[(former)FormerSanDiegan]

[quote=Nor-LA-SD-guy]
Gee Guy’s

When owning (fix rate loan an all) is lees than renting….

JMO but that is when I would pull the trigger.

Don’t know if that figures in coastal SD yet but it is available in Temecula (for the moment anyway).

But to each their own , no two lives are the same.
[/quote]

But just because buying is cheaper than renting does not mean it’s a good idea.

After all, real estate only goes down. Sell and rent now or be priced in forever.

/sarcasm off

[(former)FormerSanDiegan]

[quote=Nor-LA-SD-guy]
Gee Guy’s

When owning (fix rate loan an all) is lees than renting….

JMO but that is when I would pull the trigger.

Don’t know if that figures in coastal SD yet but it is available in Temecula (for the moment anyway).

But to each their own , no two lives are the same.
[/quote]

But just because buying is cheaper than renting does not mean it’s a good idea.

After all, real estate only goes down. Sell and rent now or be priced in forever.

/sarcasm off

[(former)FormerSanDiegan]

[quote=KIBU]My question to all of you is how long do you think the Fed can keep rates this low: months, years ???

We can’t deny that the rate change is a huge factor in bringing down the purchase cost significantly. In more cases, my opinion is that you start to see more economical sense in purchasing. Of course why now when you can still wait and minimize your risk.

Anyway, what’s your opinion on when or what factors will make the Fed having to abandon this bottom rate and increase the rate. After all, come back kid Voelker is coming back. [/quote]

Despite all the doom and gloom, I still believe in the business cycle. This will likely be the worst recession in most of our lifetimes. But, just like the boom ended when it exhausted itself this bust will end when it exhausts itself and the recession will die of natural causes.

Typically the Fed responds late to economic recoveries. We could be recovering by Sept 2009, but the Fed (and most folks for that matter) will not recognize it until many months or up to a year later later at which point they will consider rate changes again. I think they would need to see a combination of a recovering economy and clear evidence of sustained inflation.

Digressing further… at that point they will once again be behind the curve and a series of rate increases will be needed to quell inflation. Eventually inflation will be curbed when the business cycle moves down again. At that point, 10-15 years from now people will be bemoaning the end of Western Civilzation for the 4th time in my life **

** The other times being ~1974-1975 (Oil shock and ensuing inflation turns the US into a third world nation), 1989 (Japan is the next Superpower, “all your real estate are belong to us”, making US slaves to Asia), 2008-2010 (Housing bubble bursts and ensuing recession turns US into a third world nation)

[(former)FormerSanDiegan]

[quote=KIBU]My question to all of you is how long do you think the Fed can keep rates this low: months, years ???

We can’t deny that the rate change is a huge factor in bringing down the purchase cost significantly. In more cases, my opinion is that you start to see more economical sense in purchasing. Of course why now when you can still wait and minimize your risk.

Anyway, what’s your opinion on when or what factors will make the Fed having to abandon this bottom rate and increase the rate. After all, come back kid Voelker is coming back. [/quote]

Despite all the doom and gloom, I still believe in the business cycle. This will likely be the worst recession in most of our lifetimes. But, just like the boom ended when it exhausted itself this bust will end when it exhausts itself and the recession will die of natural causes.

Typically the Fed responds late to economic recoveries. We could be recovering by Sept 2009, but the Fed (and most folks for that matter) will not recognize it until many months or up to a year later later at which point they will consider rate changes again. I think they would need to see a combination of a recovering economy and clear evidence of sustained inflation.

Digressing further… at that point they will once again be behind the curve and a series of rate increases will be needed to quell inflation. Eventually inflation will be curbed when the business cycle moves down again. At that point, 10-15 years from now people will be bemoaning the end of Western Civilzation for the 4th time in my life **

** The other times being ~1974-1975 (Oil shock and ensuing inflation turns the US into a third world nation), 1989 (Japan is the next Superpower, “all your real estate are belong to us”, making US slaves to Asia), 2008-2010 (Housing bubble bursts and ensuing recession turns US into a third world nation)

[(former)FormerSanDiegan]

[quote=KIBU]My question to all of you is how long do you think the Fed can keep rates this low: months, years ???

