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Reality
Participant“The flaw in this question is that you are trying to apply logic and history to develop a real estate valuation method based on rental price. This can be done but you’ve chosen a house in San Diego to apply it to, this cannot be done.”
Why not exactly?
Participant“Most people purcahse a home based on emotions. If you dont want to deal with peoples emotions deal in units or commercial property.”
This was also true when you could buy a decent home for $150,000 not too many years ago. It will always be true. But it doesn’t change the fact that incomes will ultimately cause the crash most of us expect. They just don’t support the current “market price”, or anything close to it.
ParticipantWhere’d you get $85,000 for median income? That seems high.
ParticipantI rent for now, but I’m pro real estate. And ANTI BUBBLE.
ParticipantSorry you feel that way sdrealtor. I both expect and am rooting for a correction. Positively.
Those of us on the sidelines didn’t create the bubble, and most of us are smart enough to stay clear until things shake out. The idiots who bid prices out of sight without the wherewithal to afford those prices deserve bankruptcy, and so do the lenders who enabled them.
Participant
“I own a house in 92130 across from highly rated elementary school. 3 bedrooms + loft. Bought in Sept 2005 for 750,000. 40,000 down, 600,000 in interest only loan fixed for 10 years and 112,000 in adjustable home equity loan.My husband wants out of California? Should we try to sell before it gets too late?”
It’s already too late to leave without taking a loss. Sell the damn place and mitigate the damage. But there will be damage.
BTW, you don’t own a house. The bank does. You own a mortgage for a house you probably can’t afford.
ParticipantNo offense SD Realtor.
I didn’t mean you were stupid, and I realize there are other issues than financial. It just seems the premium for buying is exhorbitant at this time.
Participant“What is generally not acknowledged on any threads is that there are other factors that are not tangible or measureable in dollars and cents that may drive people to buy. There is almost a certain hostility that I read when some people post questions about buy verses rent in some of the responses.
SD Realtor”
Those reasons are emotional and not supported by financial analysis. When you can rent for half the cost of buying, how does buying make any rational sense?
With the dollars at stake, that’s just stupid.
ParticipantI’m not sure why buying is necessary to provide your kids with a “nice environment”. In this market, you can afford to rent a much nicer home than you can afford to buy.
ParticipantNever underestimate the effect of pussywhipping on real estate prices.
ParticipantYou seem to have some inaccurate assumptions.
Your mortgage (before property taxes) would be about $3100/month with a 6.34% interest rate which is the current average. Property tax at 2% would be $833 per month wouldn’t it? ($500,000 times 2% = $10,000 per year divided by 12.)
Add in insurance and HOA let’s say $200 that makes your monthly payment about $4100. I’m not sure how you save $1500 in income taxes a month. That’s $18,000 a year. Your total interest the first year will only be about $30,000. Who has that high a tax rate? At 40% which is still too high, you’d only save $1,000 a month in taxes the first year. And that tax deduction will only shrink over time.
You’d still be paying a net $3100 vs. $2000 for renting. A lot to pay for “pride of ownership”.
ParticipantIf they sell for $557,000? How about if they sell for $357,000 in a few years?
Who cares where they do or don’t come up with the money? Let them go bankrupt. They bought at the height of the bubble. They can stay put for many years or take their medicine, which will taste worse later.
And they won’t be alone.
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