[DWCAP]

General consensus is that the lower ranges, especially the areas you are looking in, have bottomed and rebounded. The demand levels in your areas at those prices is very high, not too far off of rental cash flow. Basically, I dont think that houses in your area/price are going to keep falling alot. Maybe +/- 5-10%, but the vast majority of the correction is prob over. If you cant take a 5% loss, on paper, I worry about your future as a homeowner.

Having said that these area are also the most sensitive to loan availablility and interest rate affordability. Perhaps I am wrong, but these are the areas I think of being affected the most when I see stories about how FHA is writing more loans than GSE’s. This is neither sustainable or advisable as public policy. (3.5% DP loans with taxcredit kickers stink just like 0% as both are imediatly underwater without appreciation).
I just dont believe we will see the end of the next decade (2020) without some serious inflation, as too many governments owe too much money. You wont see it now, and you wont see it in 2011, so you have time to buy at low interest rates, but dont expect them to last at 4.5-5.5 forever. How do you think streched loans/values are gonna fair when/if interest rates went to a measly 7%?
To make matters worse, I feel that the offical governement inflation indicatiors intentionally underreport inflation. This underreporting does three things, keeps interest rates low as long as people believe it, allows for increasing loose monitary policy (which is politically popular), and sets the stage for reduced liabilities in the world of SS and Medicare in the future. It isnt gonna stop.

So what is the point of all that? If you want to buy a house becuase it is a place for you to live with your family for years and years, then nearly all of the risk is played out and you should PATIENTLY wait for a house to show up that you find acceptable. (The beauty of slowly releasing REO inventory is that it isnt a sprint but rather a marathon and you have time.)

[DWCAP]

General consensus is that the lower ranges, especially the areas you are looking in, have bottomed and rebounded. The demand levels in your areas at those prices is very high, not too far off of rental cash flow. Basically, I dont think that houses in your area/price are going to keep falling alot. Maybe +/- 5-10%, but the vast majority of the correction is prob over. If you cant take a 5% loss, on paper, I worry about your future as a homeowner.

Having said that these area are also the most sensitive to loan availablility and interest rate affordability. Perhaps I am wrong, but these are the areas I think of being affected the most when I see stories about how FHA is writing more loans than GSE’s. This is neither sustainable or advisable as public policy. (3.5% DP loans with taxcredit kickers stink just like 0% as both are imediatly underwater without appreciation).
I just dont believe we will see the end of the next decade (2020) without some serious inflation, as too many governments owe too much money. You wont see it now, and you wont see it in 2011, so you have time to buy at low interest rates, but dont expect them to last at 4.5-5.5 forever. How do you think streched loans/values are gonna fair when/if interest rates went to a measly 7%?
To make matters worse, I feel that the offical governement inflation indicatiors intentionally underreport inflation. This underreporting does three things, keeps interest rates low as long as people believe it, allows for increasing loose monitary policy (which is politically popular), and sets the stage for reduced liabilities in the world of SS and Medicare in the future. It isnt gonna stop.

So what is the point of all that? If you want to buy a house becuase it is a place for you to live with your family for years and years, then nearly all of the risk is played out and you should PATIENTLY wait for a house to show up that you find acceptable. (The beauty of slowly releasing REO inventory is that it isnt a sprint but rather a marathon and you have time.)

[DWCAP]

[quote=bearishgurl][quote=DWCAP] . . .

DWCAP, both parcels are protected under Prop 13, no? Do YOU or another relative own the property next door and if so, would you/they be willing to sell it to your brother so he can apply for a lot joinder thru the subdivision map act?? I’ve seen this done in Chula Vista. Then he can build a sprawling one-story and take years for platting, permitting and building and the family would be much less inconvenienced. While he’s messing around with the formalities for 1.5 yrs. +, he can rent the place next door for more cash flow.

He is probably aware that another option is to sell and buy a bigger house, with market-rate taxes.[/quote]

My parents are still alive. The issue here is that they SOLD him the house, at a below market price and then carried the loan themselvs so he didnt need downpayments and such. I am sure that whatever loan balance is left will be forgiven/inherited upon my parents deaths.

My dad does own the property next door, it is available for me to buy should I ever decide to move to Santa Barbara. Not that I really can in the foreseeable future as the job market there is kinda crappy. But if I won the lotto I would move back in a heart beat. In all reality I will prob inherit the property, and retire to it years and years from now.

