[hipmatt]

Dude, sit tight and rent. I also rent in Tem, lived here since 90. I’m a former r.e. agent myself. If you ask me, this valley is one of the most overpriced in the country. Temecula now is a joke. All new homes are a 2% tax, built on little lots right next to each other, its sad. To feel special they all pimp out their homes with fancy blinds, flooring, granite, stainless steel this and that, stamped concrete here and there, maybe a pool if they have some equity and the lot is big enough. But it still ends up looking like the guy next door which makes keeping up with the Jones’ even more important. Some software guy that works in SD, but had to buy here, and now thinks his home is a gold mine, and now he’s his own Bill gates. They’re all over the place here. You can’t talk logic either. They don’t believe there could be a prob with the economy, housing, gas prices, people are just blind. I’m just a doom and gloomer for mentioning it.

You are right about the gas/commute dilemma many are facing. Eventually, gas will go even higher and it will affect everyone. I still can tolerate the city, but I can’t believe these prices today.

Some houses have quadrupled in price in the last 11 years, no joke. Now, they all think its gonna continue.

Traffic here is now completely out of control. People are rude, impatient, and materialistic. Paid for plastic soccer moms now run rampant, truly believing that they are living the life of a desperate house wife, mowing over anything that gets in the way of their lifted SUVs. They all look the same. We really did have a woman run over an old man in the Costco parking lot with a lifted Excursion, because she was on the cell phone. The nicest parts of town now are the older parts, where things move a bit slower, and people seem more down to earth.

But over at the mall/Costco area, and its a war zone. Its only getting worse, I’m afraid.

My advice is to save on that nice rent you have. I would also recommend putting down at least 10% or more an any home purchases. I’d stay away from 100% financing. Good luck.

[hipmatt]

I am not a financial or economic pro, but I just can’t understand how everything can keep going up in value, and how inflation isn’t a problem, when it seems like the only thing thats keeping our economy going is a crap load of loans and financing.

Everyone (wall street) acts like the economy is just fine, there will be a soft landing, and the fact that personal and national debts are at an all time high and growing is no big deal. Is anyone expected to pay off their debt, or is debt a new “concept” that goes like, “if you can afford it now, thats all that matters, perpetual debt is now OK”.

Incomes are not going up, but houses in socal are 3-4 times more expensive than they were just 10 years ago. Health care is up. Fuel is way up.(temporarily down, but you are kidding yourself if you believe the worst is over). Rents are going up. People are driving nicer cars, buying nicer LCD TV’s, and now we have cell phone bills/HDTV Sat bills, etc that we really didn’t have 10 years ago. Theres the illegal immigration costs. Where is this money coming from? How can we say inflation isn’t here?

How can the Jones’ buy a $600k home in Temecula(at 2%tax too), a new Suburban or two, commute to SD, furnish their home with granite, plasma, and stamped concrete, and actually pay off ANY debt? I know I currently make a lot less than you all, but who else plans on OWNING(not owing any $$ to anyone else) their car or home? How can all these mortgage brokers survive? There like a dime a dozen, how many are actually needed? I am confused.

I know a couple who makes what my wife and I do(just about $75k per year). They just bought a first home in Menifee for $385k. They feel like they got a steal because the price was reduced $20k. They did 100% financing. Now that they are struggling to make the payment, they have decided to move to Oregon. But their plan is to wait a year, so that they can make a $100k profit on their house, “like their neighbor did”. They said this so matter of fact, like everyone who owns a home just makes $100k per year, just like the past few years. They are not the only ones. There are tons of people doing this like its no big deal.

If they would make a 20% cash down mandatory, we wouldn’t have any of this bs. I am just confused, and disappointed in our countries lack of financial responsibility. I wonder when its all gonna hit the fan, and wonder what I can do to make it through. So far, I sold my home last summer, invested in some Gold, Oil, and CDs, thats about it. I haven’t made a whole lot yet, but I would have lost about $20k on the house if I stayed. I am happy with my decision, but I wonder whats best to do in the future.
Matt

[hipmatt]

I just hope we raise interest rates, save the dollar from its death, encourage savings and discourage debt. I also hope the ridiculous housing market crashes, but thats just me.

[hipmatt]

My favorite restaurants in Temecula are actually Rosa’s Cantina (mexican)in old town and Pat and Oscar’s on the Pond (mostly Italian)on the corner of Rancho Cal and Ynez. , but neither of these are 5 star or high end, they are just good food, casual atmosphere, and my fav is Rosas.