We can’t deny that the rate change is a huge factor in bringing down the purchase cost significantly. In more cases, my opinion is that you start to see more economical sense in purchasing. Of course why now when you can still wait and minimize your risk.

Anyway, what’s your opinion on when or what factors will make the Fed having to abandon this bottom rate and increase the rate. After all, come back kid Voelker is coming back. [/quote]

Despite all the doom and gloom, I still believe in the business cycle. This will likely be the worst recession in most of our lifetimes. But, just like the boom ended when it exhausted itself this bust will end when it exhausts itself and the recession will die of natural causes.

Typically the Fed responds late to economic recoveries. We could be recovering by Sept 2009, but the Fed (and most folks for that matter) will not recognize it until many months or up to a year later later at which point they will consider rate changes again. I think they would need to see a combination of a recovering economy and clear evidence of sustained inflation.

Digressing further… at that point they will once again be behind the curve and a series of rate increases will be needed to quell inflation. Eventually inflation will be curbed when the business cycle moves down again. At that point, 10-15 years from now people will be bemoaning the end of Western Civilzation for the 4th time in my life **

** The other times being ~1974-1975 (Oil shock and ensuing inflation turns the US into a third world nation), 1989 (Japan is the next Superpower, “all your real estate are belong to us”, making US slaves to Asia), 2008-2010 (Housing bubble bursts and ensuing recession turns US into a third world nation)

[(former)FormerSanDiegan]

[quote=KIBU]My question to all of you is how long do you think the Fed can keep rates this low: months, years ???

We can’t deny that the rate change is a huge factor in bringing down the purchase cost significantly. In more cases, my opinion is that you start to see more economical sense in purchasing. Of course why now when you can still wait and minimize your risk.

Anyway, what’s your opinion on when or what factors will make the Fed having to abandon this bottom rate and increase the rate. After all, come back kid Voelker is coming back. [/quote]

Despite all the doom and gloom, I still believe in the business cycle. This will likely be the worst recession in most of our lifetimes. But, just like the boom ended when it exhausted itself this bust will end when it exhausts itself and the recession will die of natural causes.

Typically the Fed responds late to economic recoveries. We could be recovering by Sept 2009, but the Fed (and most folks for that matter) will not recognize it until many months or up to a year later later at which point they will consider rate changes again. I think they would need to see a combination of a recovering economy and clear evidence of sustained inflation.

Digressing further… at that point they will once again be behind the curve and a series of rate increases will be needed to quell inflation. Eventually inflation will be curbed when the business cycle moves down again. At that point, 10-15 years from now people will be bemoaning the end of Western Civilzation for the 4th time in my life **

** The other times being ~1974-1975 (Oil shock and ensuing inflation turns the US into a third world nation), 1989 (Japan is the next Superpower, “all your real estate are belong to us”, making US slaves to Asia), 2008-2010 (Housing bubble bursts and ensuing recession turns US into a third world nation)

[(former)FormerSanDiegan]

[quote=KIBU]My question to all of you is how long do you think the Fed can keep rates this low: months, years ???

We can’t deny that the rate change is a huge factor in bringing down the purchase cost significantly. In more cases, my opinion is that you start to see more economical sense in purchasing. Of course why now when you can still wait and minimize your risk.

Anyway, what’s your opinion on when or what factors will make the Fed having to abandon this bottom rate and increase the rate. After all, come back kid Voelker is coming back. [/quote]

Despite all the doom and gloom, I still believe in the business cycle. This will likely be the worst recession in most of our lifetimes. But, just like the boom ended when it exhausted itself this bust will end when it exhausts itself and the recession will die of natural causes.

Typically the Fed responds late to economic recoveries. We could be recovering by Sept 2009, but the Fed (and most folks for that matter) will not recognize it until many months or up to a year later later at which point they will consider rate changes again. I think they would need to see a combination of a recovering economy and clear evidence of sustained inflation.

Digressing further… at that point they will once again be behind the curve and a series of rate increases will be needed to quell inflation. Eventually inflation will be curbed when the business cycle moves down again. At that point, 10-15 years from now people will be bemoaning the end of Western Civilzation for the 4th time in my life **

** The other times being ~1974-1975 (Oil shock and ensuing inflation turns the US into a third world nation), 1989 (Japan is the next Superpower, “all your real estate are belong to us”, making US slaves to Asia), 2008-2010 (Housing bubble bursts and ensuing recession turns US into a third world nation)

[(former)FormerSanDiegan]

[quote=jpinpb]I made this comment on other threads. Setting aside even whether someone w/70k would buy in Clairemont – I have money to put down, 20%. And for the longest time my intention was to put that down.