The whole thing is kinda a weird mess. It is convoluted and unique to say the least. Part of it is just family personality. My parents were farm kids from Minnesota, and they had to WORK their way up. They shoveled alot of crap in their day, so dont like the idea of just giving away valuable assets to their kids. Not that they dont wanna help, but they want to see their kids with the same gusto and appreciation for what we have.

I dont think I can really explain it all easily. The way to solve it is for my brother to sack up and reduce the HH spending and save for another house. But they like their stuff, sooo…. little house it is.

I just wanted to give an example of how in some ways, family RE inheritances may not be optimal.

[DWCAP]

[quote=bearishgurl][quote=DWCAP] . . .

DWCAP, both parcels are protected under Prop 13, no? Do YOU or another relative own the property next door and if so, would you/they be willing to sell it to your brother so he can apply for a lot joinder thru the subdivision map act?? I’ve seen this done in Chula Vista. Then he can build a sprawling one-story and take years for platting, permitting and building and the family would be much less inconvenienced. While he’s messing around with the formalities for 1.5 yrs. +, he can rent the place next door for more cash flow.

He is probably aware that another option is to sell and buy a bigger house, with market-rate taxes.[/quote]

My parents are still alive. The issue here is that they SOLD him the house, at a below market price and then carried the loan themselvs so he didnt need downpayments and such. I am sure that whatever loan balance is left will be forgiven/inherited upon my parents deaths.

My dad does own the property next door, it is available for me to buy should I ever decide to move to Santa Barbara. Not that I really can in the foreseeable future as the job market there is kinda crappy. But if I won the lotto I would move back in a heart beat. In all reality I will prob inherit the property, and retire to it years and years from now.

The whole thing is kinda a weird mess. It is convoluted and unique to say the least. Part of it is just family personality. My parents were farm kids from Minnesota, and they had to WORK their way up. They shoveled alot of crap in their day, so dont like the idea of just giving away valuable assets to their kids. Not that they dont wanna help, but they want to see their kids with the same gusto and appreciation for what we have.

I dont think I can really explain it all easily. The way to solve it is for my brother to sack up and reduce the HH spending and save for another house. But they like their stuff, sooo…. little house it is.

I just wanted to give an example of how in some ways, family RE inheritances may not be optimal.

[DWCAP]

[quote=bearishgurl][quote=DWCAP] . . .

DWCAP, both parcels are protected under Prop 13, no? Do YOU or another relative own the property next door and if so, would you/they be willing to sell it to your brother so he can apply for a lot joinder thru the subdivision map act?? I’ve seen this done in Chula Vista. Then he can build a sprawling one-story and take years for platting, permitting and building and the family would be much less inconvenienced. While he’s messing around with the formalities for 1.5 yrs. +, he can rent the place next door for more cash flow.

He is probably aware that another option is to sell and buy a bigger house, with market-rate taxes.[/quote]

My parents are still alive. The issue here is that they SOLD him the house, at a below market price and then carried the loan themselvs so he didnt need downpayments and such. I am sure that whatever loan balance is left will be forgiven/inherited upon my parents deaths.

My dad does own the property next door, it is available for me to buy should I ever decide to move to Santa Barbara. Not that I really can in the foreseeable future as the job market there is kinda crappy. But if I won the lotto I would move back in a heart beat. In all reality I will prob inherit the property, and retire to it years and years from now.

The whole thing is kinda a weird mess. It is convoluted and unique to say the least. Part of it is just family personality. My parents were farm kids from Minnesota, and they had to WORK their way up. They shoveled alot of crap in their day, so dont like the idea of just giving away valuable assets to their kids. Not that they dont wanna help, but they want to see their kids with the same gusto and appreciation for what we have.

I dont think I can really explain it all easily. The way to solve it is for my brother to sack up and reduce the HH spending and save for another house. But they like their stuff, sooo…. little house it is.

I just wanted to give an example of how in some ways, family RE inheritances may not be optimal.

[DWCAP]

[quote=bearishgurl][quote=DWCAP] . . .

DWCAP, both parcels are protected under Prop 13, no? Do YOU or another relative own the property next door and if so, would you/they be willing to sell it to your brother so he can apply for a lot joinder thru the subdivision map act?? I’ve seen this done in Chula Vista. Then he can build a sprawling one-story and take years for platting, permitting and building and the family would be much less inconvenienced. While he’s messing around with the formalities for 1.5 yrs. +, he can rent the place next door for more cash flow.