That being said, Baily’s in oldtown would be exactly what you are looking for. look here http://www.oldtowndining.com/ Make sure you eat on the second floor, which is the high end place, not the bottom, which is a nice casual cafe/bar. Ask for a window seat, if you can get one, you will have a nice view of front street, and as an added bonus…. If you go to Costco in Temecula, you can buy $100 worth of dining gift cards to Baily’s for just $79. But, if price really is no object, skip that part.

[hipmatt]

NO, the banks won’t. The bank would be bankrupt virtually immediately if they started doing this. They are in the business to make money, not to give away 100k to every tool that got sucked into buying a house at an insane price with an insane loan. This won’t happen.

[hipmatt]

I agree that it will be about five years. If the fed does whats right and raises interest rates to slow inflation and save our worthless dollar, it might be sooner, but don’t be surprised what the fed and gov. might do to save us from a recession. These guys have no spine and no one wants to take the blame for anything. It has been postponed so long, nothing will surprise me now.

[hipmatt]

I’ve lived in Temecula for 16 years, went to High School here. I’ve seen homes QUADRUPLE in price since 1996. Not all homes, but many like paloma del sol, were around and under the $100k in 96, and the same ones have sold for over $425k. Sadly, home buyers here STILL expect these kind of gains like it is their God given right. IMHO the bubble here is amongst the worst in the nation. Sold my home last year and now I rent, but there are still some tools out here who think their castle is worth $700k or more.
The more people continue to live like they currently do, the more they will run this place into the ground. Traffic is horrible and getting worse, gas is down a bit now but still relatively high and will go back up soon. All the people here that actually make decent $$ usually commute at least an hour each way to SD, LA, OC or maybe Riverside. These guys arent all that smart, everyone drives huge trucks and suvs, usually alone, despite the horrid fuel economy. People here are up to their ears in debt as “keeping up with the Jones’s”is priority one for these yuppies.
You would think that ridiculous home prices alone would keep people away from making bad decisions about their house, but the taxes are another story. Take a 3000sqft $700k home on a 6200sqft lot in Harveston. The taxes are 1.9% per year. Thats over $13k a year. If the home was paid off, you still would have to budget over $1100 per month just for property taxes. Throw in the $130 hoa, and fire insurance, and you are at about $1400 a month to live in your paid off home. This makes absolutely no sense to me and can no way represent the amount of money it takes to own a home. Imagine buying this home traditionally with 20% down and a 30 year fixed loan. It would be $140k down, a mortgage of about $560k. P and I would be $3285 add taxes and ins. about $4600 total per month not including utilities. And how many people can honestly afford this in the Temecula Valley?

[hipmatt]

I’m a bear on RE and US stocks. Rising inflation, increased consumer and fed debt, weakening dollar, a HUGE fake RE bubble popping, many bubble jobs lost, even more non bubble jobs lost , rising interest rates, the house is no longer going to be your ATM, well… all that tells me that recession is on the way despite what the fed reserve, G.W. Bush, or the media tells us.

I am bullish on gold, silver, oil though.

[hipmatt]

It is all lies and based on assumptions, like it says.

1. a $210k home…show me one in socal

2. they assume a down payment. most people are using 100% financing these days.

3. they assume a 30 year fixed. most people use interest only or arms that would pay off no or very little principle balance.

4. they lie about the mortgage price. A $200k loan with 6.5% fixed rate for 30 years gives you a payment of $1264 for principal and interest ONLY, it does not include taxes, insurance, mortgage insurance(less than 20% down) and or HOA expenses. Realistically this payment would be about $1500 per month or more.

5. The biggest flaw. They assume that homes will appreciate 4.5% per year. Did they forget the past? This is like saying the stock market only goes up. Housing is equally as volotile. In the next 10 years, homes will most likely go down and then back up, and they will be lucky to break even.

6. A $210k home that appreciates 4.5% per year would be worth about $330k in 10 years. At $1500 per month you would have spent $180k in 10 years on payments plus your $10k down and closing costs coming close to $200k total invested. WAY higher than the $137k that the renter has paid. If you take a look at the amortization schedule, you will see that with their loan suggestion, you would still owe $170k at year 10. You take $330k home value – $170k loan balance – 6% commision(about $20k) and you get $140k net worth like they say.

7. If you rented and invested the $10k down payment in a modest CD account(we’ll say 4% even though 5.25% is common now)and contributed the extra $400 per month difference between rent and mortgage payment to the account, you would have a net worth of $74k in 10 years.

8. As you can see in this scenerio, they’re math is all fugged up. And I was conservative on all my numbers. In the real world, one may earn a higher rate of CD’s or investments. I also didn’t include closing costs or repairs to the home which the renter wouldn’t have to pay.