But w/the way the economy is, I am less inclined to put all of it down. If I can get and FHA loan w/3 or 5% down, I’d almost rather go that route, especially if I’m buying today, or before bottom, let’s say.

I’d rather have cash on hand for emergency than tie it up in a house. And since the bottom is hard to predict and I may find a house I would buy, potentially it could lose more equity and there goes my money.

So unless it’s some screaming deal, forget about 20% down. That’s how I feel about it.[/quote]

I would definitely want to maintain a strong cash reserve. You will pay more in interest and/or PMI though for that extra security. These days it is probably worth it.

[(former)FormerSanDiegan]

[quote=jpinpb]I made this comment on other threads. Setting aside even whether someone w/70k would buy in Clairemont – I have money to put down, 20%. And for the longest time my intention was to put that down.

But w/the way the economy is, I am less inclined to put all of it down. If I can get and FHA loan w/3 or 5% down, I’d almost rather go that route, especially if I’m buying today, or before bottom, let’s say.

I’d rather have cash on hand for emergency than tie it up in a house. And since the bottom is hard to predict and I may find a house I would buy, potentially it could lose more equity and there goes my money.

So unless it’s some screaming deal, forget about 20% down. That’s how I feel about it.[/quote]

I would definitely want to maintain a strong cash reserve. You will pay more in interest and/or PMI though for that extra security. These days it is probably worth it.

[(former)FormerSanDiegan]

[quote=jpinpb]I made this comment on other threads. Setting aside even whether someone w/70k would buy in Clairemont – I have money to put down, 20%. And for the longest time my intention was to put that down.

But w/the way the economy is, I am less inclined to put all of it down. If I can get and FHA loan w/3 or 5% down, I’d almost rather go that route, especially if I’m buying today, or before bottom, let’s say.

I’d rather have cash on hand for emergency than tie it up in a house. And since the bottom is hard to predict and I may find a house I would buy, potentially it could lose more equity and there goes my money.

So unless it’s some screaming deal, forget about 20% down. That’s how I feel about it.[/quote]

I would definitely want to maintain a strong cash reserve. You will pay more in interest and/or PMI though for that extra security. These days it is probably worth it.

[(former)FormerSanDiegan]

[quote=jpinpb]I made this comment on other threads. Setting aside even whether someone w/70k would buy in Clairemont – I have money to put down, 20%. And for the longest time my intention was to put that down.

But w/the way the economy is, I am less inclined to put all of it down. If I can get and FHA loan w/3 or 5% down, I’d almost rather go that route, especially if I’m buying today, or before bottom, let’s say.

I’d rather have cash on hand for emergency than tie it up in a house. And since the bottom is hard to predict and I may find a house I would buy, potentially it could lose more equity and there goes my money.

So unless it’s some screaming deal, forget about 20% down. That’s how I feel about it.[/quote]

I would definitely want to maintain a strong cash reserve. You will pay more in interest and/or PMI though for that extra security. These days it is probably worth it.

[(former)FormerSanDiegan]

[quote=jpinpb]I made this comment on other threads. Setting aside even whether someone w/70k would buy in Clairemont – I have money to put down, 20%. And for the longest time my intention was to put that down.

But w/the way the economy is, I am less inclined to put all of it down. If I can get and FHA loan w/3 or 5% down, I’d almost rather go that route, especially if I’m buying today, or before bottom, let’s say.

I’d rather have cash on hand for emergency than tie it up in a house. And since the bottom is hard to predict and I may find a house I would buy, potentially it could lose more equity and there goes my money.

So unless it’s some screaming deal, forget about 20% down. That’s how I feel about it.[/quote]

I would definitely want to maintain a strong cash reserve. You will pay more in interest and/or PMI though for that extra security. These days it is probably worth it.

[(former)FormerSanDiegan]

[quote=esmith]How about we stop panicking and try to do some level-headed analysis.

– What’s the median house price in San Diego county?

