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PerryChase
ParticipantNo matter the amount of crime, I certainly would never vote for more police in the City of San Diego. The city is certainly so mismanaged that only a bankruptcy will save our finances. Sorry, but I think that the beast needs to be put on a crash diet. The pension deficit alone is $12k+ per household. Who’s going to foot the bill?
My brother has a business in San Diego and he moved out of the city limits in anticipation of higher taxes and fees.
December 28, 2006 at 1:29 PM in reply to: nesting young 4s Ranch experiences and puzzling questions #42367ParticipantDuplexes? I don’t think they build anymore of those? Where do do you find a duplex?
Young married couples should not be buying expensives houses. They should travel the world and have romance and fun. When you’re old you’ll appreciate the memories.
ParticipantI agree, it’s going to take a looong time. A lot of FBs refinanced and cashed out, or took out HELOCs for emergencies. We have just entered the “emergency” period of negative cash flows on “investment” properties and people are still hoping that the market will shoot right back up to save them.
I don’t expect a real estate panic until 3 years from now, when the FBs have no more emergency funds to carry them over. At that time, debts would have skyrocketed leaving borrowers no way to service those debts.
Here’s a scenario I envisage. BF his bought house in 2004 for $600k. Refinanced at $800k and cashed out $200k in 2006. He can’t really afford the $800k note (much less the original $600k loan) so he’s using part of his $200k cash horde out to service the debt. He still thinks that in a few years his out will be worth $1.2M, so of course he went out and bought a big SUV.
A few years go by and his cash is running low… but houses in his neighborhood are now only worth $400k. His debt is still $800k and he can’t make the monthly payments. His wife and kids are used to having everything. He’s now worried about paying for the college education of his oldest son who is also clamoring for a new car, preferably a BMW. What is he to do? He’s an FB out options.
Some people might be able to pull themselves out of this quandary. But throw in a few real family emergencies such as medical expenses, unemployment, divorce (ie, the vagaries of life) and you have a nasty mess.
December 27, 2006 at 2:35 PM in reply to: nesting young 4s Ranch experiences and puzzling questions #42333ParticipantConcho, that is a great point. People who are self-employed (ie consultants) can deduct part of their rent from their ordinary income. If they own their own homes, they’d have to depreciate and recapture (upon sale) the home office portion (a bookkeeping hassle).
asianautica, putting away for retirment?! Buyers were counting on ever appreciating homes for retirements. On a related note, it’s better for the economy if people work now and consume now, and seniors keep on working and consuming rather than living leisurely lives off of investments/savings.
Participantsdrealtor, your comments piqued my interest. So I looked at some sales data. I concur with your observation that house prices went through the roof in 2004.
As an illustration, if you look at the houses on the west side of Camino Del Sur accross from Santa Luz, you’ll see that in 2003 they originally sold in the 500s and 2004 onwards they sold in the 700s and 800s.
The above neighborhood is a good example because it’s a new community so there wouldn’t have been major restoration jobs that would have skewed the data (unlike in more established neighborhoods).
ParticipantI was thinking the same thing sdrealtor. However, Mr. Mannion probably wouldn’t have had to foresight to sell and rent had he not been friends with Mr. Toscano.
Most who sold high also “reinvested” even higher with no way to get out now that the market is in a slump. I know a few of those buyers.
ParticipantLookoutBelow, wow, you have a great deal.
Mixxalot, I too like Point Loma & OB. I’m looking for an old house in those environs to restore when the time is right.
December 22, 2006 at 7:53 PM in reply to: Rent vs. Buy Calculators – How to figure it out??? give me advice.. :) #42287ParticipantFor tax purposes, your standard deduction, married filing jointly is $10,300. You get to deduct this amount regardless of rent or buy. Any mortage interest plus property taxes over the 10,300 amount times your tax rate equals your tax savings.
ParticipantI’m looking for a place to live.. If I wait another 12 months, thats another $20,000 in rent.. Shouldn’t that be included in your calculations? If you’re comparing 2 scenarios involving time, I think rent should be included..