Bottom line is if the house value stayed the same, and neither went up or down in value in the 10 years, the renter would be way ahead. $210-$170-$12.6k= $27k The renter would have $47k more in his pocket than the owner. Of coarse the smart renter will rent untill the market bottoms out, then purchase a home, enjoy the appreciation, and make a much larger profit than either case here.

Why own, when you can rent!

P.S. “why own, when you can rent” is available in English ONLY.

[hipmatt]

You are a smart man. Living in america, its so easy to see that we consume more, waste more, spend more, worry less, and expect the fines luxuries like its our god given rights. Most of our spending has been financed by the way. Its pathetic and this is one area thats embarassing about being an american. Our materialism and vanity is our own worst enemy. We need to calm the hell down, save more, and live below our means, not 5x above them.

Your point about insulation is a good one, and one that we should adopt, but we’d rather spend that money on granite countertops that do absolutely nothing, than make our homes more efficient. And one ac unit isn’t enough you know, we have to have huge 3500+sqft homes to keep up with the Jones’s, so I need two AC units to cool my huge palace, day and night.

We can still attain the highest quaity of life on the planet even if we do take a look in the mirror and address the problems that we face rationally.

[hipmatt]

Personally, I say rent. No offense, but if you can only put down 5% and must use an interest only loan to finance, I don’t think you or anyone else for that matter are/is in a position to buy.

Remember that these shady loans got us to where we are today(dangerously high speculated market w/ no fundementals to back it up). People are so desperate to say that they “own” a place, they are willing to risk financial suicide. Its at least 20% down and a regular mortgage(you at least pay SOME principal off). Good luck with your move and I also recommend cashing in on your current property and wait the 4-6 years for prices to bottom out.

[hipmatt]

For every owner out there that is “testing the waters”, there are three or four others who are either going into foreclosure, facing higher mortgages due to arms reseting, actually paying principal on a former int. only loan, or just can’t afford the gas from Temecula to San Diego anymore. Hmm, I think there will be sellers, for a long time.

I think that those who “think” they are testing the waters now, only to pull their homes off the market because they couldn’t get that utmost rediculous price for their home, may be singing a different song in a year or two, when this thing goes full swing. They may wish that they weren’t so greedy in the first place, they still may have realized a great profit.

Some people presume that buying a trailer or moving to texas is the only way to sell a home and still have a place to live around here, but I wonder why they don’t consider renting? I’m renting a beauty(love it)and my parents are planning on selling their home of 15 years to do the same. Take for example the guy who wants that extra room for a gaming room. Say he has a home that could sell for $700k, and owes about $180k. He could take the $500 k profit and just simply invest in risk free CDs. At todays rates, (5.25% easy and probably going higher)that $500k could turn into $600k guaranteed in less than 4 years. While we assume a modest home price depreciation of only 25% in the next 4 years(most people here assume a much larger devaluation of todays home prices), his $700k home is now worth only $525k. He would make $275k in the next 4 years by selling and renting, vs. staying in his house while it drops in price. He could probably rent a home that has that extra room that his heart desires for about the same amount as his current mortgage too. Then, when he feels the market has bottomed, he can repurchase a much larger, nicer home, for even less money, and the next period of home price appreciation will be even more profitable.

[hipmatt]

I agree, the fed is between a rock and a hard place. We aren’t in that great of shape…we don’t have money, we have debt, the country and the people are in debt…the answer to recessions isn’t more debt, especially at this point. Home values are so high, that nothing can save them, even low rates again. We are in for a huge reality check.

[hipmatt]

My humble $.02
RENT! RENT! RENT!
Theres no way that if you believe most of what we believe(on this board) that you could even propose the question without already knowing the answer. It is so dangerous to buy a home at this time, especially a 800k home with only 5% down. Rent for about 4-6 years, save up at least 20%(20%now=160k, in five years it may be only 80k) and pay much less for your home. If you decide to move, you won’t kill yourself.

[hipmatt]

I have lived here in Temecula since 1990 and have sold some real estate here too. In my humble opinion, the market has slowed, mainly due to a large increase in listings, many of which have been on the market for over 90 days. Prices haven’t dropped a whole lot yet, but that will come next as supply and demand lays down the law, perhaps in one of the worst bubble areas in CA. I follow the MLS, and it seems to me that this pressure has
affected homes over the $600k mark the most, while homes priced under say $475k, haven’t taken as big of a hit yet. Murrieta is even worse with even more listings.

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