– Knowing that you can get a 5% 30-year fixed mortgage, what would be your total monthly payment if you bought a median house today? Let’s say 20% down. Include property tax and downpayment opportunity loss. You can use this source to check historical mortgage rates and CD rates:

http://research.stlouisfed.org/fred2/series/WCD6M?cid=121
http://research.stlouisfed.org/fred2/series/MORTG?cid=114

– When was the last time houses were this cheap?

– What if we use inflation-adjusted dollars?[/quote]

I don’t know if we are at the bottom in pricing, but I have to agree with esmith on the point that housing is near generational lows in San Diego in terms of affordability, since it is obvious that houses are more affrdable than they have been in my adult lifetime (I’m in my mid-40’s).

My single-point Clairemont anecdote is illustrative, but there is further evidence.

Look at Rich’s chart in this article:
http://voiceofsandiego.org/articles/2008/12/17/toscano/780monthlypayments090408.txt

The article was written in September, with data from a couple months prior to that (Case-Shiller). At that time mortgage rates were around 6% and prices have dropped another 5 to 10%.

If you factor in rates dropping to ~ 5% and the further price decline, today we are at or near an all time low on that chart, which goes back to the late 1970’s.

So esmith is right, things are cheap by historical standards. They may get significantly cheaper, but we are definitely seeing historically low housing costs when measured by affordability metrics.

[(former)FormerSanDiegan]

[quote=esmith]How about we stop panicking and try to do some level-headed analysis.

– What’s the median house price in San Diego county?

– Knowing that you can get a 5% 30-year fixed mortgage, what would be your total monthly payment if you bought a median house today? Let’s say 20% down. Include property tax and downpayment opportunity loss. You can use this source to check historical mortgage rates and CD rates:

http://research.stlouisfed.org/fred2/series/WCD6M?cid=121
http://research.stlouisfed.org/fred2/series/MORTG?cid=114

– When was the last time houses were this cheap?

– What if we use inflation-adjusted dollars?[/quote]

I don’t know if we are at the bottom in pricing, but I have to agree with esmith on the point that housing is near generational lows in San Diego in terms of affordability, since it is obvious that houses are more affrdable than they have been in my adult lifetime (I’m in my mid-40’s).

My single-point Clairemont anecdote is illustrative, but there is further evidence.

Look at Rich’s chart in this article:
http://voiceofsandiego.org/articles/2008/12/17/toscano/780monthlypayments090408.txt

The article was written in September, with data from a couple months prior to that (Case-Shiller). At that time mortgage rates were around 6% and prices have dropped another 5 to 10%.

If you factor in rates dropping to ~ 5% and the further price decline, today we are at or near an all time low on that chart, which goes back to the late 1970’s.

So esmith is right, things are cheap by historical standards. They may get significantly cheaper, but we are definitely seeing historically low housing costs when measured by affordability metrics.

[(former)FormerSanDiegan]

[quote=esmith]How about we stop panicking and try to do some level-headed analysis.

– What’s the median house price in San Diego county?

– Knowing that you can get a 5% 30-year fixed mortgage, what would be your total monthly payment if you bought a median house today? Let’s say 20% down. Include property tax and downpayment opportunity loss. You can use this source to check historical mortgage rates and CD rates:

http://research.stlouisfed.org/fred2/series/WCD6M?cid=121
http://research.stlouisfed.org/fred2/series/MORTG?cid=114

– When was the last time houses were this cheap?

– What if we use inflation-adjusted dollars?[/quote]

I don’t know if we are at the bottom in pricing, but I have to agree with esmith on the point that housing is near generational lows in San Diego in terms of affordability, since it is obvious that houses are more affrdable than they have been in my adult lifetime (I’m in my mid-40’s).

My single-point Clairemont anecdote is illustrative, but there is further evidence.

Look at Rich’s chart in this article:
http://voiceofsandiego.org/articles/2008/12/17/toscano/780monthlypayments090408.txt

The article was written in September, with data from a couple months prior to that (Case-Shiller). At that time mortgage rates were around 6% and prices have dropped another 5 to 10%.

If you factor in rates dropping to ~ 5% and the further price decline, today we are at or near an all time low on that chart, which goes back to the late 1970’s.

So esmith is right, things are cheap by historical standards. They may get significantly cheaper, but we are definitely seeing historically low housing costs when measured by affordability metrics.

[Author]

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