He is probably aware that another option is to sell and buy a bigger house, with market-rate taxes.[/quote]

My parents are still alive. The issue here is that they SOLD him the house, at a below market price and then carried the loan themselvs so he didnt need downpayments and such. I am sure that whatever loan balance is left will be forgiven/inherited upon my parents deaths.

My dad does own the property next door, it is available for me to buy should I ever decide to move to Santa Barbara. Not that I really can in the foreseeable future as the job market there is kinda crappy. But if I won the lotto I would move back in a heart beat. In all reality I will prob inherit the property, and retire to it years and years from now.

The whole thing is kinda a weird mess. It is convoluted and unique to say the least. Part of it is just family personality. My parents were farm kids from Minnesota, and they had to WORK their way up. They shoveled alot of crap in their day, so dont like the idea of just giving away valuable assets to their kids. Not that they dont wanna help, but they want to see their kids with the same gusto and appreciation for what we have.

I dont think I can really explain it all easily. The way to solve it is for my brother to sack up and reduce the HH spending and save for another house. But they like their stuff, sooo…. little house it is.

I just wanted to give an example of how in some ways, family RE inheritances may not be optimal.

[DWCAP]

[quote=bearishgurl][quote=DWCAP] . . .

DWCAP, both parcels are protected under Prop 13, no? Do YOU or another relative own the property next door and if so, would you/they be willing to sell it to your brother so he can apply for a lot joinder thru the subdivision map act?? I’ve seen this done in Chula Vista. Then he can build a sprawling one-story and take years for platting, permitting and building and the family would be much less inconvenienced. While he’s messing around with the formalities for 1.5 yrs. +, he can rent the place next door for more cash flow.

He is probably aware that another option is to sell and buy a bigger house, with market-rate taxes.[/quote]

My parents are still alive. The issue here is that they SOLD him the house, at a below market price and then carried the loan themselvs so he didnt need downpayments and such. I am sure that whatever loan balance is left will be forgiven/inherited upon my parents deaths.

My dad does own the property next door, it is available for me to buy should I ever decide to move to Santa Barbara. Not that I really can in the foreseeable future as the job market there is kinda crappy. But if I won the lotto I would move back in a heart beat. In all reality I will prob inherit the property, and retire to it years and years from now.

The whole thing is kinda a weird mess. It is convoluted and unique to say the least. Part of it is just family personality. My parents were farm kids from Minnesota, and they had to WORK their way up. They shoveled alot of crap in their day, so dont like the idea of just giving away valuable assets to their kids. Not that they dont wanna help, but they want to see their kids with the same gusto and appreciation for what we have.

I dont think I can really explain it all easily. The way to solve it is for my brother to sack up and reduce the HH spending and save for another house. But they like their stuff, sooo…. little house it is.

I just wanted to give an example of how in some ways, family RE inheritances may not be optimal.

[DWCAP]

Thanks for the advice, but I dont think he would ever take it. They did consider something similar to what you advise in early 09, but decided not to. The resulting bounce since then has convinced them to hold on till they can get out for even.

There isnt too much room to expand. I dont understand all of it, but it was gonna cost him like a quarter mil+ to put a second story on it. An addition is possible, but not cheap any way it goes.

As for the Condo, they have decided to just suck it up and take the monthly loss. They make great $$$, and if they really wanted to make it up, they could just cut back on the lifestyle alittle. But they dont so they have chosen to remain stuck. Path of least resistance and all that.

It was just an example of how family housing inheritances can sometimes not be optimal.

[DWCAP]

Thanks for the advice, but I dont think he would ever take it. They did consider something similar to what you advise in early 09, but decided not to. The resulting bounce since then has convinced them to hold on till they can get out for even.

There isnt too much room to expand. I dont understand all of it, but it was gonna cost him like a quarter mil+ to put a second story on it. An addition is possible, but not cheap any way it goes.

As for the Condo, they have decided to just suck it up and take the monthly loss. They make great $$$, and if they really wanted to make it up, they could just cut back on the lifestyle alittle. But they dont so they have chosen to remain stuck. Path of least resistance and all that.

It was just an example of how family housing inheritances can sometimes not be optimal.

[DWCAP]

Thanks for the advice, but I dont think he would ever take it. They did consider something similar to what you advise in early 09, but decided not to. The resulting bounce since then has convinced them to hold on till they can get out for even.

There isnt too much room to expand. I dont understand all of it, but it was gonna cost him like a quarter mil+ to put a second story on it. An addition is possible, but not cheap any way it goes.

