[bob2007]

SD Realtor, is it great you have a clear view of the market and are realistic about it. The unfortunate consequence of that is sellers tend to choose agents who are not, then accept a lower price adjustment later, in part because of your assessment, or they don’t sell at all.

[bob2007]

Sorry about the bad formatting in my last post. I was trying to keep the content from SD Realtor small. The formatting looked ok on my screen, but I can see after the post it is difficult to follow.

[bob2007]

Hi,

>Now yes if what you posted IS TRUE, that even with 100% >financing, homeowners in say 4s or Carmel Valley can afford >the payments, then yes, those homes will depreciate at a >slower rate…

I didn’t specify – sorry my fault. I would say carmel valley and 4s are risky. One example of what I was referring to is an area of poway I researched that was the right demographic.

>I feel your assumptions break down very rapidly for a >variety of reasons such as divorce, maybe one of the wage >earners decides to have a baby and stop working, job >displacement, relocation… It seems to me that there are >variables that you are conveniently ignoring.

I agree with you about the divorce, I had not counted that as strongly as I should have. The areas we looked at were populated by local business owners and self employed professionals with their practices located here. They probably won’t be displaced or relocated by a forced move, but rather by their own choice. Although spouses may work, a single income can pay the mort.

>However these people are also smart and I don’t think they >and they alone will prop up the entire market of higher end >property.

I don’t think they will prop up the entire market, but these areas will have higher comps than others. The people live in the house as a choice on where/how to live, not as an investment. If I end up +/- 10% whenever I do sell, its not a big deal. If its down 30%, then I guessed wrong and will pay the price. Hopefully I will guess better on other non-real estate investments.

One of the best posts I have ever read come from this group. I don’t remember exactly who said it, but the gist was that hedge funds controlled the market and any guesses we could make were already considered by the hedge funds earlier. This sure feels right. Since I moved to dollar cost averaging and long term investments life has been much better.

I’m not considering my home as an investment, but my financial bet is that housing won’t crash to the 30% – 50% range from 2007 values.

[bob2007]

We all could be wrong, but if you are betting on a 30% drop over 5 years you should try to find something besides home ownership as a goal.

Regarding the 100% financing, the key is the 1M loan amount, anything above that is not deductible, and AMT will catch any attempt to do so with a second. A lot of people with money in excess of what they need to buy the house only put enough down to get to the 1M threshold. This provides a deduction, and the other cash can be used for other investments as insurance against a real estate drop.

The comments on this thread about areas like stonebridge are right on the mark (stay away). If purchasing above 1M you need to look at the existing demographic of the neighborhood. If everyone is heavily leveraged and low on other cash as the posts indicate, bad things lie ahead for pricing. On the other hand, if the neighborhood consists of business owners and professionals that put 20% plus down and have additional cash to spare, the overall pricing in the neighborhood should be better (no forced sales, adjustments out of income, etc).

[bob2007]

My understanding is that you get up to 500k tax free (24% in CA) if you held the property for 2 years or more. It doesn’t matter where you put it afterwards.

[bob2007]

“Boob” isn’t much of an insult. Everyone likes boobs.

[bob2007]

I can’t imagine anyone in real estate would try to convince anyone on this list to buy. I have nothing to do with the real estate business.

[bob2007]

Ok, biotech guy. Make a decision! Don’t just whine. Why not go back to Chicago where you would be happy? If housing is too expensive, and you say your industry is dying (I don’t think so), it makes no sense to stay in a bad situation.

[bob2007]

DesperateBuyer, I will agree with you on many points. I read your first post and thought it was just bait to get everyone riled up, but after reading your second post I’ll give the group a second target. I made a dissenting post at one time with similar negative results. I think there are a few good people in this group, so here it goes again….

To the group: If all the posts agree with the status quo
1. You will have nothing to talk about
2. Your knowledge about the market/buyer mentality will help you make more informed decisions.

I am posting this because I would genuinely like to see all of you get a home if that is what you wish to do. I used this board to get the negative perspective on the market.

I have put my money behind my belief, and purchased a home. I also sold a home in the past month. Three offers in 7 days because it was priced right. I made money on it because I held it more than 8 years. At the time I purchased it there were opinions on both sides, just as now. I am near the end of participating in this group now that this house has been sold.

This has worked for me several times. Once I did sell after a few years, and took a $10k loss on the house because it was a bad time to sell. However, I purchased another house at the same time, paid less for the same reason, and made a substantial amount on it.

So, you now have some opinions from people that believe that with a 8-10 year horizon they are willing to buy. Fixed rate loans, decent down payment. No expectation of the price doubling, but not losing money either. They believe the quality of life is worth the risk.

[bob2007]

I went through all the details with a parents retirement savings. Luckily I stopped it in time. Variable annuity sales are where the the adjustable bed guys aspire to be.

[bob2007]

Well said.

[bob2007]

SD Realtor,

My reasons for purchasing are right along your lines of thoughts. I have kids in the 5-7 range, and wanted to have a nice environment before they get too much older. I’ll never get this time back, and if it costs me a bit on the house, then that is a price I am willing to pay. I am _not_ trying to push my decision on other in this list, so lets not start bashing again. The right decision and timing for each person has to do with a lot of factors.

I didn’t make an offer on the house you were interested in, but that is a very nice place. I hope you can find what you are looking for at a great price.

Bob

[bob2007]

Thanks for proving my point.

[bob2007]

Hello,

I have been monitoring this list for the past 4 months and have found it very interesting. I would now like to contribute and hopefully give something useful back to the group.

I wish to congratulate FTB as well. I have purchased in scripps and will be closing in a month. I have a 10 year time frame, and even if the value does not increase (or decreases), I feel the lifestyle change is worth it to me.

Regarding financing, I put 20% down. I have 3 friends that have purchased in the last few months the same way, and a dozen more that could do so if they wished. I understand that I am fortunate to be in such a position, and only mention it to point out that many homes are being purchased without creative financing. This is especially true in certain neighborhoods as mentioned by SDR.

One important item I will take away from this discussion board is the distinction of what people “hope” will happen, versus reported observations (as in this thread). Some of the “hope” appears to target a benefit in the $50k range. In my opinion there are lots of ways to make money. Trying to target the bottom of the market to make this amount seems very difficult to me, and is the type of emotion that can color the way a person acts in all areas.

>Hopefully the Dems can turn this around without taxing me >out of affording my own house.

I would not count on this. In fact, it is more likely they would eliminate the the home mortgage deduction if they could get away with it. The rich will _always_ have ways around the taxes. I see it in action every day with my job. It is the middle to upper middle class that will pay the price. If the majority of your income is reported on a W2 and you make over 150k (or hope to some day), think about that before you consider the Dems. That is the demographic that will be paying for Edwards health plan (his $50M is protected). I used to be a republican. Now I don’t want to support either party.

[Author]

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