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kev374
ParticipantOkay, let’s say it’s a change of ownership record and look at it from another angle.
This home was built in 1988…meaning IT DID NOT EXIST before that. The property was bought at the very end of the peak of RE market (i.e. 1988) at 158K (I checked the title for this house). Since the RE market started declining in a big way between 1990 through 1997 we can assume at the very best that this property was worth less than 158K in 1997? Agreed? Now, between 1998 and 2000, a 2 yr period appreciation was about 10-15% so we’re looking at about 175K or so.
so I don’t know where the 98k figure came from (I thought undervaluing the house for tax evasion constitues fraud!!!) but it’s still 365% appreciation for 5 years.
Participantawesome! I love Foresakencraft, that guy has some good stuff on there!
Participantwait until it makes sense financially. There is no point putting off buying a house just waiting for the absolute bottom, that again is speculation and is for investors. When the payments are close to rents and the PITI is under 30% of your gross then it makes sense to buy 😉
Just my opinion but I think we should see a great time to buy in about 12-18 months.
ParticipantI predict rents are going to increase sharply. Landlords are hearing about the state of the market and know this is their opportunity. Rents in my apt. complex increased 10%! With list prices being cut quite aggressively on condos it may make sense buying soon enough, I would say in about a year. I know here in South OC there are 2 bedroom, 900-1000 sqft condos going for $380k or so. In a year I predict these will be in the 320-350k range. PITI+HOA on these will be just a bit more than renting 😉
ParticipantIf you can’t pay 20% down you can also buy PMI upfront and roll it into the mortgage. This is usually cheaper than using a piggyback loan because PMI upfront is at 1.5% flat rate instead of .5% per year 😉 Even if you figure out 5 years to reach 20% equity with 10% down you still come out ahead.
Participantwhen I said wages are stangnant I meant inflation adjusted. A 25% increase in income over a 5 year period just about breaks even with inflation and isn’t really any wage growth in real terms.
In addition the population of Orange County has increased only by 7% or so between 2000 and 2005 which has been the slowest increase in decades.
People are NOT moving into OC by the droves, that is completely an URBAN LEGEND!!!!
There are been a tremendous amount of overbuilding of late and right now, 60,000 new condos are slated to come to join the huge inventory pool within the next 2 years or so. Talk about a huge amount of surplus that nobody wants to buy.
My personal opinion is that unlike previous declines this time around there is going to be a very sharp initial decline in prices, probably 20% over the next 2 years, as the people that bought more than they could handle will be forced to foreclose after which we will have a slow protracted decline which may last another 5 years. We’re probably looking at a 7yr or longer downcycle.
List prices are already being cut on many properties by 10% or more over comps that sold in the summer 😉 That’s your 10% decline right there and it’s only been a few months now.
ParticipantI’m in the same boat, I hate my little rental apartment but I can’t find anything I like enough to make a 30 year commitment so I have to renew my lease for another year albeit at a 10% rent increase 🙁 I know that this is the absolute WORST time to buy a home because we’re at the absolute peak. We all have to just be PATIENT, it’s hard when we’ve been waiting so long for this circus to end but I’m very optimistic there is hope on the horizon 😀
Participantaaah, I so would’ve wanted to make this one to hang out with the other RE bears but I’m leaving for New York that weekend 🙁 Well, maybe I can make the next one whenever it is 😛
Participantthat is very excessive. I pay $1320/mo. for my 680sqft 1bd here in Lake Forest, CA (near Irvine) and this is on the higher side. My rent went up this year by $100/mo. (8% increase) from $1220/mo. The normal rent increase is around 5% or so, 7-10% is expected in this market, 25% is absolutely outrageous!
Your landlord is an extremely greedy scumbag, take caution even if you move out he may rip you off in other ways.
ParticipantHistorically I believe RE prices have exceeded local inflation by about 1% but you also have to take into account income which has pretty much stagnated and even in some cases receded in the past 5 yrs.
Income is the only fundamental that drives demand. People keep harping on the fact that prices are high because everyone “wants” to live in SoCal etc. which may be true but everyone wants a Ferrari as well so are Ferraris selling in the thousands? I think not. The median household income in SoCal is around $60ish K. That doesn’t support a very high price point, perhaps $200k or so.
Infact per 2005 Census estimates only 25% of SoCal makes 100k or over in household income. My guess is that the vast majority of that 25% are older and already homeowners are not creating any new demand for homes…which means that the demand at this price point in the absence of exotic financing schemes is close to nil!! We are seeing this lack of demand in the market right now which will help adjust prices to demand driven by fundamentals.
ParticipantI would strongly suggest patience in this market. A 1 year minimum wait regardless is prudent, at that time a reassesment will be necessary based on how much prices have come down. Remember between 1990 and 1995 my cousin’s apartment went down 36% in value, this time the situation is MUCH worse.
People will tell you that it is IMPOSSIBLE for that much decline but if a 200-300% price appreciation was possible a 50% decline is not only possible but LIKELY!
ParticipantThere are many economists out there who speak absolute rubbish! Infact, I would say an above average number of seasoned pros have no idea what the hell they are talking about. One of the top business schools in the country, UCLA Anderson, has made absolutely contradictory predictions 6-months apart… in early March they said housing was going to crash 15% or more, now they say it’s going to be flat even though predictions based on market fundamentals are the same for both time periods. Seems like someone paid them off.
You have to also keep in mind that many economists have unethical industry bias..for instance the report that came out of Harvard University recently on the state of the Housing Market is an absolute joke and was financed by the National Association of Realtors. Harvard University economists selling themselves to cheap scam artists like the NAR is highly unethical.
It’s better to absorb knowledge from all sources and then make your own judgement.
Participantdon’t forget interest opportunity costs on the 20% downpayment and if the property goes down in value that will be a long time before you recoup past the interest opportunity costs. Not to mention HOA fees can escalate out of control as well. HOA’s are evil.
Participanthere is the thing, the smart people already know this and stupid people will just ignore the sign and buy anyway becuase they are stupid and easily swayed by real estate con artists who will feed them some BS about why the sign is wrong.
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