I don’t get this logic. If you buy, you’re paying interest instead of rent. I’m simplifying here, but if interest is more than rent, you loose. Either way you have to pay to have a roof over your head.
I agree that it’s way too early to even think about making offers, much less submit offers.
December 21, 2006 at 11:59 PM in reply to: nesting young 4s Ranch experiences and puzzling questions #42250ParticipantAnother minor point. The married filing jointly standard deduction is $10,300 for 2006. The income tax savings should be the delta between standard and itemized deductions times your tax rate (unless you’re itemizing already for other reasons).
In other words, add $3657 (10,300*.355) to the extra cost of buying/saving of renting.
December 21, 2006 at 3:31 PM in reply to: nesting young 4s Ranch experiences and puzzling questions #42230Participantocrenter, I love your blog. I read it periodically.
December 21, 2006 at 1:14 PM in reply to: Report: 2.2 Million Subprime Borrowers Face Foreclosure #42220ParticipantVery good point. An ARM is an ARM regardless of whether it was issued in the Prime or Subprime market. Plenty of people with good credit gambled on appreciation. I wonder how many of those guys will still have good credit a few years from now.
ParticipantThis is a re-post of something I found on Ben’s blog.
I believe that it’s a sign of what’s to come in San Diego. Remember all the free rents of the 1990s? They’ll be back.Owners right now are still in denial. So it’ll take time.
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The Providence Journal from Rhode Island. “One classified newspaper ad says ‘1st Mo. FREE.’ Another: ‘Free Heat, Free Hot Water and FREE RENT!’”
“The latest ‘promotional giveaways’ to lure new tenants even include a free spa getaway weekend. If that’s not enough, one property manager offers $500 to anyone who makes a referral that lands a new tenant.”
“The reason is simple: rental properties are going empty. ‘Our occupancy rates are off anywhere from 2 to 5 percent’ from last year, said Cheryl Martin, VP of Residential Property Management of Warwick. ‘We need to do something to be more aggressive in order to compete.’”
“Property managers and real-estate agents say the demand for rentals priced at $1,100 per month and up has gone soft. Not since the recessional mid-1990s, Martin said, have they resorted to freebies to lure new tenants.”
“The large number of rentals going empty is reflected statewide in the ‘rental vacancy rate,’ which has nearly doubled in the last three years, to 7.7 percent last year, according to U.S. Census data.”
“‘We’re flooded with inventory,’ said Diane Barone, a real-estate agent in Cranston. ‘The rental market is terrible; it’s just terrible. You get a bunch of people and you show, you show, you show, and they’re just sitting there.’”
“The construction of hundreds of condos, many in downtown Providence, has also flooded the real-estate market, and some of the spillover is driving up the inventory of rentals as condo owners who can’t sell their units decide instead to rent them out.”
“‘I have a client right now, he’s got a little house on Ninth Street for $1,600 a month, and he’s down to $1,300 and nobody even wants to look at it,’ said Suzanne Knight, a real-estate agent on Providence’s East Side. ‘It’s been vacant for four months now. … There’s just much more supply than demand.’”
“East Side property owners are competing with new downtown properties, Knight said. ‘There are hundreds of rental units downtown that weren’t here two years ago,’ Knight said. ‘You’d think landlords would lower their rents, but it takes a while. So they’re empty.’”
December 21, 2006 at 9:20 AM in reply to: nesting young 4s Ranch experiences and puzzling questions #42198ParticipantJuice, that’s lousy advice. We’re supposed to talk him out of buying and not into buying. Unless the buyer is up to the negotiating task, he doesn’t stand a chance against the experienced salespeople. Remember, they’ve seen and dealt with all sorts of offers already so they are prepared. Most people can’t negotiate a car much less a house.
He can rent a brand new house at 4S and save the difference. Then buy a newly-built house a few years from now (with better design, applicances, etc..) for a lower price.
nestingcouple, redo your rent/buy calculations. Once you see the real numbers, you won’t want to buy anymore!
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