As for the Condo, they have decided to just suck it up and take the monthly loss. They make great $$$, and if they really wanted to make it up, they could just cut back on the lifestyle alittle. But they dont so they have chosen to remain stuck. Path of least resistance and all that.

It was just an example of how family housing inheritances can sometimes not be optimal.

[DWCAP]

Thanks for the advice, but I dont think he would ever take it. They did consider something similar to what you advise in early 09, but decided not to. The resulting bounce since then has convinced them to hold on till they can get out for even.

There isnt too much room to expand. I dont understand all of it, but it was gonna cost him like a quarter mil+ to put a second story on it. An addition is possible, but not cheap any way it goes.

As for the Condo, they have decided to just suck it up and take the monthly loss. They make great $$$, and if they really wanted to make it up, they could just cut back on the lifestyle alittle. But they dont so they have chosen to remain stuck. Path of least resistance and all that.

It was just an example of how family housing inheritances can sometimes not be optimal.

[DWCAP]

Thanks for the advice, but I dont think he would ever take it. They did consider something similar to what you advise in early 09, but decided not to. The resulting bounce since then has convinced them to hold on till they can get out for even.

There isnt too much room to expand. I dont understand all of it, but it was gonna cost him like a quarter mil+ to put a second story on it. An addition is possible, but not cheap any way it goes.

As for the Condo, they have decided to just suck it up and take the monthly loss. They make great $$$, and if they really wanted to make it up, they could just cut back on the lifestyle alittle. But they dont so they have chosen to remain stuck. Path of least resistance and all that.

It was just an example of how family housing inheritances can sometimes not be optimal.

[DWCAP]

[quote=AN]
If you can afford to pass down a few hundred grand to your heirs, why wouldn’t you pass down a house instead, especially if you’re in CA. Just the prop 13 alone is enough reason to give your kids house(s) instead of cash.[/quote]

My parents did this. They bought many properties in Santa Barbara back in the day, with two houses (side by side) for their sons. My brother bought his in 2001, just before the market went on a tear.
Problem is, the house isnt huge, and two growing girls take up alot of it. (Not supprisingly the biggest problem they face in a house full of girls is that there isnt enough closet space.) But he is kinda stuck because he inherited my dads property tax. It is STUPID low. It wouldnt cash flow, would cause rifts in the family if sold, and is so damn cheap that moving makes almost no economic sense. He is litterally stuck. (it doesnt help that he is underwater on a condo he bought as a rental. It is sucking up his extra $$)

So maybe $$$ is a better option, as it would let people make personal decisions that better fit their situtation.

[DWCAP]

[quote=AN]
If you can afford to pass down a few hundred grand to your heirs, why wouldn’t you pass down a house instead, especially if you’re in CA. Just the prop 13 alone is enough reason to give your kids house(s) instead of cash.[/quote]

My parents did this. They bought many properties in Santa Barbara back in the day, with two houses (side by side) for their sons. My brother bought his in 2001, just before the market went on a tear.
Problem is, the house isnt huge, and two growing girls take up alot of it. (Not supprisingly the biggest problem they face in a house full of girls is that there isnt enough closet space.) But he is kinda stuck because he inherited my dads property tax. It is STUPID low. It wouldnt cash flow, would cause rifts in the family if sold, and is so damn cheap that moving makes almost no economic sense. He is litterally stuck. (it doesnt help that he is underwater on a condo he bought as a rental. It is sucking up his extra $$)

So maybe $$$ is a better option, as it would let people make personal decisions that better fit their situtation.

[DWCAP]

[quote=AN]
If you can afford to pass down a few hundred grand to your heirs, why wouldn’t you pass down a house instead, especially if you’re in CA. Just the prop 13 alone is enough reason to give your kids house(s) instead of cash.[/quote]

My parents did this. They bought many properties in Santa Barbara back in the day, with two houses (side by side) for their sons. My brother bought his in 2001, just before the market went on a tear.
Problem is, the house isnt huge, and two growing girls take up alot of it. (Not supprisingly the biggest problem they face in a house full of girls is that there isnt enough closet space.) But he is kinda stuck because he inherited my dads property tax. It is STUPID low. It wouldnt cash flow, would cause rifts in the family if sold, and is so damn cheap that moving makes almost no economic sense. He is litterally stuck. (it doesnt help that he is underwater on a condo he bought as a rental. It is sucking up his extra $$)

So maybe $$$ is a better option, as it would let people make personal decisions that better fit their situtation.

[Author]

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