC]

i’ve thought of making my lowball offer…then if/when it is rejected, suggesting I stay on as a tenant until it sells – for LESS rent – but only if that’s what the landlord will want.

landlord may want to show it empty…but personally, I’ve always believed a house shows better furnished….unless it’s furnished/decorated very badly…. i think the house looks better with our stuff vs. empty… but i’m also not thrilled about people coming to show the house with my family home…we went through that when we sold our last home.. major PITA… i loved how realtors would ignore the please call two hours ahead or whatever your requested and would say, “we’re here in your driveway, can I show the house”…as you are eating breakfast in your pajamas or something…. jerks…

we like the house we are renting – but it’s not the “perfect” hosue. it is 1900 sq ft, and with three kids, we really would rather have asomething a tiny bit larger iwth a 4th bedroom…. the hosue is very nice, and we like the area/location… we just would like more space. for the right price, howeve3r, we’d take it…it woud only be perfect if it ws for a steal of aprice. and in this market, they would have to sell it dirt cheap so we would be protected against the future price drops.

my guess is we will continue to rent for another year, and think more seriously about buying at the end of 07, early 08..depending no how the market is going.

[23109VC]

that house looks like crap.

[23109VC]

my lease expires in a few months, and the owner claims she will NOT re-lease it…but either will sell to me, or will ask me to leave to list it. fine.

i may offer 300k…. might even go to 325…but that’s about it. my gut is that the owner actually paid about 400k…. which is about what she will get on the current market IF someone bought it at current prices/values…

then the owner will lose another 6% in commissions..almost 25k more…. so i realistically think the owner WILL sell happily for 375k….. b/c that’s all she will get IF she waits for me to leave and lists it…

so honestly…. she might even let it go for 350… 325 would probably be too low…

then again, maybe she’s nuts and to her “lowball” is 410.. 🙂 i won’t know till i make an offer. can’t hurt to offer low..i’ll see where she really stands after i make the low offer….

there is SO MUCH INVENTORY up here….it is such a buyer’s market…. i’m so glad i’m not a seller right now….

[23109VC]

abo0ut a year ago, i was shopping around for rates and ended up talking to a loan broker who flat out told me to do an ARM and said it was no big deal that real estate always went up, and in a couple of years I could refi out of the loan into a new one… he acted like it was no big deal, and everyone was doing it.

when he told me how much loan I qualified for, I gasped and said there was NO way I could afford that much loan, and that my income wouldn’t support it. he said i could go “stated income” and just put down “whatever i wanted” for my income…

i didn’t walk.. I RAN. but there a lot of people out there who don’t know any better, are ignorant, or maybe justl iked what they heard and went along wih the program.

herd mentality. everyone was doing it, they did it..

now they pay for it. but my poitn is there are PLENTY of people out there who were profiting of screwing people and they were all too happy to sign people up for loans that would lead to foreclosure….

[Author]

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