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(former)FormerSanDiegan
Participanttemeculaguy –
One more thing …
RE: “I think you may find that when other areas find themselves more inline with fundamentals there will still be apprehension on the part of the buyer, or it could just be me.”There are few buyers at the bottom. When the general public is apprehensive, (or better yet repulsed) by real estate, that’s when you want to buy.
Participanttemeculaguy –
I think you are wise to wait in your neck of the woods.betting on the fall –
Nationally homeownership is at record highs, but what about San Diego. Roughly 45% of the population rents. In LA it’s more like 50%.Where did the buyers come from after the last downturn ?
After 2-3 years of anemic sales there was pent-up demand. Also, the economy was improving. I believe there need to be triggers, such as an improving economy, good jobs, and an influx of population, etc. to make a bottom. Rent prices typically reflect these things.Participanttemeculaguy –
I think you are wise to wait in your neck of the woods.betting on the fall –
Nationally homeownership is at record highs, but what about San Diego. Roughly 45% of the population rents. In LA it’s more like 50%.Where did the buyers come from after the last downturn ?
After 2-3 years of anemic sales there was pent-up demand. Also, the economy was improving. I believe there need to be triggers, such as an improving economy, good jobs, and an influx of population, etc. to make a bottom. Rent prices typically reflect these things.Participanttemeculaguy –
I am using Clairemont as a proxy because I actually bought a home in Clairemont in 1996, within a couple months of the absolute bottom. ATtthat time, I figured out that I could buy a house there for about $200 above my rent, after accounting for taxes. Other areas will be different.
Here are some round numbers for example
400K => P&I equal 2600
(interest portion is 2300)
Taxes: 416/mo
INsurance: 75 / monthPITI : ~ 3100 per month
For a couple making 100-120K, they are in the 37% combined state/fed tax bracket, and they pay enough state income tax that they their itemized deductions are about the same as the standard deduction (meaning that any additional deductions are at the marginal rate).
Tax deduction on 2716/mo (interest & taxes) = 1000.
Effective monthly payment : 2100.
I ignored maintenance, but you can throw in a hundred bucks per month or so and it’s still pretty close.
I agree that some areas, such as Temecula, will likely go lower than this value because of the relative desire for some folks to drive less than an hour or two to work. And to pay less than $300 per month for A/C. These other costs IMO would make prices in a place like Temecula likely drop to several hundred dollars below equivalent rent.
So, yeah, I guess I knida agree with you.
Of course, if rates go up to 8% that puts in a lower bottom. Or if rents decline that also lowers the bottom.
Participanttemeculaguy –
I am using Clairemont as a proxy because I actually bought a home in Clairemont in 1996, within a couple months of the absolute bottom. ATtthat time, I figured out that I could buy a house there for about $200 above my rent, after accounting for taxes. Other areas will be different.
Here are some round numbers for example
400K => P&I equal 2600
(interest portion is 2300)
Taxes: 416/mo
INsurance: 75 / monthPITI : ~ 3100 per month
For a couple making 100-120K, they are in the 37% combined state/fed tax bracket, and they pay enough state income tax that they their itemized deductions are about the same as the standard deduction (meaning that any additional deductions are at the marginal rate).
Tax deduction on 2716/mo (interest & taxes) = 1000.
Effective monthly payment : 2100.
I ignored maintenance, but you can throw in a hundred bucks per month or so and it’s still pretty close.
I agree that some areas, such as Temecula, will likely go lower than this value because of the relative desire for some folks to drive less than an hour or two to work. And to pay less than $300 per month for A/C. These other costs IMO would make prices in a place like Temecula likely drop to several hundred dollars below equivalent rent.
So, yeah, I guess I knida agree with you.
Of course, if rates go up to 8% that puts in a lower bottom. Or if rents decline that also lowers the bottom.
Participantbeechhunter –
It was just too easy to pass up.
FOr the record … I’d rather have my agent bee savvy and “street smart” then be able to from complete sentences without running on with the possible acception of the listing where I wood insist on tripple-checking his final copy as a proof-reader before he submists it and makes a boo-boo that people sea and witch distract them from the point you are trying to make, which is to sail your house.
Participantbeechhunter –
It was just too easy to pass up.
FOr the record … I’d rather have my agent bee savvy and “street smart” then be able to from complete sentences without running on with the possible acception of the listing where I wood insist on tripple-checking his final copy as a proof-reader before he submists it and makes a boo-boo that people sea and witch distract them from the point you are trying to make, which is to sail your house.
ParticipantWe get bashed for being stupied
Classic !
But seriously, there are some good agents out there and I have one that I trust for my RE needs. But I would add that I just wouldn’t want him proof-reading my child’s homework, if you know what I’m saying.
ParticipantWe get bashed for being stupied
Classic !
But seriously, there are some good agents out there and I have one that I trust for my RE needs. But I would add that I just wouldn’t want him proof-reading my child’s homework, if you know what I’m saying.
ParticipantI received a solicitation in the mail yesterday from IndyMac bank advertising 5.55% CD rates. Seems they are eager (as indicated by high rates) to borrow some funds from consumers (still cheaper than floating bonds out there). Hmmm… Wonder why ?
ParticipantI received a solicitation in the mail yesterday from IndyMac bank advertising 5.55% CD rates. Seems they are eager (as indicated by high rates) to borrow some funds from consumers (still cheaper than floating bonds out there). Hmmm… Wonder why ?
ParticipantSome perspective:
A 20% decline in an area like Clairemont from today’s prices for example would likely result in near-equilibrium of monthly carrying costs for purchase versus renting.
3/2 ‘s in this area are about 500-520K. 20% decline would be 400-416K. Rents are in the 1900-2100 range for 3 BR/ 2 BA. Let’s pretend that I am a first-time buyer and me and my spouse make a combined 100K. Once the price drops below about 425K or 450K we would likely choose to buy over renting since after tax considerations the monthly carrying costs of purchase would be within a couple hundred bucks of renting. Assume a 30-year fixed rate loan.
Depending on changes in rates and rents, this is how I see the bottom.
ParticipantSome perspective:
A 20% decline in an area like Clairemont from today’s prices for example would likely result in near-equilibrium of monthly carrying costs for purchase versus renting.
3/2 ‘s in this area are about 500-520K. 20% decline would be 400-416K. Rents are in the 1900-2100 range for 3 BR/ 2 BA. Let’s pretend that I am a first-time buyer and me and my spouse make a combined 100K. Once the price drops below about 425K or 450K we would likely choose to buy over renting since after tax considerations the monthly carrying costs of purchase would be within a couple hundred bucks of renting. Assume a 30-year fixed rate loan.
Depending on changes in rates and rents, this is how I see the bottom.
ParticipantThe higher conforming loan limit also applies to Guam and the US Virgin Islands.
Guam ?
Can;t be expensive there.Methinks it has something to do with political pull. Perhaps Sen Stevens and Sen Inoue had something to do with it. In Alaska’s case it falls in the same category as the bridge to nowhere.
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